Chapter 1. Introduction to Surya Nepal 3
1.1 Competitive Analysis: Potter’s Five Forces 4
Chapter2. Vision 6
2.1 capital structure 7
2.2 Objective 8
2.3 Marketing strategy 8
Chapter 3. VRIN Analysis 8
Chapter 4. SWOT Analysis 9
Chapter5. BCG matrix 13
Chapter 6. Strategic options 14
Chapter 6.1 Ansoff matrix 14
Chapter 6.2. Bowman’s strategy clock 16
Chapter 6.3. Generic strategy 18
Chapter 7. Evaluation 19
Chapter 8. Implementation 20
Chapter 9.Recommendation 22
Chapter 10.conclusion 23
Chapter 1. Introduction to Surya Nepal
A Report on Surya Nepal Pvt. Ltd
Formally known as Surya Tobacco Company this Surya Nepal Company was established in 1986. Surya Nepal company is a joint venture between British American tobacco having share of 2% Nepalese entrepreneurs holding share of 39% and ITC limited having share of 59%. Recently this company has given a new form to the local cigarette market. Firstly this company has started its product with two brands of cigarette Bijuli and Naulo of which Naulo was fallen later on. The brand of cigarette under it divided are Khukuri, Shikhar, Bijuli and chautari all of them has its own brand extensions. In value Surya Nepal has market share of 70%-75% at the cigarette industry in Nepal. It has 82%-85% sales a high segment and about 60% sales in low segment. This company has strongest and largest market share the strongest distribution network all FMCG company in Nepal. Around 75000 retailers are served through 6000 secondary wholesalers and 60 whole distributions (Limited, S, 2018).
Figure 1 Surya Nepal Company profile (https://image.slidesharecdn.com/bcgitc-160206124957/95/swot-and-bcg-matrix-of-itc-company-competitive-marketing-4-1024.jpg?cb=1454763044)
1.1 Competitive Analysis: Potter’s Five Forces
Competitive analysis is about gaining the advantage over our competitors. The aim of Porter’s ‘Five Forces’ framework is to identify the key factors in the industrial environment which influence the organisation’s capability to position itself in order to gain competitive advantage. Potters five forces model of competitive analysis is commonly used for developing the strategy of industry. Porter’s Five Force frameworks are:-
1. The threat of new entry,
2. The threat of substitutes,
3. The bargaining power of buyers,
4. The bargaining power of suppliers and
5. The competitive rivalry (CGMA, 2018).
Figure 2 five forces analysis (Porter)(https://image.slidesharecdn.com/sm-161216124538/95/porters-five-forces-model-4-638.jpg?cb=1485067572)
1. The threat of new entry
? The threat of entry of new firm in the cigarette industry of Nepal is very low. The firm that is operating in this market has high power of competition. The establishment cost of cigarette industry is very high whereas the rules and regulations of government is also tough and time consuming (CGMA, 2018).
2. The threat of substitutes
? The substitute products for the brands of Surya Nepal are the products like Khaini, Gutka and Chewing gum (CGMA, 2018).
3. The bargaining power of buyers,
? The bargaining power of buyer of Surya Nepal brand is medium due to the rapid growth of the competitor in the market and due to the little cost occurring to the customer of Surya Nepal for shifting to other brand (CGMA, 2018).
4. The bargaining power of suppliers
? The bargaining power of the supplier in cigarette industry is high because this company has enormous distribution network all over Nepal and demand for its brand is also very high (CGMA, 2018).
5. The competitive rivalry
? Competitors of Surya Nepal brand are very high. Some of the major competitors of the Surya Nepal in the cigarettes industry are:-
i. Janakpur Cigarette Factory
ii. Nepal Tobacco company
iii. Perfect Blends Pvt.Ltd
iv. Seti cigarette Factory
v. Gorkha Lahai Pvt. Ltd (Scribd, 2018).
Its vision is “to be an internationally bench marked multi-business corporation in Nepal, delighting domestic consumers with a proud “Made in Nepal” (Limited, S, 2018).
Mission is to create sustainable competitive advantage for the buyers by providing a superior sourcing solution.
