Contents

Company Profile......................................................................................................... 4
History of Surgical Industry:....................................................................................... 5
Vision Statement:....................................................................................................... 6
Mission Statement:..................................................................................................... 6
Strategic Objectives:.................................................................................................. 6
Industry Analysis.......................................................................................................... 8
Pest analysis............................................................................................................... 8
Political-Legal.......................................................................................................... 9
Political instability.............................................................................................. 12
Antitrust regulations........................................................................................... 13
Special incentives.............................................................................................. 13
Laws on hiring and promotion............................................................................ 14
Tax laws.............................................................................................................. 14
Economical............................................................................................................ 15
GDP trends:........................................................................................................ 15
Interest rate:...................................................................................................... 15
Inflation rates:.................................................................................................... 16
Unemployment levels:....................................................................................... 17
Energy availability and cost:.............................................................................. 17
Socio cultural......................................................................................................... 18
Growth rate of population:.................................................................................18
Life style change:............................................................................................... 19
Career expectations:.......................................................................................... 19
Technological......................................................................................................... 20
Total government spending for R&D..................................................................20
Focus of technological efforts:............................................................................20
Productivity improvements through automation:...............................................21
SWOT analysis.......................................................................................................... 22
Opportunities:....................................................................................................... 22
Threats:................................................................................................................. 22
External Factor Evaluation Matrix (EFE)....................................................................23
1

PEST Impact Matrix................................................................................................... 24

Internal analysis....................................................................................................... 27
Strength:............................................................................................................... 27
Weakness:............................................................................................................. 27
Internal Factor Evaluation Matrix (IFE)...................................................................28
Industry and Competitive Analysis...................................................................................29
Question 1: What are the Industrys Dominant Economic Traits?............................30
Export of surgical instrument of Pakistan..............................................................30
Profile of industry.................................................................................................. 31
Export of surgical to different countries in 2013-2014..........................................31
World Exports of Surgical Instruments..................................................................33
Top ten buyers of surgical instruments..................................................................34
Question 2: What Is Competition Like and How Strong Are the Competitive
Forces?..................................................................................................................... 35
PORTERS FIVE FORCES MODEL...............................................................................35
Bargaining power of buyers................................................................................... 35
Threat of new entrant............................................................................................ 36
Threat of substitute............................................................................................... 36
Industry Rivalry..................................................................................................... 36
Impact on profitability.............................................................................................. 37
Strategy for minimizing the power of competitive forces.........................................38
Question 3: What Forces Are at Work to Change Industry Conditions?....................39
Question 4: Which Companies are in Strongest / Weakest Positions?......................40
Question 5: What Strategic Moves Are Rivals Likely to Make Next?........................41
Question 6: What are the Key Factors for Competitive Success?.............................43
Question 7: Is the Industry Attractive or Unattractive and Why?.............................45
TWOS Matrix............................................................................................................. 46
Strategic Factor Analysis summary (SFAS)...............................................................47
CPM Matrix............................................................................................................... 48
The Strategic Position and Action Evaluation (SPACE) Matrix...................................49
The Boston Consulting Group (BCG) Matrix..............................................................51
The Internal-External (IE) Matrix............................................................................... 52
The Grand Strategy Matrix....................................................................................... 53
2

The Quantitative Strategic Planning Matrix (QSPM).................................................54

Decision:................................................................................................................... 56
Strategy
Fvaluation

References:............................................................................................................... 57

Company Profile
Content

Information

Name

Ittehad Surgical

Location

Satellite Town, Gujranwala

Contact No

+92-300-8621717

History of Surgical Industry:

Surgical industry of Pakistan holds a history of more than 100 years when the craftsmen
of Sialkot were famous during the Mughal period for their fine swords and daggers but the
introduction of rifle in 1857 put them out of work. The opportunity for alternative work arose in
1905 when some broken equipment at the American Mission Hospital in Sialkot afforded a
chance to adopt their skills. By 1920 Sialkot was exporting to all parts of British Empire
including Afghanistan and Egypt and was later selected for supplying surgical instruments for the
Allied forces in World War II. The Metal Industries Development Centre (MIDC) was
established in 1942 to act as a supply and inspection agency for the Allied forces. Although the
surgical instruments manufacturing factories were mostly owned by Hindus, the craftsmen were
mostly Muslim and the industry was not affected by the partition of British India.
When Pakistan got independence in 1947 it inherited 17 registered surgical instruments
manufacturers in Sialkot.

In 1958 the Surgical Instruments Manufacturers Association of

Pakistan (SIMAP) got established to unite the manufacturers at one platform. The association
since then has played an important role in addressing issues at the government level, nominating
trade delegations and participants for trade fairs and exhibitions and representing the industry at
various local and international forums. The surgical industry got its real boost in the 1960s, when
the government of Pakistan gave various incentive and bonus schemes to this industry. In the
1980s the demand of surgical instruments from Pakistan increased worldwide. However, in 1994
US imposed restrictions by US authority Food and Drug Administration (FDA) on the imports of
surgical instruments from Pakistan and forced the industry to improve its manufacturing.
The city of Sialkot is very well known particularly in Europe for its surgical industry. At
the end of 2014 there are 3400 small and large units of surgical; more than 500,000 workers are
grossly engaged in manufacturing of Surgical Instruments to meet the export commitments in the
International Market. There are 2 main types of the surgical instruments single use instrument
and reusable instruments. Pakistan produces 80% of single use instrument and 20% of reusable
instrument.

Vision Statement:
To become a recognized leader of surgical industry in Pakistan by providing large range of
product.

Mission Statement:
To provide quality surgical instrument to our customers at competitive price by utilizing
innovative technologies and select and retain the professional workers.

Strategic Objectives:

To continue to be providing the quality products to the valuable customers

To select and retain the professional workers for the organization
To project an outstanding corporate image
To satisfy the customer through extra ordinary service

SWOT analysis
Opportunities:

Positive GDP per capita shows purchasing power of people increase.

Low inflation rate decrease the prices and increase the value of money.

Increasing Growth rate of population would increase the number of consumers.

