FRED R DAIVD’S STRATEGY

FORMULATING FRAMEWORK
DR.FRIGZ INTERNATIONAL

CREATED BY:
M. MOBASHAR ALI
ASIF MEHMOOD
MUZAMMAL HUSSAIN

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 DR. FRIGZ INTERNATIONAL
SURGICAL INSTRUMENT MANUFACTURER
GOHDHPUR, KULOWAL ROAD, SIALKOT.

Contents
PART A (INDUSTRY ANALYSIS)
SURGICAL INDUSTRY ....................................................................................................................................... 1
GROWTH: .................................................................................................................................................... 1
OVERVIEW OF SIALKOT SURGICAL INDUSTRY .................................................................................................. 1
RAW MATERIAL USED IN MANUFACTURING.................................................................................................... 2
IMPORTS OF SURGICAL INSTRUMENTS............................................................................................................ 3
EXPORT OF SURGICAL INSTRUMENTS .............................................................................................................. 4
PAKISTAN’S EXPORT IN 2004-05 ...................................................................................................................... 5
WORLD EXPORT OF SURGICAL INSTRUMENTS ................................................................................................. 6
COUNTRIES SHARES IN WORLD EXPORT .......................................................................................................... 7
ABRIDGED SUMMARY OF DUTY DRAWBACK (REBATE) RATES .......................................................................... 8
MAJOR CONSUMERS OF SURGICAL INSTRUMENTS .......................................................................................... 8
MAJOR MANUFACTURING UNITS .................................................................................................................... 9
PROCESS FLOW CHART OF SURGICAL INDUSTRY............................................................................................ 10
EXTERNAL ENVIRONMENT ANALYSIS ............................................................................................................. 11
PESTEL ....................................................................................................................................................... 11
POLITICAL, GOVERNMENTAL, & LEGAL FACTORS ....................................................................................... 11
SOCIAL, CULTURAL, & OTHER FACTORS ..................................................................................................... 11
TECHNOLOGICAL FACTORS ........................................................................................................................ 11
ECONOMIC FACTORS ................................................................................................................................. 11
Pest Impact Matrix ................................................................................................................................ 12
PORTER’S 5 FORCES ................................................................................................................................... 13
1. PORTER’S 5 MODEL ........................................................................................................................ 14
2. IMPACT ON PROFITABILITY ................................................................................................................ 15
3. STRATEGIES TO CONTROL PORTER’S 5 MODEL ADOPTED BY FRIGZ INTERNATIONAL .......................... 16

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 4. PORTER’S 5 FORCES ....................................................................................................................... 17
INTERNAL ENVIRONMENT ANALYSIS ............................................................................................................. 18
STRUCTURE ............................................................................................................................................... 18
PHYSICAL OUTLOOK............................................................................................................................... 18
DEPARTMENTS ...................................................................................................................................... 18
HIERARCHY OF THE FIRM ....................................................................................................................... 20
HUMAN ..................................................................................................................................................... 21
KNOWLEDGE ......................................................................................................................................... 21
SKILLS .................................................................................................................................................... 21
ABILITY .................................................................................................................................................. 21
PART B (FRED DAVID STRATEGY FORMULATING FRAMEWORK
INTRODUCTION............................................................................................................................................. 22
RESEARCH MODEL AND METHODOLOGY....................................................................................................... 22
STAGE 1:THE INPUT STAGE............................................................................................................................ 23
EFE (EXTERAL FACTORS EVALUATION) ....................................................................................................... 23
INTERNAL FACTOR EVALUATION (IFE) ........................................................................................................ 24
STRATEGIC GROUP MAPPING .................................................................................................................... 25
CPM MATRIX ............................................................................................................................................. 26
VERTICAL ANALYSIS OF CPM .................................................................................................................. 26
HORIZONTAL ANALYSIS OF CPM ............................................................................................................ 27
STAGE 2: MATCHING STAGE .......................................................................................................................... 28
BCG MATRIX .............................................................................................................................................. 28
IE MATRIX: ................................................................................................................................................ 29
SWOT MATRIX ........................................................................................................................................... 30
TWOS MATRIX ........................................................................................................................................... 31
SPACE MATRIX .......................................................................................................................................... 32
GRAND MATRIX ......................................................................................................................................... 34
STAGE 3: DECISION MAKING ......................................................................................................................... 35
QSPM ........................................................................................................................................................ 35
REFERENCES .................................................................................................................................................. 36

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 PART A
(INDUSTRY ANALYSIS)

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 SURGICAL INDUSTRY
Surgical industry of Pakistan holds a history of more than 100 years, when some British doctors got their
surgical instruments repaired from the skilled workers of Sialkot and that was the foundation of Sialkot
Surgical Industry. Surgical instrument manufacturing industry originated in the early 1940s in and around the
City Sialkot. The sector manufactures a wide range of medical, surgical and veterinary instruments exporting
more than 95%, which includes 60% of disposable and 40% of reusable surgical instruments, of its production
i.e. 100 million instruments annually. Its exports made to over 140 countries.

The surgical instrument manufacturing started in Sialkot at the turn of the 19th century, when the American
Mission Hospital in Sialkot for the first time got its scalpels and other instruments repaired from the local
artisan community of blacksmith. These craftsmen successfully replicated these imported instruments, which
were being used by the Hospitals. When Sialkot industry started exporting surgical instruments, for the
improvement of instruments British Government established the Metal Industries Development Centre
(MIDC) in 1941.

After Independence Sialkot inherited total of 17 registered surgical instruments manufacturers. In 1958
Surgical Instrument Manufacturers Association of Pakistan (SIMAP) was incorporated as representative body
of the exporters and manufacturers of surgical industry, to safeguard the interest of the Industry. Later on
many benefits to promote surgical industry had been provided to the manufacturers of surgical instruments.

GROWTH:
The exports, which were US$ 129.6 Million in 2006-07 came up to US$ 151.6 Million in 2007-2008 showing an
increase of 16.98% (by chamber of commerce Sialkot). Although exports to USA, Germany, UK, France, Italy
and UAE has been increased. The U.S.A. is top buyer of the products, over the last year and it is expected to
grow at 28% in year 2009-2010. During the period from 2000-01 to 2007-08 the surgical instrument growth
recorded by 9 per cent per annum. Currently Sialkot is producing 2,000 various surgical instruments for
worldwide exports.