To provide a superior smoking experience to all smokers of our brands as well as consumers of other tobacco products (Limited, S, 2018).
2.1 capital structure
The capital structure of SNPL is as follows:
Heading Amount (Rs.)
Authorized capital 65,000,000
Issued capital, subscribed & paid up 20,160,000
Capital share of the shareholders can be summarized as
Shareholders Share (%)
British American Tobacco (BAT) 2%
Nepalese entrepreneurs 39%
(Limited, S, 2018).
• For enhancing the quality of cigarettes
• For being the market leader in the cigarette of Nepal
• For expanding the business and increasing the profit (Limited, S, 2018).
2.3 Marketing strategy
Different product is used to target different category of product
There is variety in the flavor and content of nicotine level of different Surya Nepal cigarette product.
Constantly pursue newer and better processes, products, services and management practices (Image.slidesharecdn.com, 2018).
Chapter 3. VRIN Analysis
VRIN framework was established by American professor Jay Barney in 1991. By focusing on four essential qualities of VRIN framework business can achieve the competitive advantage:
? “We are always customer-focused and will always strive to surpass customer expectation in terms of value, product quality and satisfaction.”
? Generally Surya Nepal Company focuses on their responsibility towards generating economic value for the country. And they are also focusing on the demands of the customers that meet the expectations of customers (Campus, 2018).
? Surya Nepal’s Combined Community Vision and CSR Strategy are knitted everywhere and are in arrangement with the specified importance of the Government of Nepal (Famuyide, S. 2018).
? To grab the market share Surya Nepal often update the brands of its product in order to survive and attract more customer (Famuyide, S. 2018).
? This Company has many SBUs of the product which assist it to perceive its customers, (Famuyide, S. 2018).
Chapter 4. SWOT Analysis
SWOT Analysis is an implementation in which managers find the administrative strength (S), and weakness (W) and environmental opportunities (O) and threat (T). After the organization has recognized its capitals, its need to find out which of its resource are valuable and represent the weakness and strength for the organization (Limited, S, 2018).
In this field Surya Nepal is one of the oldest Company Brand Loyalty
. In Nepal most popular brands of cigarettes are being produced by this company. As it provides better quality of products to its customers and fulfills their requirement it has become more popular in the market. And because this company has become popular it has gained high market share (Limited, S, 2018).
As mentioned earlier about popularity and leadership of its product, most of the customers are loyal towards its product. Customer gets the best quality of product as demanded which has boosted its brand loyal. Many smokers those who smoke of other brands may shift to its products but it’s hardly seen that its customers shifting to other products. Habits die hard, like many of the customers had said that they are having health problems with switching brand too (Limited, S, 2018).
It is seen that generally cigarette’s price rise with time and quality. Satisfied consumers can pay higher prices to the product. Surya is however gradually changing its prices but the sales is still growing as it has the products for all the categories of people (Limited, S, 2018).
As this company is leader in the market, some of its competitors are JCF (YAK) and NCF (MARLBORO) (Limited, S, 2018).
Surya Nepal private limited constantly pursue newer and superior processes, services, products and management practices. Hence, all this will help the company to grab more market share and attract more customers (Limited, S, 2018).
Distribution will play great role on the sales of cigarette product. Sales of this product will raise more good as the distribution will play a good role. So this company must have a great distribution channel. The retailers of Surya Nepal Company receive the products from the whole sellers or the daily sales service. Though they are doing their work properly, there are creating constraints that are affecting the distributions. These can be overcome only by using wide distribution channel as well as effective daily sales services (Limited, S, 2018).
Launch of new brands
Surya has a great market share in the section of cigarette it can easily introduce new brands in the marketplace according to the changing trends (Limited, S, 2018).
New filter brands
As most of people are becoming more health conscious and as they have increasing preference of filtered cigarettes, Surya Nepal can also launch different new quality cigarettes like cigar and global varieties in the market (Limited, S, 2018).
As this company is the producer of most sellable FMCG creation in country Nepal, Surya Nepal has high chance to earn premium in the products as well as other new segments against its Brand images (Limited, S, 2018).