Ceramic Fairs organized in Pakistan to attract foreign buyers.

Capture new range of products.

Threats:
People perception about pollution (surgical industry is not environmental friendly and
People are more caring about the environment now).
Increase cost of raw material.
Instability of government and energy crises in Pakistan(surgical instrument of Pakistan is
one of the best in the world but because of the energy issue many of the foreigner order
are not fulfilled in proper time that break the trust of the customer).
Very high competition (The existing competitors have high reputation and have low
price).
6

 Upcoming Increased competition at international level.

Government Spend less on R&D

External Factor Evaluation Matrix (EFE)

External Strategic Factors

Weight

Rating

Weighted

Opportunities
Positive GDP per capita shows purchasing power of

0.15

0.15

0.15

0.15

0.10

0.10

0.10

0.40

0.10

0.30

0.05

0.10

0.10

0.40

0.10

0.40

0.10

0.30

0.05
1.00

0.15
2.45

people increase.
Low inflation rate decrease the prices and increase the
value of money.

Increasing Growth rate of population would increase

the number of consumers.

Surgical organized in Pakistan to attract foreign

buyers.
Capture new range of products

Threats
Increase cost of raw material
Instability of government and energy crises in Pakistan
Very high competition
Less Government Expenditure on R&D
Unemployment levels shows increasing trend
Total Score

Pest analysis
Political-Legal
Political instability

Political instability is big threat for our business and Pakistan is very unstable politically and has
a lot of problem of violence that's why reputation in the global market is very bad for Pakistan.
According to World Bank data for Political Stability Index for Pakistan from 1996 to 2013 is
below in the table. The average value for Pakistan during that period was -2.04 points with a
minimum of -2.81 points in 2011 and a maximum of -1.14 points in 2000.
Country
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan
Pakistan

Year
1996
1998
2000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Political stability index

-1.21
-1.18
-1.14
-1.70
-1.58
-1.56
-1.76
-2.04
-2.43
-2.57
-2.63
-2.67
-2.81
-2.69
-2.59

-2.81 are weak and -1.14 is strong value for the index and above table shows that Pakistan has
worse condition in political stability and absence of violence.
Antitrust regulations

Antitrust regulations are designed to promote economic competition and protect the individual
from the resulting economic harm. Without competition, monopoly power may result. Monopoly
power is the power to reduce output and increase prices. Thats why government develops
Competition Commission of Pakistan to increase the competition. These antitrust regulations are
not threat for surgical industry because these regulations are helpful for new entrant in this
industry competition is already very much.
8

Laws on hiring and promotion

According to Pakistans Constitution act article (11.3) No child below the age of fourteen years
shall be engaged in any factory or mine or any other hazardous employment in the surgical
industry there are many child labor is working that law is threat for the industry.
In Pakistan the hiring and promotion of employees can be followed according to the public
service system which says that shall be recruited through advertisement and the advertisement
should be clearly stated job specification, salary and designation and on the other hand same
process would be followed in promotion but in promotion the process would be inside the
organization. This could be huge threat for our business because following these processes in
hiring and promotion increasing a lot of cost.
Tax laws

According to SRO 565 and 567 under which currently manufacturers and commercial importers
are allowed to import raw materials at concessionary rates. Surgical goods are also imported at
concessionary rates under the SRO 567. Reduction in custom duty is a opportunity for the
surgical industry.
Economical:
Interest rate:

According to State Bank of Pakistan interest rate is 8.5% in 2015 As compared to previous years
interest rate that was 9.5% which shows a positive sign in term of economy. It would be a great
opportunity for new investors who want to invest their money in surgical industry.
Unemployment levels:

According to the recent statistics, approximately 5.10 percent of labor force is unemployed in
Pakistan (World Bank Survey) and it shows increasing trend. It will be consider as a threat for
our business because due to high unemployment people consumption and purchasing power is
decreasing.

Socio cultural

Growth rate of population:

According to the recent statistics of World Bank annual growth rate in Pakistan population is
almost constant in last few years that is 1.7% in 2013. It is indicated that the population of
Pakistan has been increasing and this dramatically increases in population providing an
opportunity to our business because increase in population can increase in consumer
consumption and increase our sales.
Life style change:

Below graph shows that Pakistan has low life expectancy than other European countries, USA,
Japan and Australian. Pakistan has average age of its citizens around 60 years and People are
becoming more aware and health conscious. So low life expectancies can have cause as a threat
for our business.
Career expectations:

Government of Punjab has Established a Technical Education and Vocational Training Authority
(TEVTA) to train the workers in surgical industry and there are lot of banks and other institutions
who provide different kinds of training development and career development programs related to
meet the expectations of people related to their career. These are the opportunity for our business
expectations high then the performance should be high.

Technological
Total government spending for R&D

R&D covers basic research, applied research, and experimental development. Germany, USA
and other European countries are the big market for the surgical and in the study of World Bank
we can see that they spent almost 3% of the GDP on the research and development while on the
other hand Pakistan only spend 0.5% of the GDP. That is threat for our business.
Focus of technological efforts:

In Pakistan no step was taken for surgical sector development whereas other countries of the
world, through research have increased significantly its production capabilities. In our country
mostly people used traditional method for production. So in that case poor technological efforts
consider threat.

10

Productivity improvements through automation:

In surgical sector a lot of automated systems is installed which are increasing productivity and
minimize the input cost. Automated machine/system usage can be an opportunity for sector and
our business.

PEST Impact Matrix

Name of change
Political Change
Political
instability

Impact of change

Opportun
ity

Threat

response

Political Stability is

Bad

very low

reputation
in global
market

Antitrust

Increase competition

Helpful for

regulations

and reduce

new entrant

monopoly\

Laws on hiring

Clarify the job

import raw

and promotion

description

materials at
concessionar

Tax laws

Reduction in custom

y rates

Economic Change

Interest rate

Inflation rates

Decrease in Interest

Increase the

rate

net profit

Decrease in Inflation

Low prices

rate

and value of
money is
increasing

Unemployment

High unemployment

levels

level

11

increasing a
lot of cost

duty

Strategic

Social Change
Growth rate of

Increasing

population

Increase in
number of
consumer

Life style change low life expectancies

Career

Trained worker

Threat
More skilled
worker

expectations

provide
benefit to the
firm

Technological Change

Total
government
spending for

Low spending on

Have less

R&D

Knowledge
of the

R&D

Focus of
technological
efforts

12

market

traditional method

Low

for production

production

Productivity

Increasing

Increase

improvements

Operating

through

Cost but

automation

provides
efficiency of
work

PORTERS FIVE FORCES MODEL

Bargaining power of supplier (Low)

13

The bargaining power of supplier is low in the surgical industry because there are large numbers
of supplier in the industry and most of the big companies prefer to outsource their raw material
rather than they produce by them self because they can get it on low price.

