Moonum Group

Strategic Management & Business Policy
Analysis of MCC
PRESENTED TO: MR. UMER NOOR
PRESENTED BY: MOONUM, SIDRA, UMER, SAID

Introduction
With over 700 stores in 29 countries, METRO Cash &
Carry is the international leading self-service
wholesale operator with sales of around 31
billion in 2011.
In 2007, METRO Cash & Carry opened its first
wholesale store in Lahore.
Thereafter, it expanded to 5 wholesale centers in
a short span of 18 months in Pakistan.
Each wholesale center, on an average has an
investment of Rs. 2.0 billion and directly employs
over 320 persons and 150 for auxiliary services.

ORGANIZATIONAL PURPOSES
ORGANIZATIONAL
PURPOSES
A simple and efficient business concept
Defined through its customer base
Only professional customers are allowed to
purchase at METRO Cash & Carry, all of them duly
registered and provided with a customer card.
In the context of Pakistan, The concept has a little
difference that they also keep an eye on end
consumer and serves them as well.

MISSION
METRO is a Cash & Carry Wholesaler for businesses
and professionals. METRO provides quality
products and business solutions at the lowest
possible prices.
VISION
METRO will dominate the Cash & Carry wholesale
segment globally, through our unique business
formula which improves the competitiveness of
our customers all over the world.

VALUES
Innovative in all we do.
Open communication.
Our employees are our main asset.
OBJECTIVES
Acknowledged first choice Cash & Carry
Wholesaler.
To continuously focus on customer needs and
satisfaction.
Commitment to ethical and environmental
values.
Win-win partnership with our suppliers.

THE-ENVIRONMENT/MACRO-
ENVIRONMENT
The PEST framework
POLITICAL ENVIRONMENT
Low foreign investment in Pakistan due to the
Political instability.
The threat of change of Government.
Government Policies.
The uncertainty of the political conditions.
an unanticipated employee shortage, anytime,
due to insecure conditions of country.

The PEST framework
ECONOMICAL ENVIRONMENT
Per capita income of Pakistan is $3,876
Citizens purchasing power tends to be low and
they do not purchase grocery monthly for lower
middle income group.
The countrys population is growing at under 3%,
while the rate of migration to urban centers is even
higher.
The market size growth

The PEST framework
SOCIO-CULTURAL ENVIRONMENT
The self-service cash and carry concept has yet to
become established nation-wide.
This concept has been evolving in urban areas.
The trading industry is still heavily influenced by
tradition, dominated by small stores and street
markets. However, the demand for quality, high-
class products is growing.
Therefore, this socio-cultural change supports the
expansion in cash and carry stores network in
Pakistan.

The PEST framework
TECHNOLOGICAL ENVIRONMENT
The technology advancement has less impact in
this industrial sector, reason being a service
providers rather than manufacturing sector.
The up gradation of information system may has
effect.

PORTER'S FIVE FORCES MODEL
COMPETITIVE FORCES THE FIVE FORCES
FRAMEWORK
Competitive
Rivalry
Potential
Entrants
Buyers
Substitute
Suppliers
PORTER'S FIVE FORCES
MODEL
Threat of Entrants:
Low Capital requirement for foreign investors like
Wal-Mart and TESCO
High capital requirement for local entrants
Low product differentiation
Low switching cost
Low access to distribution channels

MODEL
Bargaining Power of buyers
High concentration of buyer, but low buying
volumes
Products are standard or undifferentiated Low
product differentiation.
Low switching costs
No or low threat of backward integration
Relatively price sensitive dependent on most
grocery products
Customers are highly knowledgeable about
product
Thus, the bargaining power of the buyers is high
MODEL
Bargaining Power of buyers
High concentration of buyer, but low buying
volumes
Products are standard or undifferentiated Low
product differentiation.
Low switching costs
No or low threat of backward integration
Relatively price sensitive dependent on most
grocery products
Customers are highly knowledgeable about
product
Thus, the bargaining power of the buyers is high

MODEL
Bargaining power of suppliers
The industry is an important customer of the supplier
(especially for farm producers)
The suppliers products are an important input to
the buyers business
MODEL
Threat of substitutes
The threat of substitutes tends to be high due to
existence of countless street shops, corner shops,
utility stores and giant market players like Makro,
Imtiaz Super market etc.