OVERVIEW OF SIALKOT SURGICAL INDUSTRY

SURGICAL INDUSTRY OF PAKISTAN- SIALKOT

TOTAL NO. OF UNITS 2220

SEGMENTS UNITS
Large 20
Medium 50
Small 150
Vendor 2000
Total 2220

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RAW MATERIAL USED IN MANUFACTURING
Raw Material
1 Flat Rolled Stainless Steel Sheets and Strips (AISI 410 & 420)
2 Hot Rolled Stainless Steel Bars
3 Electroplating Polishes
4 Compositions and Salts
5 Grinding Belts
6 Emery Powder
7 Emery Grains
8 Electropolishing Chemicals
9 Trichloroethylene
10 Felt Mops
11 Satin Finishinhg Wheels
12 Granules and Flakes from Gloss Powder
13 Grinding Wheels

To meet the quality and standard set by the buyer of surgical instruments, this industry has to purchase
material from outside country in order to meet the standards set by the buyer. Raw material importing in this
industry has been increased by the last few years.

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IMPORTS OF SURGICAL INSTRUMENTS

YEARS Value (Million US $)

1998 32.5

1999 31.6

2000 32.9

2001 33.23

2002 36.37

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EXPORT OF SURGICAL INSTRUMENTS

YEAR Value(US $ in million)

2000-01 124.137

2001-02 145.04

2002-03 149.96

2003-04 132.56

2004-05 182.87

2005-06 160.07

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PAKISTAN S EXPORT IN 2004-05

COUNTRY SHARE (%)

USA 28.8%

Germany 13.7%

United King dom 9.1%

Italy 5.3%

UAE 4.7%

France 4.12%

Japan 2.2%

Rest of the World 32.1%

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WORLD EXPORT OF SURGICAL INSTRUMENTS
YEAR VALUE (In US $ Billion)

1998 22.7

1999 24.6

2000 25.5

2001 28.23

2002 30.33

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COUNTRIES SHARES IN WORLD EXPORT
COUNTRY %AGE

USA 24.71
GERMANY 12.33
NETHERLAND 7.13
MEXICO 5.89
IRELAND 5.29
UK 5.23
FRANCE 5.07
JAPAN 4.57
BELGIUM 4.07
ITALY 3.45
REST OF WORLD 22.26

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 ABRIDGED SUMMARY OF DUTY DRAWBACK (REBATE) RATES

Duty Draw Back SRO's / Rates

S/N Product / Commodity 786 839 612 930
(I)/2005 (I)/2006 (I)/2007 (I)/2007 211 (I)/2009
Dt. 6-8-05 Dt.17-8-06 Dt. 16-6-07 Dt. 11-9-07 Dt.5-3-2009
SURGICAL PRODUCTS
Annealed Surgical and Veterinary instruments of
68 Stainless Steel and non-surgical Scissors of 0.90% 1.08% 1.08% 0.75% 0.75%
stainless steel

Annealed Surgical and Veterinary instruments of

69 Carbon Steel and non-surgical Scissors of Carbon 0.96% 1.08% 1.08% 0.75% 0.75%
steel
Nickle or Chrome plated Scissors, Annealed
70 Surgical or non-surgical items, all types made of 1.24% 1.08% 1.08% 0.75% 0.75%
Cast/Pig Iron.

Annealed Surgical and Veterinary instruments all

71 1.59% 1.08% 1.08% 0.75% 0.75%
sorts made of Brass

Annealed Surgical and Veterinary instruments of

72 stainless steel all sorts made from duty 0.75% 1.08% 1.08% 0.75% 0.75%
freeImported Forging

The surgical industry of Sialkot Pakistan has urged the FBR to equalize the rate of duty drawback to 2.73%
from 0.75% on surgical and manicure to flourish this industry in the larger national interest.

MAJOR CONSUMERS OF SURGICAL INSTRUMENTS

Major customers include in order of market size are shown below:

MAJOR CUSTOMER OF SURGICAL INSTRUMENTS

Foreign Customers
Government
medical and health services
doctors and dentists
hospitals
drug companies

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 MAJOR MANUFACTURING UNITS

Insta lled Capac ity

S.NO. Name of Units (Million Nos.)

1. M /s T. S. K. Impex, Sialkot 20.0

2. M /s Dr. Frigz Surgical & Co. ( pvt) Limited 15.0

3. M /s Bashir Jamil & Brothers (Pvt ) Limited 10.0

4. M /s We Brother , Sialkot 8.0

5. M /s Hilbro Instruments ( Pvt ) Limited 6.0

6. M /s Technimen Gama (Pvt ) Limited 5.0

7. M /s Asim Surgical Revit Makers 5.0

8. M /s Tinopal Surgical (Pvt ) Limited 3.5

9. M /s A.D.Surgical ( Pvt ) Limited 2.0

10. M /s Garish Surgical ( Pvt ) Limited 2.0

11. M /s A-One Surgico 1.7

12. M /s Weldon Industries 1.5

13. M /s Medisporex ( Pvt ) Limited 1.2

14. M /s Ghulam Rasool Surgical 1.2

15. M /s Tata Services 1.1

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PROCESS FLOW CHART OF SURGICAL INDUSTRY

DIE MAKING RAW MATERIAL FORGING

SHEARING

MACHINING TRIMMING ANNEALING

INITIAL ELECTRO-
HEAT
ASSEMBLING
TREATMENT POLISHING
FILLING

LABLEING & TESTING &

FINSHING & FINAL
PACKAGING CLEANING ASSEMBLY

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EXTERNAL ENVIRONMENT ANALYSIS
PESTEL
POLITICAL, GOVERNMENTAL, & LEGAL FACTORS
1. Exporters of Pakistan face problem to get visa from the foreign embassies due to security issues.
2. Establishment of SIMA (Surgical Instruments Manufacturer Association) and launching of USAID (U.S.
Assistance to Pakistan).
3. Government imposed ban on the export of semi-finished to protect the surgical industry.
4. Exporters are also allowed to get raw material on duty-free basis in order to provide benefit to the
manufacture of surgical, but the rates of raw material were increasing apace which increased the cost of
production.
5. Government planning to establish “Raw Material Bank” in order to provide raw material to the
manufacturers on fixed rates.
6. Government issued funds approximately Rs. 250 million to establish the hospitals and provision of dental
units, machines etc, i.e. big opportunity for the firms to deal locally.
7. Establishment of Technical Education and Vocational Training Authority (TEVTA) to train the workers in
surgical industry.