Bargaining power of buyers (High)

The bargaining power of buyers is high in the surgical industry because of

Cost of switching to other brand is very low

price competition in market
number of manufacturer is very high

Threat of new entrant (Moderate)

In surgical industry threat of new entrant is moderate because in market to start business you
need high capital because machinery is expensive but also there are no barriers to enter the
surgical industry. Some other reasons for moderate threat are

buyers demand is growing rapidly

There is already high competition
industry members generating high profits

Threat of substitute (Low)

The competitive forces of substitutes product is low because surgical industry provide the
instrument that are best of its kind and there are not best substitute for surgical instrument exist
in the market.

Industry Rivalry (High)

Surgical industry is very competitive because there are lot of competitor exit within the country
and even outside the country. The main things that cause the rivalry are

14

Price war in the competitors

Customer has low cost in switching to the other manufacturers which is indication of

the strong rivalry

Pakistan surgical industry is not much a innovative but competitors are very strongly

go for innovation by developing different products lines and segments

Technology improvement is so high, competitors has their own R&D departments,
heavy investments on the R&D by the Governments

15

CPM Matrix

16

Ittehad

Orthotech

surgical

enterprises

Bonex

Positive GDP per capita shows

purchasing power of people increase
O2
Low inflation rate decrease the

Weighted Score

Rating

Weighted Score

Rating

Weighted Score

Rating

Weight

Key Strategic Factors

O1

0.15

0.15

0.60

0.60

prices and increase the value of money. 0.10

0.10

0.30

0.40

0.10

0.40

0.40

0.40

0.10

0.40

0.30

0.20

0.10

0.30

0.30

0.20

0.10

0.30

0.30

0.40

0.10

0.40

0.30

0.20

0.05

0.15

0.15

0.10

0.10

0.10

0.40

0.30

0.10

0.30

0.40

0.30

O4

Surgical organized in Pakistan

to attract foreign buyers

T3

Very high competition

T4
Less Government
Expenditure on R&D
S2

skilled labor force

S3
Stable and strong
relationship with our customers
W1 reward and benefits
mechanisms are not effective
W2
Lack of international
market awareness
W4

Insufficient Quality Control

Total Score

17

1.00

2.60

3.45

3.10

AInternal assessment of Itehad surgical company

Culture
Elements of culture that discussed in itehad surgical company.
Rites
Every organization has their own culture and itehad surgical instrument also have a some rites,
ritual and cultural practices. Namaz prayers practices perform in Itehad surgical instrument. The
facility of mosque room available for worker and other employee to perform their religious
activities. But they have not in the proper form of environment to performing these activities.
Ceremonial
Ceremonial is like a several rites connected together in any organization. Itehad surgical has no
ceremonial activities to perform main reason behind that its a local base organization and they
cant focus on any ceremonial activities.
Myth
Ittehad surgical has no myth and has no case study methodology concept applied in the
surgical.
Saga and Legend
There is no proper saga and legend of surgical instrument but they have narrative their
CEO Muhammad Adeel as a hero and legend of the Ittehad organization.
Hero
The main hero in the Ittehad narrates to the CEO Mr. Adeel and they have no any hero that they
mention.
Conflict
During the interview of different management we examine that some of the conflict come when
the G.M tell us we are participated all the management in the decision making process. But when
the interview to middle management one supervisor tell us that all decision make through
centralized decision making system.

18

Dimension
Strong work ethic
High ethical belief clear code of conduct practices
Formal dress
Informal dresses
Socialize together outside of work
Do not question supervisor decision
Be health conscious wellness program
Have numerous meeting
Participated management style
Allow substantial working from home
Preserve natural environment
Aspects of Itehad Surgical instruments

Low

average

high

Management functions
There are four major functions of management of the ittehad surgical Company which are as follow:

Planning
Organizing
Leading
Controlling

(1)Planning
The ittehad surgical Company consists of just a three layers of flat hierarchy. Due to this the top level
management has the duty of setting the goals and objectives of the company. Planning is also done by the
upper level managers.
(a)Strategic Goals
In most of the companies the strategic goals are made for long term but ittehad surgical Companys goals
are set for only three years, they change their strategies after every three years. The goals are set by the
Managing Directors of the company after getting the clearance from the head quarters. Every year in the
annual meeting they have a review of their strategy to make sure they are moving with the changing
environment in the market.
The following are the strategic goals of ittehad surgical Company:

19

To continue to be an organization providing the quality products to the valuable customers.

To select and retain the professional people for the organization.
To project an outstanding corporate image.
To satisfy the customer through extra ordinary service and an excellent service

(b)Tactic Goals
Tactic goals are set at the end of the year at annual basis. The top level management decides these goals
with the consultation of the lower level employees. The following are the tactic goals of the company:
To increase the revenues by 20% as compared to last year.
To increase the total retail customers by around 10%
To increase the market share by 5%

(2)Organizing
Organizing is the second management function. The following steps are taken by the ittehad surgical
Company in organizing their goals and objectives:

Departmentalization
Work Specialization
Delegation and Accountability
Resource Allocation
Organizing the Human Resources

All the steps are discussed below in detail:

(a)Departmentalization
On the basis of functional approach the ittehad surgical Company is divided into different departments.
Grouping of employees is done on the basis of their common skills and work activities. Such kind of
approach helps the company in solving their problems and it also make the less the need of training the
employees specially. The general manger is head of all the departments all the department have to report
to the general manager in the ittehad surgical Company. There are five major departments in the company
which are as follow:

(1)

Production Department
Industrial Relations Department
Sales and Marketing Department
Human Capital Department
Finance Department
Production Department: This department looks around all the production of the company. All

plants in the country are in under its control.