MODEL
RIVALRY AMONG EXISTING COMPETITORS
The intensity of competitive rivalry in the wholesale
and retail industry is high.
Competitors are of roughly equal size there is the
danger of intense competition as one competitor
attempts to gain dominance over others such as
Hyperstar, Naheed superstore, Imtaiz superstore etc.
MODEL
Pakistan has growing industry of supermarket,
wholesale and retail industry as 55 to 60% of total
market is underserved.
In a wholesale market, where products or services are
poorly differentiated, rivalry is increased because
there is little to stop customers switching between
competitors and the only way to compete is on price.
MODEL
The barrier to exit is high; Entry from this market is not as
easy as it will take too much time to windup the whole
business. However, to go for merger and acquisition is
easy. The most recent example is MCCs acquisition of
Makro.
THE DYNAMICS OF INDUSTRY
STRUCTURE - INDUSTRY LIFE
CYCLE
Industry Life Cycle
Buyers
Numbers of buyers are increasing as the middle class are now prefer
to buy monthly grocery from supermarkets instead of grocery shop at
because supermarkets are providing quality products at low price.
Produ
ct
Quality of products and customer services are increasing and being
better to capture more customers
Comp
Many entrants are coming in the industry as industry is growing
Margi
n
Margins are fairs as large number of customer are served
Profits
Highest profits are enjoying by the existing organization
COMPETITORS AND
MARKETS
Hyper market in Pakistan

Neighborhood stores in Pakistan are accounted
for 95% of retail business and have estimated
annual turnover of $3 billion.
These stores are located in all parts of the country
with an average floor area of 3,000 to 6,000
square feet.
In contrast, MCC has been introduced to Pakistan
in the past several years and has elicited a
positive customer response.
These Hyper stores make up 5% of all Pakistans
retail food stores.
Consumer behavior of
Pakistan

The average Pakistani consumer spends 42% of his
income on food.
Consumption of imported processed and ready-
to-eat food is greater in urban areas because of
higher disposable incomes and access to modern
style of food.

HYPERMARKETS, SUPERMARKETS,
SUPERSTORES, CONVENIENCE STORES
Name of
Retailer
Type of retailers Ownership No. of
outlets
Location Purchasing
Agents
Utility store
corporation
Manufacturer
/Retailers/
Distributors
Governmen
t of
Pakistan
(GOP)
5700 Nationwide Directly from
local
manufacturers
and suppliers
Canteen stores
department
Manufacturer
/Retailers
/Distributors
Pakistan
Military
103 Nationwide Directly from
local
manufacturers
and suppliers
K &Ns Manufacturer
/Retailers
/Distributors
/ Frozen and
Ready to Eat
poultry
Pakistani 100 Nationwide Own farms and
locally

Metro cash &
carry
Manufacturer/R
etailers
/Distributors
/hypermarkets
German
/Pakistani
7 Karachi/Lahor
e/Islamabad/F
aisalabad
Mainly local
manufacturers
and importer
Harold super Retailers Pakistani 6 Islamabad Distributor /local
MARKET SEGMENTS

SCO
HORECA
End Users
UNDERSTANDING WHAT CUSTOMERS VALUE
CRITICAL SUCCESS FACTORS
Trust, credibility and transparency
MCCS customers expect them to provide safe
products, supply chain traceability and compliance
with social and environmental standards.
MCC convincing not only in the marketplace of
products, but also in the marketplace of opinion.
MCC knows what This means that MCC must
precisely know what relevant stake- holder groups
expect from company.
MCC conducts regular dialogue to get to know the
diverse needs of these people and to be able to
better fulfill them.