SOCIAL, CULTURAL, & OTHER FACTORS

1. Foreign buyers are quality conscious, so to meet standards of the buyers, manufacturers must have
quality stainless steel. For this purpose investors were called upon it.
2. Firms in Sialkot are run by family ownership because of lack of trust on the others.
3. People become health conscious and preferred to use disposable equipment.
4. Manufacturers in surgical industry not selling their products under their brand name, they hadn’t
developed any brand but send to the other countries and then countries sell these products under their
own brand names at attractive prices.

TECHNOLOGICAL FACTORS
1. Government is going to establish Institute of Surgical Technology (IST) costing Rs. 160.459 million, to
provide surgical nursery to the surgical manufacturers.
2. IST going to provide 250 skilled and trained workers to the surgical firms in order to developed the
surgical industry.
3. Lack of skilled labor is another problem faced by the firms existing in Surgical Industry Sialkot.
4. Establishment of Dye’s manufacturer in Gujranwala is also seemed to opportunity to the Sialkot Surgical
Industry.

ECONOMIC FACTORS
1. Introduction of VAT (Value Added Tax) next fiscal year by SCCI Chairman, VAT may be done for minimum
rate of 4% to 5%, but currently no tax imposed on the imports of material by Customs.
2. The rising in the utilities cost such as electricity, telephone, gas etc. increased the cost of production.
3. The rise in the services charges of the Banks is also a drawback to the growth of surgical industry.
4. High rates on the export re-finance also added while determining the surgical industry Sialkot but it is
expected that the Government reduce rate to 3%.
5. Fluctuation in foreign exchange rates also affects the earnings of the surgical instruments exporting firms.

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 Pest Impact Matrix

Nature of Impact of Opportunities

Threats Strategic
Change Change response

Visa Getting Issues Shortage of Shorten of Export in

Political Security Issues
exports Foreign Countries
Change

Establishment of
Availability of raw
“Raw Material Fixed Rates Low cost of Material
material
Bank”

Establishment of Skill employees provide

Trained workers More skilled workers
(TEVTA) benefits to the firm

Rising utility cost Increase cost of

Economic Lower Profit Margin
production
Change

Rising bank Bank's charges Increase cost of

Lower Profit Margin
charges increasing production

Fluctuation in
lower earnings limit profits Lower Growth Rate
Exchange Rates

Chances of
Difficult to expand Lack of opportunity of
Lack of trust winding up
business skilled workers
business
Social Factors

No goodwill of
No image of the Company is restricted by
No Brand Name their own
company foreign customers
company

Establishment of Provide Surgical Helps the industry in Increased the

(IST) Nursery the business production & lower cost
Technological
Change
Through skilled workers
Skilled workers Skilled and trained Increased the
increase efficiency &
provided by (IST) workers production
effectiveness

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PORTER S 5 FORCES
BARGAINING POWER OF SUPPLIER
In surgical industry the supplier of raw material are very limited. They are not able to supply the required
material according to the manufacturers. So manufacturers have to import the raw material from the other
countries that also increase the cost of manufacturing. So in this industry Supplier has strong power because
of the following factors:
1. Suppliers are limited
2. Demand is more than supply
3. Switching costs are high because manufacturers have to contact foreign suppliers of material.
BARGAINING POWER OF THE BUYER
Hence in the above discussion we try to explain that the buyers (customers) of the surgical industry major are
foreign customers. They have freedom to buy from any manufacturer. There are many other foreign
manufacturers in the market exists. They have strong bargaining power because of the following factors:
1. Switching costs are low
2. A lot of foreign manufacturers
3. Easy availability of the products
4. Importing barriers they face by their country so they prefer their home made.
5. Other low cost suppliers
RIVALRY AMONG COMPETITORS
There are a lot of competitors that exists in both inside country and outside country. They are very active
participating in the strong competition both inside the country and outside the country. In the foreign
countries surgical industries competitors are Siemens Medical Solutions, United States Surgical Corporation,
Alcon Incorporation, Boston Scientific Corporation, etc. These factors are:
1. Price war in the competitors is very enthusiastic
2. Technology improvement is so high, competitors has their own R&D departments, heavy investments
on the R&D by the Governments
3. Sialkot surgical industry has no distribution channels, even most of them doesn’t sale under their
brand name, while rivals are strong in the market.
4. Most Sialkot manufacturers are not actively innovating the surgical products, but competitors are
very strongly go for innovation by developing different products lines and segments.
5. Competitors are also trying to put the Pakistan Surgical Industry out of race by means of imposing
trade barriers, lowering their prices, getting new technology, etc.
6. Customer has low cost in switching to the other manufacturers which is indication of the strong
rivalry.
THREAT OF NEW ENTRANTS
Surgical Industry has potential to grow according to the SCCI, but it needs Government Support to grow. No
single individual or firm can establish a successful business, because it faces following factors in the markets:
1. Huge early investments
2. May firm bear losses in the early years of the establishment
3. Difficulty to get customers out from the existing other established firms.
4. Government also imposing Value Added Tax (VAT) on surgical goods.
5. Import rebates are going low
6. It is also expected that the Government in the coming budget will not provide any relief to the
exporters.
7. Firms that were already established have expertise and learn from its practices while remaining in the
surgical industry.

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 8. Requires technical expertise typically is needed to develop proprietary knowledge necessary to
differentiate products from others in the marketplace.
So, the above mentioned factors give an indication that the Surgical Industry has weaker threat of New
Entries to the Industry.
THREAT OF SUBSTITUTES
Surgical Industry has not adopted the rapid technological change. Sialkot Surgical is only making the
instruments used in the surgical, but it doesn’t make the equipment used in the Surgical Industry. Adaptation
of the Fess Surgical equipment is a big threat to the surgical industry.