(2) Industrial Relation Department: This department deals with the problems of the employees.
The department listen the problems of the employees and send them to the high authorities for
settling them up and stop them from becoming a hurdle in the work progress of the company.

20

(3) Sales and Marketing department:

This department makes sure that the product is easily available in the market for the customers to
buy and deals with the issues of advertisement, promotion, and distribution of the product.
(4) Human Capital Department:
This department takes care of the efficient workers of the company, they
select some efficient workers of in the company recommend their names for promotion in job so
that the workers remain happy and dont leave the company. Management level employees are
dealt by the department.
(5) Finance Department:
The department is concerned with cost and price of the products produced by the company. It
also tackles with import related issues of the company. Finance department is assisted by the sales
and marketing department in making invoices and payroll entries.

(3)Leading
The third management function is leading. The following major steps are taken by the ittehad surgical
Company in the leading function:
Motivation
Communication
Corporate Culture
(1)Motivation
Ittehad surgical Company gives high attention to the motivation of the employees.
Promotions of hardworking employees are a part of the companys policy. Promotions of employees are
done on the performance basis which is a great motivation for the employee that higher his performance
there is more chance of his promotion.
Beside from promotion strategy the ittehad surgical Company also uses the
compensation strategy to motivate the employee; ittehad surgical is paying industrial average in
compensation. Not only this different campaigns and competitions between the employees itself are also
used to motivate the employees.
Managers play a very important role in the motivation of the employees in
ittehad surgical Company. They help them in all their problems either they are personnel or professional.
They give them feedback on their performance which makes the employee feel good. Working
environment and a challenging milestone are a major factor in employee motivation in the company.

21

(2)Communication
There is an open environment in the ittehad surgical Company which allows the employees to
communicate with each other and it allows the information to flow inside the company and discourages
the barriers between members to share information. Before making the decisions the top level managers
discuss it with the middle level managers and before decision making it is shared till the end of the
hierarchy.
(3)Corporate Culture
The top management of the ittehad surgical tries to follow the prescribed culture of
the organization. ittehad surgical has formal and documented values that are communicated to all the
employees. The top level manager acts as role models to make sure that the rules and regulations are been
applied in the company and closely administrator review their employees behavior.

(4)Controlling
The last and the most crucial function of management are Controlling. In this function
the company evaluates that either they have achieved the goals which they had set before. If the answer is
yes then the employees and managers are rewarded with bonuses and other ways and vice versa. In the
following well come to know that how the Coca-Cola Company performs its controlling function?
(1)Sales Persons Reporting System
Sales person had to report to the market developer area every day
about his activities. He give him record of the per day sales and he can get any kind of assistance by the
area market developer anytime on any matter.
Attendance of the sales person is taken with the punch card system, with the help of which the entry and
exit time of the sales person is recorded.
(2)Sales Person Evaluating System
Evaluation of all the sales person is done on quarterly basis. Evaluation
helps in the promotion of the people to higher levels in the organization. The evaluation is a great
motivator for the sales person because due to this he works hard to get promotion or at least the monetary
reward. Monetary rewards are not only given to the best sales person, they are also given to the best
market developer and the best sales manager of the year.
Performance development plan is kept as base to evaluate the performance of the employee. The
measurement of performance is done on the basis of achievement of targets which were set and

22

communicated at the start of the year in front of each sales manager, each quarter to market developer and
monthly to ever salesperson.

Functions check list

Marketing audit checklist:
Is the organization positioned well among competitors?
Yes the organization as well positioned among competitors. On the basis of product quality we
positioned well among competitors, we provided high quality products. We have also strong core
values on the basis of those values we positioned well among competitors.
Are the present channels of distribution reliable and cost effective?
Yes the present channel is reliable and cost effective. After the production medicine is given to
distributor for delivery of product and distributer is responsible for the supply of medicine.
Does the firm conduct market research?
Yes, ittehad surgical conducts market research, after every four month firm conduct market
research in order to identify market need and check availability of products.
Are product quality and customer service good?
The main focus of the company is to produced and provided high quality products. They never
compromise on quality of medicine and always provided high quality products.
Are the firm product and service priced appropriately?
Their priced are fixed by government drug regulatory authority, companies cannot increase
prices.
Does the firm have an effective promotion, advertising and publicity strategy?
No, firm did not use any type of advertising and promotion strategy.
Does the firm have R&D facilities?
Yes, firm did not have any R&D facility.

Production
Are supplier of raw material and parts are reliable and reasonable?
23

ittehad surgical import raw material and parts from India and china, and Pakistan had strong
relationship with these countries.
Are machinery are in good condition?
In surgical industry it is very necessary to maintain the conditions of machinery, all machinery
present in ittehad surgical are in good condition and check on monthly basis.
Are inventory control policies are effective?
There are no such policies for inventory control because production of medicine is done through
batch process
Are quality control policies are effective?
Yes quality control policies are effective in ittehad surgical.

MIS

An MIS provides managers with information and support for effective decision
making, and provides feedback on daily operations.

A manufacturing MIS can help managers monitor a manufacturing process to

maximize the value to processes within an organization.

Information is provided to managers through various summary reports that are

usually generated through accumulation of transaction processing data.

Each MIS is an integrated collection of subsystems, which are typically organized

along functional lines within an organization.

Thus, a financial MIS includes subsystems that address financial reporting, profit
and loss analysis, cost analysis, and the use and management of funds.

HR
The ittehad surgical HR department provides associates with the opportunities to develop knowledge and
skills that lead to more effective job performance. The developmental process is a joint responsibility
between managers and associates. This process includes determining development needs, agreeing on the
development methods, and coaching. Methods of development may include on-the-job experiences,
specific training programs, or other developmental approaches. Development, coaching, and feedback are
extensions of the performance appraisal process, and prepare associates for current and future business
needs.
To enhance the performance of individuals and departments to meet business needs, a combination of
internal and external resources may be utilized.