Opportunities and Threats
Opportunities Threats
State of the art favorable
environment for shopping.
Suppliers bargaining power is quite
high. MCC is somehow under
pressure from the suppliers. For
example, Late delivery my cause
the processes to get stuck. The
customers will suffer ultimately that
may affect the companys
reputation.
Increasing Population growth
specially middle class
Foreign investors can enter easily
into the industry due to
comparatively low investment
requirements.
About 55% to 60% of the total of
already existing market is still
underserved.
Security threats due to customers
hesitate to go out.
INTERNAL CONFIGURATION
OF THE ORGANISATION
RESOURCED BASED VIEW
(RBV)
INIMITABI
LITY
First Mover
Advantage
Physical Uniqueness
Path Dependence
Casual Ambiguity
DURABILIT
Y
Exists
SUBSTITUT
ABILITY
Can be copied?
APPROPRI
ATABILITY
Who captures
the value
THE POSITIONING SCHOOL
VALUE CHAIN ANALYSIS
INBOUND LOGISTICS
MCC has GRD (Goods receiving department) for
receiving the Goods.
The department has set certain standard for goods
acceptability in terms of Quality and quantity both.
GRD department is responsible to meet and ensure
the predefined standard for commodities.
OPERATIONS
The merchandising department of MCC is
responsible for the product display and shelving
through Plano-gram.
OPERATIONS
According to Mr. Ali Ahmed (Department Manager
of MCC), Overall items are purchased as 27% by
end-users, 45% by SCO and remaining by Traders.
OUTBOUND LOGISTICS
The outbound logistics is not as such applicable in
case of MCC. As it is a supermarket not a
manufacturing organization.
However, in the distribution, we can state the
delivery solution of MCC that is being provided to its
wholesale clients for example Hardees and United
Kings. This DS is a well defined and structured system
for its valuable customers that give an added value
to its distribution process.
MARKETING AND SALES
At MCC, The sales and marketing segment is
considered the most essential and powerful tool to
attract the customers. MCC continuously keeps an
eye on its sales processes and patterns. The sales
managers have set of planned goals for the sales.
The accurate check & balance; back up plans and
structured tactics and campaigns are key point of
its robust sales.
SERVICE
Delivery solution is a part of sales department the
supplement. to the company's classic self-service
business model has been popular among customers
and instrumental in boosting the companys
turnover.
PROCUREMENT
MCC has a separate Supplier relationship
management function for procurement. The SRM
represents the supply chain management process
that provides the structure for how the relationship
with the suppliers are developed and maintained.
TECHNOLOGY DEVELOPMENT
MCC is using up to date and modern technologies
to support its whole business process.
MIS (Management Information System),
GMS (goods management system),
CRM (Customer Relationship Management)
HUMAN RESOURCE MANAGEMENT
Considering HRM a significant tool for business
development and value addition for the customers
and business both, MCC provides continuous
training to its employees that lead to the
development of the organisational processes. MCC
employees play a key role in our wholesale
operations.
FIRM INFRASTRUCTURE
MCC physical infrastructure sounds different and
unique as compare to the other key players of the
industry.
Some of the features are:
parking area
The infrastructure is strong and up to date.
The interior of the store
shelf placements
Area is wide enough
Warehouses

STRENGTHS & WEAKNESSES
Strengths Weakness
Well equipped with technology. MCCs overall concept is to serve
hypermarket customers. In Pakistan, its
strategy is quite change and vague.
They target customers from
hypermarket and supermarket both at
the same time. This strategy is making
difficult for MCC to be focused about
its customers.
Provide its wholesale customers DS
(Delivery Solution) facilitates its strong
customer relationships.
Less number of stores as compare to
other key players.
Metro in both food and non food item
has quality assurance department
which measures quality and finally
provided best quality to its customers.
Too much internal documentation is
required for approval to serve different
customers on different price levels.
STRENGTHS & WEAKNESSES
Strengths Weakness
More than 20,000 articles available at
MCC (food and non food categories)
that enlarge the customers options
and chances of purchases.
Lenient HR policies are creating internal
problems for example staff without
uniform and proper attire, Card system
is not being used properly etc
Metro post magazine is one of the best
marketing strategy of MCC
Still confusion between Makro and
metro for example, The MCC store at
Saddar Karachi is still has name
Makro even after the acquisition.
That is making customers dubious.
Multinational company that enjoys
huge experience and knowledge of
multiple cultures.
BUSINESS LEVEL-STRATEGY
They have mention in their mission statement,
METRO provides quality products and business solutions at the lowest
possible prices.
They seek to achieve the lower price than competitors whilst maintaining
similar perceived product or service benefits to those offered by
competitors

Only 40-45% of total market has been catered till 2011.
The business growth chances are quite high in long run.
Till now, Metro cash & carry has 25% of shares in supermarket industry of Pakistan.
In Pakistan, MCC aims to open 30 stores in the next 3 years for the population of
1,000,000 people. Also, company plans to invest in Karachi Stock Exchange.
STRATEGIC CHOICES
STRATEGIC PRIORITIES &
METHOD OF DEVELOPMENT
Priority 1
Review the procedure
of approval
Priority 2
Implementation of HR
policies
Priority 3
Expansion
STRATEGY OPTIONS
Review the procedure of approval

PRIORITY 1 OPTION A, METHOD 1
To short down the approval procedure time, we first
suggest developing a strategic price plan for each
product. For example,