1. PORTER S 5 MODEL
Technology innovation of new products
with hybrid technology "Hybrid includes
coated stents and impregnented dressing
introduction of the equipments rather
instruments e.g. FESS (Functional
Endoscopic Sinus Surgery)
laser technology
Huge early investments
bear losses in the early years of the
establishment
Difficulty to get customers out from the
existing other established firms.
Government also imposing Value Added Tax
Threat of (VAT) on surgical goods.
new Import rebates are going low
entrants no any relief to the exporters.
Firms that were already established have
expertise and learn from its practices
Requires technical expertise typically is
needed to develop proprietary knowledge
necessary to differentiate products from
others in the marketplace.

Bargaining
Threat of Rivalry
among
power of
Substitues competitors supplier

Price war in the competitors is very enthusiastic

Technology improvement is so high,
competitors has their own R&D departments
no distribution channels, even most of them Suppliers are limited
doesn’t sale under their brand name, Demand is more than
not actively innovating the surgical products, supply
but competitors are very strongly go for Switching costs are high
innovation because manufacturers
low cost in switching to the other
Bargaining have to contact foreign
manufacturers power of suppliers of material.
Buyer
Switching costs are low
A lot of foreign
manufacturers
Easy availability of the
products
Importing barriers they
face by their country so
they prefer their home
made.
Other low cost suppliers

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2. IMPACT ON PROFITABILITY

THREAT/POWER

HIGH MODERATE LOW

Competitive Intensity

Bargaining Power of
Supplier

Bargaining Power of
Buyer

Threat of new
entrants
Threat from
substitutes

PROFITS

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3. STRATEGIES TO CONTROL PORTER S 5 MODEL ADOPTED BY
FRIGZ INTERNATIONAL

REDUCING THREAT OF REDUCING THREAT OF ENTRANTS

SUBSTITUTES Creat Brand Imange and loyalty
Enter in the equipment Threat of Formed alliances with the linked products/
manufacturing market new services
Emphasis Change or entrants Tie up with suppliers
differences in Products Try to gain minimum efficient scale for
operations

Threat of Rivalry Bargaining

Substitues
among power of
competitors supplier

REDUCING RIVALRY AMONG

COMPETITORS
Differentiate your product
from your competitors REDUCING BARGAINING
POWER OF SUPPLIER
Focus on diffierent product
segments Make partnership with the
supplier
Try to sell in your own brand
name
Bargaining Tie up with the supplier
power of yourself
Buyer
REDUCING BARGAINING POWER OF THE
BUYER
Make Joint ventures to the foreign retailers &
distributers
Make your own office in foreign countries
Increase your brand loyalty
Give more incentives to the buyers to make
yourself prefer on others by them
Cut out retailers, i.e. sell direct to customer

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4. PORTER S 5 FORCES

QUALITY

Competitive Competing on Quality Instruments

exported to the countries
Intensity
Suppliers charged high prices,
Bargaining Power
resultantly, prices charged to
of Supplier customers increased.
Bargaining Give customer high quality, & let
customer to decide. Example coded
Power of Buyer by Frigz
Firgz representative.
Threat of new Threat
Threat is
is low,
low, although
although if
if there’s
there’s
any than experience
any than experience curve
curve & &
entrants learning
learning curve
curve cover
cover this.
this.
Threat from Threat is low but making customer
loyal by providing quality so that
substitutes customer not willing to switch.

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INTERNAL ENVIRONMENT ANALYSIS
Internal environment is the combination of structure and human;

Physical Hierarchy Knowledge Ability

outlook Departments SkillSkill

STRUCTURE
PHYSICAL OUTLOOK
Dr. Frigz International manufacturing unit is situated at Sialkot Godhpur Road. The outlook of the Frigz is
attractive. People worked inside the Frigz feel comfort working there in provided clean environment, proper
rooms for discussions, place for the parking, security, etc.

DEPARTMENTS
Dr. Frigz International is currently operating 5 major departments named as Quality Assurance Department,
Production Department, Quality Control Department, HR & Supply Chain Department, and Finance &
Marketing Department.
Quality Assurance Department
Dr. Frigz’s team is highly aware of the positive correlation between project quality, and customer satisfaction.
They endeavor to deliver flawless solutions through incorporating highly competitive Quality Assurance
processes and personnel in place. The Quality Assurance department at Frigz ensures that compliance with
established requirements, standards, and procedures is consistently checked through performance
monitoring, product evaluation, audits, and testing.
PRODUCTION DEPARTMENT
All our production departments are well-equipped with the latest, machinery imported from Germany and
England, and well-staffed with the expert technicians trained from our strategic joint venture network. It
includes the following departments:

• Raw Material Department

At Dr. Frigz, we believe that quality can only be achieved through quality raw material. As such, the best
quality Raw-materials (S.S. Strips, Round Bars, S.S.Coils and S.S.Tubes) are imported directly from Japan &
France and are subjected to composition and hardness testing through our in-house Laboratory in order
to ensure that only the best materials are passed on to production departments.
• Forging Department
The Company has its own Forging Section where Forgings are made through Drop Hammer process by
seasoned operators using Dyes made of the best-quality imported D-2 Steel. The Forgings are later put
through various processes like ring trimming, and acid cleaning / pickling by those well-versed in these
processes before they are passed to milling department.
• Milling Department
Our Milling / Machining Section have about 35 Milling / Lathe/Drill/Grinding Machines which are manned
by the exceptionally well-trained experts for good milling of the ratchets, teeth, box-making, and for all