24

Value Chain Analysis

Manufacturing Standards
Surgical industry is the sector where quality is major issue of concern. Recently its
importance has increased manifolds given the increasing global competition and new regulations being
enforced by the developed countries. These regulations require the exporters of the developing countries
to introduce systems focusing on the improvement of management, labor, technology, and all the other
fields which in any way affect the firm. The surgical instrument standards must be in conformance with
WTO standards. Over 300 Companies have ISO-9002 Certification and about 250 have Certification of
Good Manufacturing Practices.

Manufacturing process
In order to develop detailed understanding of the issues and problems
faced by a particular industry, it is of prime importance 11 that an in depth analysis of the value
chain is carried out. During the process of production, value is being added at each stage of the
production, from the first stage of raw material to the final stage of finished product, a product
undergoes a series of processes until it attains its final shape

Die making

Raw
material
shearing

Forging

Heat
treatment

Initial
Assemblin
g & Filing

Machining

Electro
polishing

Finishing
and final
Assemblin

Testing &
cleaning

Internal Factor Evaluation Matrix (IFE)

25

Annealing

Trimming

Labeling &
packaging

Internal Strategic Factors

Weight

Rating

Weighted
Score

Strength

Good conditions of offices, equipment and

machinery
skilled labour force
Stable and strong relationship with our

customers
Low production cost
Continuous adoption of new technology

0.10

0.40

0.15

0.45

0.10

0.40

0.10

0.40

0.05

0.05

0.10

0.30

0.10

0.10

0.10

0.10

0.15

0.45

0.05

0.15

Weakness

reward and benefits mechanisms are not

effective
Lack of international market awareness
doesn't have R&D facilities
Insufficient Quality Control
Lack of management system in the company

Total Score

Industry and competitive analysis

26

1.00

2.80

Question 1: What are the Industrys Dominant Economic Traits?

Export of surgical instrument of Pakistan
According to SIMAP Pakistan's last five years exports of surgical instrument are given below. By
seeing these number we can clearly see that Pakistan's export of surgical instrument show a
significant increase every next year which is a good sign for the industry.
Year
2013-2014
2012-2013
2011-2012
2010-2011
2009-2010

Value (Millions of US Dollar)

335.000
303.094
297.345
242.000
217.000

Profile of industry
size of industry
Employment
Single use Instrument
reusable instrument

3400 unit
500,000
80%
20%

Export of surgical to different countries in 2013-2014

Pakistan's surgical instruments are one of the best in the world and these are some of the best
customers countries of Pakistan. According to UN Com trade data USA, UK and Germany are
the main market for our surgical goods because major portion of our surgical good goes to these
markets. Below table show some other countries that have sufficient share in our export of
surgical goods.
Country
USA
Germany
United Kingdom
France
Brazil
Italy
Japan
Australia
Belgium
Mexico
27

% of Share
24.27
13.41
10.46
4.24
2.51
2.04
1.92
1.79
1.46
1.17

United Arab Emirates

Rest of the world

0.89
35.84

World Exports of Surgical Instruments

These statistics from UN Com trade source show that there was export of 105 billion dollar
worldwide in 2013 and also show that USA is the main exporter of the surgical with having 24%
share in the world. Below table show some of the major exporter share in the market. Pakistan
has a 0.32% share of export in surgical goods.
Value in Thousand US $
Country
World

2011
95,439,644

% Share

2012
98,847,001

% Share

2013
104,688,00

USA
Germany
Netherlan

23,557,960
12,689,824
8,143,874

24.68
13.30
8.53

24,567,413
12,843,506
8,235,730

24.85
12.99
8.33

0
25,218,300
13,831,380
8,107,183

d
Belgium
Japan
Ireland
France
UK
Pakistan

5,142,831
4,378,244
3,793,229
3,199,088
2,551,880
297,345

5.39
4.59
3.97
3.35
2.67
0.31

5,341,328
4,466,347
3,786,738
3,062,818
2,375,117
303,094

5.40
4.52
3.83
3.10
2.40
0.31

6,303,175
4,381,525
3,990,840
3,322,351
2,512,546
335,000

% Share

24.09
13.21
7.74
6.02
4.19
3.81
3.17
2.40
0.32

Top ten buyers of surgical instruments

According to the UN Com trade USA is not only the biggest exporter but also the biggest
importer of the surgical goods. This table shows the last 3 years top 10 importer countries who
import the surgical good from other countries and in all 3 year USA is on the top of the list.

Country
USA
Germany
Netherlands
Belgium
Japan
China
France
28

2013
Trade Value
18,066,015
8,597,619
6,185,813
5,954,380
5,873,167
5,555,355
4,531,329

Country
USA
Germany
Japan
Netherlands
Belgium
China
France

2012
Trade Value
17,173,916
7,871,892
6,360,737
5,967,165
4,987,579
4,859,590
4,202,668

Country
USA
Germany
Netherlands
Japan
Belgium
France
China

2011
Trade Value
16,615,557
7,871,709
5,913,339
5,644,193
4,969,901
4,284,362
4,026,365

United
Kingdom
Italy
Canada

3,641,115

United

3,412,652

United

3,293,629

3,043,778

Kingdom
Russian

2,973,145

Kingdom
Italy

3,172,350

2,644,927

Federation
Italy

2,849,655

Canada

2,514,495

(Page no.13 in phase 1) already done this question

Question 2: What Is Competition Like and How Strong Are the
Competitive Forces?

29

PORTERS FIVE FORCES MODEL

Bargaining power of supplier (Low)

The bargaining power of supplier is low in the surgical industry because there are large numbers
of supplier in the industry and most of the big companies prefer to outsource their raw material
rather than they produce by them self because they can get it on low price.