Then put this price ranges into the Information
system via IT department.
Customer type Quantity range Product price
HORECA 200-250 carton Rs. 200 each
carton
Retail 5 Carton Rs. 250 each
carton
STRATEGY OPTIONS
Review the procedure of approval
PRIORITY 1 OPTION B, METHOD 2
For solving this issue temporary authority can be
assigned to department managers.
That will help making the price settings and situation
handling easy and fast.
Then at the end of the day (after closing) the
summary sheet and system report can be cross
checked by ALC (Admin logistic department).
STRATEGY OPTIONS
Implementation of HR policies
PRIORITY 2 OPTION C, METHOD 3
The policies should be restricted in overall
organization.
MCC need to give counseling to the employees like
why its important to be casual yet formal with the
customers.
They have to ensure the rules implementations by
rewards and penalty system.
A separate monitoring team should be made within
the organizations that continuously cross check
whether the rules are being implemented or not.
STRATEGY OPTIONS
Implementation of HR policies
PRIORITY 2 OPTION D, METHOD 4
The responsibility should be given to the
department mangers to ensure that their
departments employees come in a proper dress
code assigned by MCC.
In case any employee deny the code of conduct
will ultimately suffer in his performance appraisal
and department manager will also be answerable
for assigned task.
STRATEGY OPTIONS
Expansion

PRIORITY 3 OPTION E, METHOD 5
Go for new and suitable locations for opening new
branches.
PRIORITY 3 OPTION F, METHOD 6
Go for merger, acquisition of already existing retail
outlets.
EVALUATION & SELECTION
Priority 1
Option A,
Method 1
Priority 2
Option D,
Method 4
Priority 3
Option E,
Method 5
STRATEGIC CHOICE
CRITERIA
PRIORITY 1
Problem Identified: Review the procedure of approval
Option Chosen: Option A, Method 1

Suitability: (Why we do
this?)
Feasibility: (Can we do
this?)
Acceptability: (Should
we do this?)

The internal process is
time taking and MCC is
losing its customers that
may harm the
companys image in
long run.
We are doing this
because we want our
operations to be
efficient and effective so
that we can retain the
customers.

PRIORITY 1

this?)
this?)
we do this?)

We have enough
resources to deploy the
suggested process.
he Information system is
already available and
all we need to do is
changing the
programming.
Its highly cost effective
and feasible in long run.
PRIORITY 1

this?)
this?)
we do this?)

Yes, we should do this
because it doesnt
require huge changes in
the policies and
program.
The employees are
already familiar with the
system.
hey need only overview
of the change in
programs.
PRIORITY 2
Problem Identified: Implementation of HR policies
Option Chosen: Option D, Method 4
this?)
this?)
Acceptability: (Should we
do this?)

Employee behavior of any
organization depicts the
culture of that
organization.
Specially, for supermarket
like MCC, employees
interact with customers
directly and their behavior
has huge impact on
customers buying
behavior and
perceptions.
To sustain MCC in long
run, that behavioral
change is much needed.
PRIORITY 2
this?)
this?)
we do this?)

Yes, we can do this.
The department
managers throughout
the world are
responsible for their
subordinates.
Its nothing new if we
enforce the MCCs
department managers
for this.
The managers have to
face the reluctance but
they have to deal
anyway.
PRIORITY 2
this?)
this?)
we do this?)

because it doesnt
require huge changes in
the policies.
Its all about the
implementation of
already developed
code of conduct.
PRIORITY 3
Problem Identified: Expansion
Option Chosen: Option E, Method 5
this?)
this?)
we do this?)

The competition is
expected to be
increased in upcoming 5
years.
To stay competitive
MCC needs to expand
its chains in Pakistan.
Secondly, 55-60 % of the
total market is still
underserved, that is an
opportunity for MCC.
PRIORITY 3
this?)
this?)
we do this?)

Mr. Jeroen de Groot
Quoted, We acquire
the breakeven in only 5
years after our
operations in Pakistan
even our performance is
better than Metro of
India.
We can open 30 stores
in Pakistan in the next 3
years to serve 1 Million
population of Pakistan.
PRIORITY 3
this?)
this?)
we do this?)

because competition is
increasing day by day
and to stay competitive,
MCC needs to expand
its availability and
visibility.
STRATEGIC DIRECTIONS
FOR FUTURE
MCC plans to open 30 stores in Pakistan in the next 3 years to
serve 1 Million population of Pakistan. They will increase its
availability staying in present market and present product.

MCC has done international (outside) merger.
They came Pakistan established their limited stores.
Later on, for the purpose of expansion they merged their
business with Makro (its only direct competitor).
In future they will expand its overseas operation in Pakistan
and will open 30 more stores in next 3 years.

CONCLUSION
Queries???

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