22
 other related processes for ensuring exact perfection before filing. For this purpose, top-quality imported
cutters are used throughout the machines with intense scrutiny on quality production.
• Filing Department
The process of filing is then carried out by foreign trained professionals in order to ensure high standard
of exactitude and precision. Heat Treatment Dr. Frigz has an in-house Heat Treatment Department
equipped with top-quality Vacuum Furnace imported from England, where qualified staff and engineers
trained by the English Suppliers are engaged in treating the instruments in order to add strength to the
steel and perfect the metallurgical composition for further processes.
• Polishing & Grinding Department
The Electro-polishing and Grinding Departments are manned by seasoned workmen using imported
Chemicals and best quality grinding wheels to ensure the best-quality finish. More than 15 halls housing
approximately 200 trained technicians are employed for this process as it is an important process for
quality finishing of any instrument.
• TC Department
Our Tungsten Carbide (T.C.) Department is installed with the best-quality induction machinery being
manned by the exceptionally well-trained experts of German Technology. The T.C. Tips and the soldering
material are imported from Germany to ensure matchless quality and precision. The department also
utilizes laser welding machinery for superior results and unbreakable strength.
• Coating Department
Our coating department is capable of providing Gold plated instruments as well as powder coated
instruments depending upon the requirements of the instruments or the customer. All coating related
raw materials are imported from European countries so that no compromise on quality can be made.
Furthermore, each coating is inspected for quality before any instrument is passed on to the next
department.
• DDJ Department
A new addition to our departments is the Diamond Dusted Jaws (DDJ) department. Here, using the latest
technology we diamond dust the jaws of those instruments which are used for holding purposes during
medical procedures. This process adds strength to the gripping quality of instruments and increases the
life of usage.
• Passivation Department
Using the top-quality imported Chemicals in our Passivation Department we boil test and passivate each
and every instrument for 24 hours before packing. If need arises, the instruments are re-passivated so as
to eliminate any chances of rusting or corrosion during the life of the instrument. Our instruments are
rust-free for life though we give guarantee for three years.
• Sandblasting Department
Using imported machines and quality materials, we sand blast the surface of instruments to achieve the
proper finishing requirements as demanded by our customers. The process is done by English trained
craftsmen and is a source of pride for the company where quality instruments are concerned.
• Etching
Currently etching on the instruments is being done in-house through a chemical-electrical process.
Stamping facilities are also available if requested by customer. The company plans to apply laser-etching
technology for its reusable grade instruments in the near future.
QUALITY CONTROL DEPARTMENT
Staffed by flight brains and equipped with the advanced test apparatus, Frigz quality control department
ensures the manufacture of reliable products by means of multistage close examination system verifying
from raw-material, in process to final packaging.

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HR & SUPPLY CHAIN DEPARTMENT
Key areas in which Dr. Frigz HR department deal in:
• Recruitment
• Compensation
• Training & Development
• Appraisal
This department also deals in supply chain management.
MARKETING & FINANCE DEPARTMENT
This department assesses the market demand and supply, customer demand, new product requirements in
the market, and also deals with financial measures, budgets, investments.

HIERARCHY OF THE FIRM

CEO
MIAN MUHAMMAD RIAZ

DIRECTOR QUALITY DIRECTOR DIRECTOR QUALITY DIRECTOR HR & DIRECTOR MARKETING

ASSURANCE PRODUCTION CONTROL SUPPLY CHAIN & FINANCE
MIAN M. DAUD MIAN TUFAIL MIAN FAIZ AHMED USMAN DAUD SAIR M. REHAN
SAIR AHMED

GENERAL GENERAL GENERAL GENERAL GENERAL MANAGER

MANAGER MANAGER MANAGER MANAGER

ASSISTANT ASSISTANT ASSISTANT ASSISTANT ASSISTANT

SUPERVISOR SUPERVISOR SUPERVISOR SUPERVISOR SUPERVISOR

WORKERS WORKERS WORKERS WORKERS WORKERS

In the above hierarchy of the Frigz International, strategy is made on the top level only, but daily objectives
and targets are given to the individual workers in order to:

24
 1. Speed up production
2. Improve Efficiency
3. Gain operational effectiveness
4. Refrain customers by switching to the competitors.

HUMAN
Dr. Frigz International has employees currently working 900, they are provided by the medical paid by the
CEO Mian Muhammad Riaz from his own pocket. They are provided by clean environment, security, post-age
benefits, EOBI, etc. They are provided by the competitive salaries, as concluded the turnover of the
employees is very low. Workers are rewarded on the basis of the contribution he/she make. Bonuses are also
given annually.
Human has following aspects:
1. Knowledge
2. Skills
3. Ability

KNOWLEDGE
In the top management people working are knowledgeable, up to the supervisors of the company people are
knowledgeable, and they can help the company to takeout company in case of any downfall faced by the
company.
1. Supervisors of the Frigz implement different concepts they know to achieve operational effectiveness
2. Workers of the Frigz are not knowledgeable and can’t handle new technology
3. Management working have knowledge about the strategic concepts
4. Internal information system has been established to convey information
5. Workers also provided the information about importance of the shipment and where this shipment is
exported.

SKILLS
People appointed in the top management have different skills according to the tasks. For the different
departments in the Frigz International, persons appointed that have experience in those departments. Like,
for quality assurance a lawyer by education, experienced in surgical instruments for last two decades. Along
managers of the firm, supervisors are also very skilled. They assign daily tasks to the workers in order to meet
the shipment date. The daily quality control program is also implemented under the command of the skilled
workers. They are implementing Six Sigma approach, i.e. 3.4 products errors in manufacturing of 1 million
products.

ABILITY
Workers of the Frigz international are well experienced and are able to handle complex instrument
production easily because they are in the industry when they were child. Worker’s ability in Frigz
International is of high potential but they are not polishing it.

25
 PART B
(FRED DAVID STRATEGY
FORMULATING FRAMEWORK)

26
 FRED DAVID’S STRATEGY FORMULATING SCAFFOLD

INTRODUCTION
This document is the application of Fred’s strategy scaffold to Dr. Frigz International. It has three parts. First
part called research model and methodology i.e. understanding of methodology and techniques to determine
most appropriate strategy for the company. The second part, called the background information of Dr. Frigz
International, describing its domestic operations. Third part, called applying the strategy scaffold to Dr. Frigz
International by using model and methodology of strategy formulation.

RESEARCH MODEL AND METHODOLOGY

This part deals with strategy formulation scaffold that helps in generating feasible alternatives and choose a
specific course of action. It depends on three stages mentioned in the following graph.