Bargaining power of buyers (High)

The bargaining power of buyers is high in the surgical industry because of

Cost of switching to other brand is very low

price competition in market
number of manufacturer is very high

Threat of new entrant (Moderate)

In surgical industry threat of new entrant is moderate because in market to start business you
need high capital because machinery is expensive but also there are no barriers to enter the
surgical industry. Some other reasons for moderate threat are

30

buyers demand is growing rapidly

There is already high competition
industry members generating high profits

Threat of substitute (Low)

The competitive forces of substitutes product is low because surgical industry provide the
instrument that are best of its kind and there are not best substitute for surgical instrument exist
in the market.

Industry Rivalry (High)

Surgical industry is very competitive because there are lot of competitor exit within the country
and even outside the country. The main things that cause the rivalry are

Price war in the competitors

Customer has low cost in switching to the other manufacturers which is indication of

the strong rivalry

Pakistan surgical industry is not much a innovative but competitors are very strongly

go for innovation by developing different products lines and segments

Technology improvement is so high, competitors has their own R&D departments,
heavy investments on the R&D by the Governments

Question 3: What Forces Are at Work to Change Industry Conditions?

The driving forces in an industry are the major underlying causes of changing industry and
competitive conditions. They have the biggest influence on how the industry condition will be
altered. Major driving forces in surgical industry are given below
Increased globalization
31

Competition begins to shift from regional & national level to an international level. Industry
members begin seeking out customers in foreign market and Production activities begin to
migrate to countries where costs are lowest. In surgical industry global competition really starts
because of some major companies are working globally.
Use of the product
Use of the surgical instrument is increasing day by day especially in medical sector and there is a
trend of single use of the product has been increasing especially in Europe. There are 2 main
types of the surgical instruments single use instrument and reusable instrument. Pakistan
produces 80% of single use instrument and 20% of reusable instrument.
Advance in material & technology
Advances in the material technology can dramatically alter an industrys condition. Because of
these advancement companies are providing better product on low cost. In other countries
government spend a sufficient portion of the budget on the R&D and companies also spend a lot
on R&D that's why they capture big portion of the market.
Entry of major firm
Pakistan is one of the biggest surgical providers in the surgical industry. In Pakistan competition
is increasing every other day because of the new entrant in the industry. Labor cost is very low
that's why foreigner also prefers to enter in Pakistan industry.

Question 4: Which Companies are in Strongest / Weakest Positions?

Strategic group mapping is a valuable tool for understanding the similarities, differences,
strengths, and weaknesses inherent in the market positions of rival companies. Rivals in the same
strategic groups are close competitors, whereas companies in distant strategic groups usually
pose little or no immediate threat.
32

Strategic group mapping

Competitive characteristics that differentiate surgical companies are

product line
price
High
Bonex

Orthotech
enterprises
Price/quality
Ittehad
co.

Low
Low

product line

high

The above is the graph of the group matrix of the Surgical Instruments manufacturers. On X axis
we take the product line while on the Y axis we take the price from low to high. Our company
Ijaz and co. has low share and less number of products but its competitors like Hilbro and Dr.
Frigz international offer a lot of types of instruments. There are a lot more competitors like
Hilbro and Dr. Frigz companies.

Question 5: What Strategic Moves Are Rivals Likely to Make Next?

This analytical step involves identifying competitor's strategies, evaluating their competitive
options and predicting their next moves. Some of the main strategies that our competitors are
likely to make are these

33

Product development strategy

Businesses are continuously making critical decisions about their product range. Product
decisions will include whether to develop new products and how to manage existing products.
Some competitors want to strengthen their number of product in order to capture new customers
from market.
Globalization
Technology is continually changing business, and these constant changes have been making it
more feasible and profitable for businesses to expand their operations globally. Now, competitors
taking advantage of the large revenue opportunities made possible by participating in global
market. And some of them want to make an alliance or partnership with a foreign company in
order to enter a foreign market. Partnering with a foreign company can provide the expertise,
technology, capital or market access that you might not be able to afford on your own.
Customized product development
After the standard product development, product is now send for the customized development
where it is developed for various advance and customized features of the product.
Develop Brand
There are a lot of companies that provide the material to some well known firm but they don't
have their own brands. That's why some suppliers of key components want to build their own
position by developing their own identity through developing their brand and increase their
market share.

R&D strategy
R&D is key to respond to the uncertain business environments and an increasingly competitive
market place. As new technology is being constantly introduce to the market some of the
34

competitors want to spend a good portion of their investment to the R&D to understand
customer's needs and to know what actually good for the company.
Innovation
An effective innovation strategy of a company depends more on how much it spends on R&D
because identifying customer's needs and then being the first to market with a product that
addresses those needs is the key to success.

Question 6: What are the Key Factors for Competitive Success?

An industry's key success factors (KSFs) are the particular attributes that spell the difference
between being a strong competitor and a weak competitor. Key success factors are so important
to competitive success that all firms in the industry must pay close attention to them. Our
industry's some of the key success factors are given below.
Low cost production
Cost of production can be determined by the sum of the cost of the resources that went into
making it. The cost can comprise on the cost of labour, capital and land. In Pakistan labour cost
is very low as compare to many developed countries. That's why even in surgical industry
Pakistan is one of those countries who have benefit of low cost of production that help in
competitive success.
High labour productivity
Labour productivity is concerned with the amount of output that is obtained from each
employee. It is a key measure of business efficiency, high labour Productivity reduce the cost
and increase the profits. In Pakistan we have very skilled labour in the surgical sector and
productivity is very high because we can produce more at minimal cost.

Quality
One of the cornerstones of business success is offering a high-quality product. If you want to
build a good reputation for your business you have to provide the good quality at reasonable
35

price that will make your customers loyal to you. Our biggest customers are foreigner and they
focus a lot on the quality of the product. Thats why quality is one of the key success factors for
surgical industry.
Strong relation with customer
Customer relations have become such an important success factor in modern business because
the purpose of a business is to get and keep customers. The key to successful customer relations
is to give them what they need, not just what you want to sell. The stronger the relationships with
your customers, the greater will be their trust and loyalty in your business and customer keeps
buying your product and recommending it to others.
Pricing strategy
We realize that business success cannot be defined by one particular aspect of a business but
pricing is one of other key success factor for business. Developing the right pricing strategy for
each market is one of the critical factors for business to successfully expand. A business can use
a variety of pricing strategies when selling a product. The Price can be set to maximize
profitability for each unit sold. It can be used to defend an existing market from new entrants, to
increase market share within a market or to enter a new market. Businesses may benefit from
lowering or raising prices, depending on the needs and behaviours of customers. Finding the
right pricing strategy is an important element in running a successful business. We have different
markets in surgical like domestic and some foreign proper pricing strategy is key to target
different markets.
Convenient location
There are many factors to consider in choosing the location for your business but the ideal
location would be one where costs are minimised. The key to picking a profitable location is
determining the factors that will increase customer volume for your business. Sialkot is key place
for surgical industry because of availability of raw material and airport for the imports and
exports.