As this company is a combined company between Nepal and British company , Surya Nepal has huge capital capacity which can be very helpful in grabbing market opportunity (Limited, S, 2018).
Monetary and Fiscal Policy
With the change in tax slabs every year, each brand is placed under different tax slabs according to the cigarettes. So the prices of its brand can increase each and every year. This might result customers to switch into cheaper brands or even quit smoking (Limited, S, 2018).
In the market Surya Nepal is operating as the monopolistic, competing only with foreign products. But due to the liberalization and encouragement policy of the government in the private participation during the 80’s different organization started coming into the bazaar (Limited, S, 2018).
WHO is working hard in increasing awareness to consumers about health hazard associated with cigarette smoking habits. This has decreased in the level of smokers (Limited, S, 2018).
Employees’ resistance and various trade unions’ actions can impose severe threat to Surya Nepal. Like: – the employees of this company stood on hunger strike after the official shut down of garment factory of Surya Nepal (Limited, S, 2018).
Chapter5. BCG matrix
Figure 2 BCG matrix of Surya Nepal (https://image.slidesharecdn.com/surya-nepal-presentation-150326011248-conversion-gate01/95/surya-nepal-12-1024.jpg?cb=1427350448)
BCG matrix Analysis
Above figure clearly states that the brand of Surya Nepal product has relatively high market share along with high market growth rate. Hence this company is Star in the market. Similarly this company has great chance of cash cow for the next.
Chapter 6. Strategic options
Chapter 6.1 Ansoff matrix
Figure 3 Ansoff matrix (https://www.edrawsoft.com/templates/images/marketing-ansoff-matrix.png)
Surya Nepal is selling high volume of its existing product on existing market and it has high market share of 70%-75%. They are more aware of their competitors and focus more on competing with their competitor. This is the pricing strategy of Surya Nepal (Bartleby.com, 2018).
Figure 4 pricing strategy of Surya Nepal (https://image.slidesharecdn.com/surya-nepal-presentation-150326011248-conversion-gate01/95/surya-nepal-26-638.jpg?cb=1427350448)
Surya Nepal is selling its entire product to the existing market. As its product quality meets the international stander this company is planning to sell its product to the new market to gain the foreign market share (Bartleby.com, 2018).
Surya Nepal is fully engaged on creating new product. After researching Surya Nepal came to know about the changing demand of the customer and finally thought to produce new product that will be totally different with their competitor in the existing market. They are coming up with flavor in Surya cigarette (Bartleby.com, 2018)
Here Surya Nepal will launch its new product of cigarette in new market (Bartleby.com, 2018).
Chapter 6.2. Bowman’s strategy clock
Figure 5 Bowman’s strategy clock (https://www.toolshero.com/wp-content/uploads/2018/03/bowman-strategy-clock-template-toolshero.jpg).
? Bowman’s Strategic Clock is a model that explores the options for strategic positioning – i.e. how a product should be positioned to give it the most competitive position in the market.
The purpose of Bowman’s Strategic clock is to illustrate that a business will have a variety of options of how to position a product based on two dimensions – price and perceived value (tutor2u, 2018).
a. Low price and low added value
As this company is providing its product khukuri costing rupee 5/piece which provides value equal to its price. Similarly it would be more beneficial to the consumer as well as to the company if it produces and sale the next product costing lower then Khukuri and Bijuli with low value (tutor2u, 2018).
b. Low price
According to Bowman’s strategy Surya Nepal should reduce the price of its product (khukuri and Bijuli) costing lower than its competitor product ‘Sahara’. As a result this will reduce the level of profit in sales of each product but generates high profit in overall sales (tutor2u, 2018).
Although Surya Nepal Company is providing product (Surya cigarette) costing equal to its competitor on which customers are freely paying because of its brand loyalty and quality. Hence this company should introduce more flavored product in their cigarettes in future (tutor2u, 2018).
d. Risky High margin
According to Bowman’s strategy this is a high risk positioning strategy. Before price of Surya cigarette was rupee 10/ piece but later on this company by taking high risk against its competitor it increases its price to rupee 15/ piece providing equal value as before and started earning more profit. Despite this all customers not even worried to Switch to others product because of its brand loyalty and quality. Therefore this company can generate more profit in future by raising its price higher and taking the risk of increasing the price (tutor2u, 2018).