•The Input Stage

•EFE (EXTERNAL FACTOR EVALUATION)
•CPM (COMPETITIVE PROFILE MATRIX)
Stage 1 •IFE (INTERNAL FACTOR EVALUATION)

•The Matching Stage

•SPACE (STRATEGIC POSITION AND ACTION EVALUATION)
•TWOS (THREATS, WEAKNESS, OPPRTUNITIES, STRENGHTS)
Stage 2 •BCG (BOSTON CONSULTING GROUP MATRIX)
•IE (INTERNAL EXTERNAL MATRIX)
•GS (GRAND STRATEGY MATRIX)

•THE DECISION MAKING STAGE

Stage 3 •QSPM (QUANTITATIVE STRATEGIC PLANNING MATRIX)

To reach at the decision stage the first two stages must be completed. This framework is of the FRED DAVID’S
Strategic management.

27
STAGE 1:THE INPUT STAGE
EFE (EXTERAL FACTORS EVALUATION)
The EFE total weighted score for the Frigz International is 2.85 in the following table. This signifies that it is
managing threat above the 2.5 average. Since there were some serious threats, it could try to address these
issues in a more efficient and effective manner. To reduce the impact of the threats, Frigz must counteract
threats with opportunities in a manner that reduce the impact of the threats.

EXTERNAL FACTORS EVALUATION MATRIX

EXTERNAL STRATEGY MATRIX Weight Rating Weight Comments

Score
Opportunities
Establishment of Institutions for 0.15 4 0.6 increase efficiency &
surgical improvements effectiveness

Creating the new products by new 0.1 3 0.3 Meet customer demand
technology
Selling under own brand name 0.1 3 0.3 make customer loyal
and entrance to new
markets
Establishment of raw material bank 0.05 3 0.15 Low cost availability

Supply of disposable instruments 0.1 2 0.2 Increase in Revenues of

the Frigz
Threats
Increase the taxes on imports of 0.1 3 0.3 Slow Growth
government
Rapid technological change 0.15 2 0.3 Requires knowledgeable
adaptation workers
Competitive distributive channels 0.1 2 0.2 Availability of
Substitutes
Strong brand preference and 0.1 3 0.3 Customers switch to
customer loyalty others
High rates of export re-finance 0.05 4 0.2 Decrease in Exports &
approx. 6% Revenue as well
TOTAL SCORES 1 2.85

28
INTERNAL FACTOR EVALUATION (IFE)
Dr. Frigz International’s IFE total weighted score of 2.90 indicates that they are above the industry average as
whole in formulating strategies that capitalize on their strengths and minimize their weaknesses. As provided
in the following table.

INTERNAL FACTORS EVALUATION MATRIX

INTERNAL STRATEGY MATRIX Weight Rating Weight Score Comments

STRENGTHS
every department
Job description 0.1 4 0.4
has responsibility
Quality and cost
Direct import of raw material 0.15 4 0.6
benefits

human KSA 0.1 3 0.3 knowledge,skill,ability

superior result &

give workers daily targets 0.1 3 0.3
unbreakable strength

six sigma approach 0.1 2 0.2 quality maintain

Weakness
Must train employees
employee training 0.1 3 0.3
to improve KSA
No marketing 0.1 2 0.2 planning
technology may be
low spending on R&D 0.1 3 0.3
decline

lack of distribution channel 0.05 2 0.1 Access products

check of all employee

lack of trust on employee 0.1 2 0.2
after holiday
TOTAL SCORES 1 2.9

STRATEGIC GROUP MAPPING

29
 High

Frigz, TSK
HILBRO
Impex
Brothers,
Bashir
&Jamil Bros.
WE Brothers
QUALITY

Moderate

SMALL
VENDORS,
SELLING TO
COMPANIES

Low

Low Moderate High

PRICE
The above is the graph of the group matrix of the Surgical Instruments manufacturers. On x-axis we take the
variable price and on y-axis we take the variable quality, both are in 3 scales i.e. low, moderate, & high. Our
company as being chosen is Dr. Frigz International, so the big competitors of the Dr. Frigz International
include TSK IMPEX, Bashir &Jamil Brothers and also the WE Brothers.

CPM MATRIX
In Competitive Profile Matrix (CPM) there are nine key success factors for the Dr. Frigz International as
included in the following table. They are product quality, price competitiveness, management, management
experience, branding, customer loyalty, Advertising, market share, and Customer Service. Dr. Frigz
International has three big competitors in the aviation industry are TSK IMPEX, Bashir &Jamil Brothers, and

30
HILBRO. Dr. Frigz is seen as high quality company providing excellent products. TSK IMPEX known as the
Industry Leader. Based on the data in the CPM, Bashir &Jamil and HILBRO are the most competitive ones
followed by the TSK IMPEX and Dr. Frigz.

Dr. Frigz TSK IMPEX Bashir &Jamil Hilbro

Bro.
CRITICAL SUCCESS
FACTORS

WEIGHT

RATING

RATING

RATING

RATING
SCORE

SCORE

SCORE

SCORE
Product Quality 0.20 4.00 0.80 4.00 0.80 3.00 0.60 3.00 0.60

Price Competitiveness 0.18 4.00 0.72 4.00 0.72 4.00 0.72 4.00 0.72

Branding 0.15 2.00 0.30 2.00 0.30 1.00 0.15 2.00 0.30

Management 0.10 3.00 0.30 3.00 0.30 3.00 0.30 2.00 0.20

Management Experience 0.10 2.00 0.20 3.00 0.30 2.00 0.20 2.00 0.20

Market Share 0.10 3.00 0.30 4.00 0.40 2.00 0.20 2.00 0.20

Customer Loyalty 0.08 3.00 0.24 2.00 0.16 2.00 0.16 2.00 0.16

Advertising 0.07 1.00 0.07 2.00 0.14 1.00 0.07 1.00 0.07

Customer Service 0.02 1.00 0.02 1.00 0.02 1.00 0.02 1.00 0.02

Total 1.00 2.95 3.14 2.42 2.47

VERTICAL ANALYSIS OF CPM

Dr. Frigz is almost good in critical success factors except advertising and customer services. Dr. Frigz is weaker
in these two areas, overall Dr. Frigz is better performing from the average 2.5 by scoring 2.95, and from the
competitors. In the management experience Dr. Frigz is only having top management with a decade or two
decade experience but where’s the functional level management is concerned, they are under-experience
and in-experienced. Dr. Frigz should also focus on the Branding of the products, although it has joint
ventures in other countries including USA, Germany etc. and it is providing to them under their own brand
name, but the total income is not earned only from this geographical segmented area, so Dr. Frigz should
focus on the brand establishment of the provided products.