Question 7: Is the Industry Attractive or Unattractive and Why?

36

Surgical industry of Pakistan is a moderate industry because there are some benefits and some
threats too. Porter 5 force model also show that the surgical industry of Pakistan is a moderate
industry. Factors that make it attractive are
Pakistan's export of surgical instrument show a significant increase every next year
which is a good sign for the industry
The bargaining power of supplier is low in the surgical industry because there are large
number of supplier in the industry
The competitive forces of substitutes product is low because surgical industry provide the
instrument that are best of its kind
Cost of production like labor cost is very low in Pakistan
Some of the factors that make it unattractive are

The bargaining power of buyers is high in the surgical industry because of less cost of

switching, price competition and high number of manufacturer

Surgical industry is very competitive because there are lot of competitor exit within the
country and even outside the country.

37

TWOS Matrix
Internal Factor Analysis

Strengths:

Weaknesses:
1. reward and benefits
mechanisms are not effective
2. Lack of international market
awareness
3. doesn't have R&D facilities
4. Insufficient Quality Control
5. Lack of management system
in the company
6. Less product diversity

External Factor Analysis

1. Good conditions of offices,

equipment and machinery
2. skilled labour force
3. Stable and strong
relationship with our
customers
4. Low production cost
5. Continuous adoption of new
technology have sufficient
working capital

(EFAS)
Opportunities:

(IFAS)

1. Purchasing power of people

increase.
2. Low inflation rate decrease the

prices and increase the value of

money.

Create a good brand image

as the purchasing power of
peoples increasing. (S1,O3)

Create new range of

products as we have a good
experience of 20 years.
S5,O4)

Target the foreign market by

getting the full awareness of
the foreign market.(O1, W2)
Expand the number of product
by getting information about
customer needs by developing
R&D facilities in the
company.(O4, W3)

3. Increasing Growth rate of

population
4.Capture new range of products
Threats:
1. Increasing cost of raw
material
2. Instability of government
and energy crises in
Pakistan
3. Very high competition
4. Less Government
Expenditure on R&D
5. surgical industry Impact
on environment

38

Because of the low cost of

production we can reduce
the effect of increasing cost
of raw material.(S4,T1)
By adopting new
technology we can reduce
the negative impact of
surgical industry on the
environment.(S5,T5)
By using working capital we
can develop our R&D
department.(S6,T4)

By developing our own R&D

department we can get the
market awareness.(W3,T4)
By using the diversification in
product we can reduce the
competition.(W6,T3)

Strategic Factor Analysis summary (SFAS)

Key Strategic Factors

Weight

Rating

Weighted Score

0.15

0.15

0.10

0.10

0.10

0.40

0.10

0.40

0.10

0.30

0.10

0.30

0.10

0.40

S3
Stable and strong relationship with
our customers

0.05

0.15

W1 reward and benefits mechanisms

are not effective

0.10

0.10

0.30

O1

Purchasing power of people increase.

Low inflation rate decrease the prices and

increase the value of money.
O2

O4

Capture new range of products

T3

Very high competition

T4
Less Government Expenditure on
R&D

S2

skilled labour force

W2
Lack of international market
awareness
W4

0.10

Insufficient Quality Control

Total Score

39

1.00

2.60

CPM Matrix
Ittehad &

Hilbro

Dr. Frigz

Purchasing power of people

0.15
increase
O2
Low inflation rate decrease the
prices and increase the value of money. 0.10

Weighted Score

Rating

Weighted Score

Rating

International
Weighted Score

Weight

Key Strategic Factors

Rating

co.

O1

0.15

0.60

0.60

0.10

0.30

0.40

O4

Capture new range of products

0.10

0.40

0.40

0.40

T3

Very high competition

0.10

0.40

0.30

0.20

0.10

0.30

0.30

0.20

0.10

0.30

0.30

0.40

S3
Stable and strong
relationship with our customers

0.10

0.40

0.30

0.20

W1 reward and benefits

mechanisms are not effective

0.05

0.15

0.15

0.10

W2
Lack of international
market awareness

0.10

0.10

0.40

0.30

0.10

0.30

0.40

0.30

T4
Less Government
Expenditure on R&D
S2

W4

skilled labour force

Insufficient Quality Control

40

Total Score

1.00

2.60

3.45

3.10

The Strategic Position and Action Evaluation (SPACE)

Matrix
The axes of the SPACE Matrix represent two internal dimensions (financial position and
competitive position) and two external dimensions (stability position and industry position).
These four factors are perhaps the most important determinants of an organizations overall
strategic position.

External strategic position

Competitive Advantage (CA)

Industry strength(IS)

( -7 worst, -1 best)

( +1 worst, +7 best)

-5 Market share

+5 Growth potential

-7 Brand image

+6 Resource utilization

-3 Technological know-How

+6 Financial stability

-2 Product life cycle

+4 Consolidation

-4 Control over supplier

+5 Profit potential

-2 Customer loyalty

+5 Ease of entry

X axis

Internal strategic position

Average -3.83

Average + 5.16

Total axis X score + 1.34

Financial strength(FS)

41

Environmental strength(ES)

Y Axis

(+1 worst,+7 best)

+5 Working capital

-5 Technological changes

+6 Return on investment

-2 Competitive pressure

+3 Return on asset

-2 Inflation rates

+4 Liquidity

-4 Barriers to entry

+6 Net income

-3 Price elasticity of demand

+3 Inventory turnover

-1 Demand variability

Average +4.50
Total axis Y score + 1.67

SPACE strategy matrix

42

(-7 worst, -1 best)

Average -2.83

Score on X-axis is +1.34 and score on Y-axis is +1.67 the resultant vector is in first quadrant
which needs aggressive strategy.