Chapter 6.3. Generic strategy
Figure 6 Generic Strategy (https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQ3eknyTvaesC5VPcmml8T6AXeGKOkYPeIo5oRs0PahtAn07R0H1w)
The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus (Anon, 2018).
Mostly tobacco is grown in Terai region of country Nepal itself as it has the weather- wet, hot and humid and topography plains, suitable for the cultivation of tobacco. Hence this company will offer best quality of product in low cost by competing its competitor (Anon, 2018).
Their product is vast different from their competitor. They provide better quality of cigarettes to the customer offering low and affordable price (Anon, 2018).
Surya Nepal focuses on getting advantage of cost over its target segments that provides benefit to the company (Anon, 2018).
Surya Nepal is focusing on differentiation towards its target segment that fulfills the objective (Anon, 2018).
Chapter 7. Evaluation
Strategies /Evaluation Strategic direction Vision Market strategy
Ansoff matrix ? ? X
Bowman’s clock X ? X
Generic strategy ? ? ?
After evaluating the Ansoff matrix, from the table above it is clearly shown that it is moving towards the strategic direction and successfully following its vision. But it is lacking its marketing strategy because government of Nepal has banned the advertisement of cigarette.
Similarly this table represents that Bowman’s clock is not following strategic direction rather it is only focusing on pricing strategy. Beside this vision of company is followed and they do not have the proper marketing strategy.
Finally talking about the third strategy known as Generic strategy, it is meeting all the criteria’s of the evaluation which can be the best strategy that Surya Nepal can choose.
Chapter 8. Implementation
The above strategy can be implemented through SAF analysis:
As Generic strategy meets all the criteria by focusing on cost leadership, differentiation, cost focus and differentiation focus. By this all Generic strategy will fulfill all the environmental aspects along with profitability that meet the needs of the company to operate more success in future. Hence this strategy is suitable for Surya Nepal in future (Oxford College of Marketing Blog, 2018).
According to SAF analysis accessibility is measuring the risk of implementing the strategy, return in terms of financial benefit and acceptable for all the stakeholders.
Surya Nepal can use Generic strategy which can be easily accessible because it has cost leadership and focuses on the cost redemption which shows that there is less risk in terms of finance of the company. If they don’t have any financial risk the stakeholders will easily accept the strategy (Oxford College of Marketing Blog, 2018).
As Surya Nepal is the highest market share holder in cigarette industry it has huge capital, machineries, workers, management which can make Generic strategy a feasible strategy in real world, (Oxford College of Marketing Blog, 2018).
By analyzing all the strategy of Surya Nepal some suggestions are been provided to the company Surya Nepal for operating more better and grab more market share in future:
i. Surya Nepal should come up with new flavor in cigarette.
ii. Surya Nepal should more focus on its vision.
iii. Surya Nepal should produce cigarette with low price then its competitor that provides added value to its customer.
iv. For earning more profit this company should not raise its price occasionally which on one side harms its customer and on other side its competitor may sale more and grab its market share. Due to this company may suffer.
v. Along with the profitability Surya Nepal should also focus on environmental aspects and on interest of its stakeholders.
Summarizing the above report, Surya Nepal is the leading cigarettes producing and offering organization in Nepal. Surya Nepal has more market share than its competitor i.e. 70%-75% of market share in the cigarette industry is occupied by Surya Nepal. The Surya Nepal is totally consumer based and produces cigarettes as indicated by the need and want of its customer. It has distinctive brands with various flavor and quality added to its product line. The Surya Nepal has picked up the competitive advantage over its rivals in view of its brands augmentation like Surya light, Shikhar lights, and many packets. It has additionally extraordinary brands for value pricing to costumers. Brands like Surya are for the higher class consumer where as Khukuri and Bijuli are for individuals those who are belonged to low class. The joint wander with ITC Ltd. India and BAT has likewise helped Surya Nepal picked up the aggressive predominance. Surya Nepal Pvt Ltd is known as extravagances item for the people of Nepal.
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