HORIZONTAL ANALYSIS OF CPM

When Critical Success factors are compared to the other competitors of the Dr. Frigz International, we find
out that:

31
 • Dr. Frigz is providing high quality of the products as well as TSK IMPEX, but the other two are
providing somehow low quality than the top twos
• Dr. Frigz, while remaining in the competitive world, it is offering highly competitive prices to the
customers
• Dr. Frigz is doing branding to their products and selling in their own name or tag, while other two are
also selling to the companies, after which they made their own tag on the product and sell the
products under their own brand name.
• Frigz has a good combination of management currently employed, qualified and educated, and also
giving importance to this issue.
• Frigz give importance to management experience, because it is experienced management who help
company to achieve operational effectiveness and goals, but currently it has employed well
experienced management with experience of one or two decades in top management not in
functional level.
• TSK Impex is the industry leader and Dr. Frigz is the second one, all of the rest have low market share
than these two.
• Dr. Frigz International has strong customer loyalty, customers who quitted Dr. Frigz, they face
problems in meeting the demands of the products or may compromise on quality, but Frigz is
providing continuously high quality products to the customers.

STAGE 2: MATCHING STAGE

32
BCG MATRIX
For the BCG matrix we have chosen TSK IMPEX as market leader, and Dr. Frigz international has market share
of 15 % while the industry leader has a share of the 20 % so relevant market share will be 75 %. Dr. Frigz
International is a single enterprise there is no SBU it has.

SBU SALES SALES %AGE G. PROFIT PROFIT %AGE ISGR RMS

A 4.38m 100% 1.84m 100% -21.10% 75%

25%

?
INDUSTRY SALES GROWTH

0%

-21.1% C D
-25%

1.0 0.75 0.5 0.0

RELEVANT MARKET SHARE

In the BCG matrix Dr. Frigz international lies on the Cows, “Cash Cows”,

IE MATRIX:
SBU SALES SALES %AGE G. PROFIT PROFIT %AGE ISGR RMS IFE SCORE EFE SCORE
A 4.38 m 100.00% 1.84m 100 -21.10% 75% 2.9 2.85

33
 IFE SCORE

4 3 2.9
2 1

Grow & Build

3
2.85
Hold &
EFE SCORE

Maintain

Harvest or
Divest

DR. FRIGZ LIE IN THE HOLD

& MAINTAIN SEGMENT

Dr. Frigz International is lying in the cell number V. This means that Dr. Frigz International should follow hold
and maintain strategy.

34
SWOT MATRIX

INTERNAL

Strengths Weaknesses
1. Job Description 1. No Employee Training
2. Quality of raw material 2. No marketing
3. Human KSA 3. Lack of Distribution Channel
4. Give workers daily target 4. Low spending on R&D
5. Six Sigma Approach 5. Lack of Trust on Employee

Opportunities
1. Establishment of Institutions
for surgical improvement
2. Creating the New Product by
New Technology
3. Selling under own Brand
4. Establishment of Raw Material
Bank
5. Supply of Disposable
Instruments
Threats
1. Increase in the Taxes on
Imports by Government
2. Rapid Technological Change
Adaptation
3. Strong Brand Preferences and
Customer Loyalty
4. High rate of Export Re-
finance approximate 6%

EXTERNAL

35
 TWOS MATRIX
STRENGTHS & Strengths Weaknesses
WEAKNESS 1. Job Description 1. No Employee Training
(INTERNAL) 2. Quality of raw material 2. No marketing
OPPORTUNITIES 3. Human KSA 3. Lack of Distribution
& THREATS 4. Give workers daily target Channel
(EXTERNAL) 5. Six Sigma Approach 4. Low spending on R&D
5. Lack of Trust on Employee

Opportunities SO-strategies WO-Strategies

1. Establishment of
Institutions for surgical
improvement
2. Creating the New Product
by New Technology
3. Selling under own Brand
4. Establishment of Raw
Material Bank
5. Supply of Disposable
Instruments
Threats
1. Increase in the Taxes on
Imports by Government
2. Rapid Technological
Change Adaptation
3. Strong Brand Preferences
and Customer Loyalty
4. High rate of Export Re-
finance approximate 6%
TWOS Matrix for the Dr. Frigz International focuses on matching the company strengths to maximizing
external opportunities while simultaneously minimizing external threats.
1. Surgical Institutions will provide
benefits to achieve good quality
of Raw Material, e.g. Provision
of quality checking
equipment.(S2,O1)
2. Using Human KSA new Product
and Technology can be
achieved.(S3,O2)
3. Selling under own Brand using
the technique of Six Sigma
Approach for betterment of
quality.(S5,O3)
4. With providing Job description
production of Disposable
Instruments increased, because
no confusion employee have in
sense of what to do.(S1,O5)
ST-Strategies
1. Good Quality of Raw Material is
beneficial to earn high profit
and it will avoid taxes levied by
Government on imports.(S2,T1)
2. Change in Technology can be
achieved by Human KSA by
providing them training under
professionals.(S3,T2)
3. Through the technique of Six
Sigma Approach Strong Brand
Preferences and customer
Loyalty can be achieved by
providing them high
quality.(S5,T3)
4. High rate of Export Re-finance
can be avoid by more
production by giving workers
more daily target.(S4,T4)
1. With the help of establishment
of institutions for surgical
improvement employee’s can
be trained.(W1,O1)
2. For Selling under own Brand
name the market and customer
loyalty can be
increased.(W2,O3)
3. By Creating New Product using
New Technology there will be
more spending on R&D,
innovations will be on
way.(W4,O2)
4. Disposable Instruments can be
produced by trust on
Employees and making the
decision making
decentralized.(W5,O5)
WT-Strategic
1. Marketing tools should be used
to achieve Strong Brand
Preference and Customer
Loyalty.(W2,T3)
2. There should me more
spending on R&D so that rapid
change in Technology can be
adopt.(W4,T2)

36
SPACE MATRIX
Concerning the internal strategic position and external strategic position analysis in following table, Dr. Frigz
International in surgical industry located in the Competitive Quadrant because the directional vector appears
in the lower-right of the SPACE matrix. Based on the SPACE matrix, Dr. Frigz International should use a
competitive strategy which was competitive advantages in high-competitive industry. Thus, Dr. Frigz
International should give head to market penetration, product development, and finally joint ventures with
foreigners.