The Boston Consulting Group (BCG) Matrix

Surgical industry has 95% sales in the exports and the sales of surgical instruments have been
increased 10.5% last year from US$ 303.00 Million to US$ 335.00 Million. Hilbro (Pvt) Ltd is
the market leader of the surgical industry with 20% of market share. And Ittehad and company
has market share less than 1% but it's not clear so its relevant market share also less than 5%.
Industry sales growth is rapid but Ittehad and company has less market share that's why it lies in
1st quadrant.

43

The Internal-External (IE) Matrix

The IE Matrix is based on two key dimensions, the IFE total weighted scores on the x-axis and
the EFE total weighted scores on the y-axis. The IFE total weighted scores is 2.80 and the EFE
total weighted scores is 2.45.

44

The EFE and IFE total weighted scores falls in the V cell of I/E Matrix. The company can follow
hold and maintain strategies which include Market Penetration and Product Development.

The Grand Strategy Matrix

Grand strategy matrix is popular tool for formulating alternative strategies. Grand strategy
evaluation based on two dimensions market growth and competitive position of the firm.
Surgical industry has 95% sales in the exports and The value of exports of surgical instruments

45

has been increased 10.5% last year from US$ 303.00 Million to US$ 335.00 Million. And
company also has strong competitive position. That's why Ijaz and Company falls in first
quadrant of Grand Strategy matrix.

Ijaz and Company falls in the first quadrant. The company can follow the strategies like Market
development, Market penetration, Product development, Forward integration, backward
integration and related diversification.

46

The Quantitative Strategic Planning Matrix (QSPM)

The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most
Appropriate or which alternative strategy should be select.

Product

Market Penetration
TAS

AS
TAS

Weight

Key Strategic Factors

AS

Development

Strength

Good conditions of

0.10

0.40

0.30

0.15

0.60

0.60

0.10

0.10

0.20

0.20

0.05

0.15

0.15

0.10

offices, equipment and

machinery

skilled labour force

Stable and strong
relationship with our

customers
Low production cost
Continuous adoption of
new technology

Weakness

reward and benefits

mechanisms are not

effective
Lack of international

0.10

market awareness
doesn't have R&D

0.10

0.40

0.30

facilities
Insufficient Quality

0.15

0.45

0.45

0.05

Control
Lack of management
system in the company

47

Total Score

1.00

Opportunities
1. Positive GDP per capita shows

0.15

0.45

0.60

purchasing power of people increase.

0.15

0.45

0.30

0.10

0.40

0.20

0.10

0.30

0.30

0.10

0.20

0.10

2. Low inflation rate decrease the

prices and increase the value of
money.
3.

Increasing

population

Growth

would

rate

increase

of
the

number of consumers.
4. Surgical organized in Pakistan to
attract foreign buyers.
5.Capture new range of products
Threats

Increase cost of raw

0.05

0.15

0.15

material
Instability of government

0.10

0.10

0.30

0.30

0.10

0.30

0.10

0.05

and energy crises in

Pakistan
Very high competition
Less Government
Expenditure on R&D

Unemployment levels shows

increasing trend
Total Score

48

1.00

4.75

4.05

Decision:
After all analysis we have selected two strategies (product development and market penetration)
in QSPM. Total attractive score of product development is much better than the market
penetration. So our final strategy to implement is product development in which we have many
dimensions but the main is develop the finish good as we are just making a raw form of surgical
instrument and sell it to other companies. By making our own finish good we can increase our
market share and take the advantage of the increasing growth of the surgical industry.

Suitability:
Suitability deals with the overall rationale of the strategy. The key point to consider is that
strategy would address the key strategic issues underlined by the organizations strategic
position.
Tools:

Ranking strategic options

Decision trees

Decision trees
In this evaluating tool we evaluate that there are different options for the company that

they can adopt and what is the best for them. As we suggest in matrices that the market
penetration, market development or product development are the alternative strategies for them.
The best suitable is only market development because they can easily adopt this strategy.

Ranking Strategic Options:

Market development strategy is suitable for Ittehad surgical because their market share is

high and they have to increase more. By adopting this strategy they are able to increase the share
worth more by adopting simple steps.

49

Acceptability:
Acceptability is concerned with the expectations of the identified stakeholders (mainly
shareholders, employees and customers) with the expected performance outcomes, which can be
return, risk and stakeholder reactions.
Tools:

Return
Culture
Risk

Return:

The first tool on which the acceptability will be judged is return that the amount invested in
this option will get how much return. As we suggested the market development, in this
strategy there is enough need of investment. They can invest in marketing campaigns or hire
new specialists. They will able to get there benefits in short term. So, on this tool it is
acceptable. According to our assumption it will pay back them in 4.5 years.

Culture:

The culture of Ittehad surgical is almost supportive. The power structure is high. The employees
can direct connect to the top management. The manager and employees relation is very
supportive therefore it is possible that this strategy will be implemented successfully and people
also easily accept it.

Risk:

In Ittehad surgical risk is very low because it has very strong market share. Therefore it is
low risk of getting no pay off. It is obvious that the market campaign or hiring of specialists
will definitely get payoff.

50

Feasibility:
Feasibility is concerned with the resources required to implement the strategy are available, can
be developed or obtained. Resources include funding, people, time and information.

cash flow analysis and forecasting

break-even analysis
resource deployment analysis

Financial Feasibility:

It is related about the financial resources of the organization that they have the resources to adopt
properly the strategy or not. The suggested strategy is market development in which they have to
do with their existing and new resources. In this strategy enough resources will be needed as
compared to alternative strategy market development. Because company has enough cash flows.

Human Resource:

The other thing which will be in mind about feasibility is HR that the employees or management
are able to run the strategy or not. As the HR is strength of Ittehad surgical, so it is possible for
Ittehad surgical to run easily this strategy. The employees can adopt it easily.

51

52