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

Financial Strengths (FS) Rating Environmental Stability (ES) Rating
Firm is in the position to process 2 to 3 4 Stability of the political conditions of -5
large orders of instruments, without the country
getting a single rupee from bank.
Firm has good repute in the financial 3 Establishment of different institutions -4
market in order to get loan, if for the development of the Surgical
required. Industry
Firm is financially strong in comparison 3 Except Dr. Frigz there are 19 other -5
to competitors. large manufacturers are in the industry,
so it is anticipated that new entrants in
market will occur.
Firm has increased its profit margin 2 Competitive pressure from the national -3
from 40% to 42%. industry or local manufacturers is high
Firm has investment in subway food 2 Rising in the cost of utilities -2
and in total petroleum, so it can meet
any capital shortages.
Total 14 Total -19
COMPETITIVE ADVANTAGE (CA) INDUSTRY STRENGTHS (IS)
The company holds 75% relevant -2 In 2009 95% of the industry revenues 5
market share and 15% absolute are generated from exports of
market share. (domestic) instruments.
From the last year company has -3 From the last decade, surgical industry 3
increased its capacity of production shows almost increasing trend.
With the introduction of new -3 There are 20 large manufacturers, 50 3
technology sales of the company has medium, 150 small and 2000 vendors,
been increased so they can meet the rapidly increasing
demand of the instruments.
Employee turnover status in Dr. Frigz -4 Sialkot surgical industry has potential of 5
International. earning billions from the export,
currently is under utilized.
Dr. Frigz International is exporting to -3 Labor is available at cheap prices. 5
all the countries in the world.
Total -15 Total 21
The average score of FS is: 14/5 = 2.8
The average score of CA is: -15/5 = -3.0
The average score of ES is: -19/5 = -3.8
The average score of IS is: 21/5 = 4.2

37
The two score on the x-axis are added (IS+CA= 4.2-3.0= 1.2) and the resultant point is pointed on the x-axis.
Similarly two scores on the y-axis are added (FS + ES = 2.8 – 3.8 = -0.1) and the resultant point is plotted on Y.
The intersection of the new xy points is drawn and a directional vector is drawn.

FS
Conservative Aggressive

6
5
4
3
2
1
CA IS
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6
-1
-2
-3
-4
-5
-6
Defensive Competitive

ES

38
 GRAND MATRIX
RAPID MARKET GROWTH

WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
QUADRANT IV

1.Concentric Diversification
2.Horizontal Diversification
3.Conglomerate Diversification
4.Joint Ventures

SLOW MARKET GROWTH

Dr. Frigz International is financially strong and is in situation to compete at high level of competition, but the
industry growth rate is low or Dr. Frigz in a slow growth industry. Dr. Frigz has ability to launch diversified
programs into more promising growth areas. Dr. Frigz International can go for concentric diversification,
Horizontal diversification, Conglomerate Diversification, or can go for joint ventures.

39
STAGE 3: DECISION MAKING
QSPM
QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
Strategic Alternatives
1 2
Joint Joint
Ventures Ventures in
European
in USA Community
Key Success Factors Weight AS TAS AS TAS
OPPORTUNITIES
Establishment of Institutions for surgical improvements 0.15 3 0.45 3 0.45
Extension of Distribution channels 0.1 3 0.3 4 0.4
Selling under own brand 0.1 3 0.3 4 0.4
Establishment of raw material bank 0.05 3 0.15 4 0.2
Supply of disposable instruments 0.1 4 0.4 4 0.4
THREATS
Increase the taxes on imports of government 0.1 1 0.1 1 0.1
Rapid technological change adaptation 0.15 1 0.15 1 0.15
Competitive distributive channels 0.1 1 0.1 1 0.1
Strong brand preference and costumer loyalty 0.1 1 0.1 1 0.1
High rates of export re-finance approx. 6% 0.05 2 0.1 1 0.05
STRENGTHS 1.0
Job description 0.1 4 0.4 4 0.4
Quality of raw material 0.15 4 0.6 4 0.6
human KSA 0.1 4 0.4 4 0.4
give workers daily targets 0.1 4 0.4 4 0.4
six sigma approach 0.1 4 0.4 4 0.4
WEAKNESSES
employee training 0.1 3 0.3 4 0.4
No marketing 0.1 4 0.4 4 0.4
low spending on R&D 0.1 3 0.3 4 0.4
lack of distribution channel 0.05 1 0.05 1 0.05
lack of trust at employee 0.1 3 0.3 3 0.3
Total 1.0 5.70 5.85

So we recommend Dr. Frigz International to go for the Joint Ventures in the European Community, for the
sake of earning profits and to become in the STAR block of the BCG and also in other matrix.

40
REFERENCES
1. www.thefinancialdaily.com
2. www.dawn.com
3. www.books.google.com
4. www.simap.com.pk
5. www.tdap.gov.pk
6. www.smeda.gov.pk
7. www.financialnews.com
8. www.sialkotweb.com
9. www.dailytimes.com.pk/default.asp?page=2009\11\26\story_26-11-2009_pg5_1
10. www.thenews.com.pk/daily_detail.asp?id=163307
11. www.opfblog.com/1100/sialkot-airport-to-raise-exports-to-2b-sbp-chief/
12. http://cmer.lums.edu.pk/upload/Sialkot_enterprenurial_Spirit.pdf
13. www.onepakistan.com/news/local/23926-Surgical-industry-urges-FBR-equalize-rate.html
14. www.pgbf.com.pk
15. http://www.tradeboss.com/default.cgi/action/viewcompanies/companyid/311166/
16. http://www.defence.pk/forums/economy-development/1049-pakistan-economy-news-updates-
archive-91.html
17. www.frigzinternational.com

41