IMPROVMENT OF FINANCIAL POSITIONHKB

H Karim Buksh (Pvt) Ltd For the period of 30 dec 2010.

PREPARED BY: Awais Ali Raja ACCA.int/MBA iii FINANCE

SUBMITTED TO: Mr M.Rafique MBA FINANCE DEPARTMENT

FUUAST UNIVERSITY KARACHi

ACKNOWLEDGMENTS• My first and foremost humble and gratitude to ALLAH the almighty for

giving me the valor to remain dedicated to make this audit report

• Apart from it i take the opportunity to acknowledge the real effort of : first, we would like to thanks MR M RAFIQUE , for his valuable support

and encouragement which he has offered, his words of wisdom will always be remembered, and we are convinced that the knowledge of marketing that he has imparted would go a long way and helping us all through our professional career.

Secondly to Raja Munawar ACA assistant manager of HKB pvt.ltd Pakistan, he have provided us with valuable information which helped us a lot in completion of this project.

• Regard's• AWAIS ALI RAJA ACCA.int• MBA Finance 3rd Semister

• Haji Kareem Bakash is one of the most renowned departmental stores of Lahore. It was started in 1927 and its first branch was opened at Mall Road. Now it is in its third generation. It has three main branches at Mall Road, Allama Iqbal Town and Liberty. These are the three main branches which are operating but the interesting thing is that the branch working at liberty has different management and the owner is also different but the rest of the branches and many SBU’s that have started by the Haji Kareem Bakash people. It was opened as a departmental store it was the store that introduced the concept of departmental store in Lahore. It was opened to cater the upper class or the high income people to provide them the quality products along with quality services. The covered area of the retail outlet at liberty is 50000 square feet. It has more then 250 employees in all of its three outlets and their distribution is as follows:-

• · No. of employees at the outlet of liberty is 100• · No. of employees at the outlet of Mall Road is 80• · No. of employees at the outlet of Allama Iqbal Town is 70

The Mission of HKB was to provide variety of products or everything less than one roof in this way fulfills the requirements of customers and provide them the quality services.

It was opened as departmental store having the following characteristics:-· High Prices · High Level of Services· Product VarietyIt is a single owned store as we know that the store owned and controlled by a single owner is called an independent store and it is not the part of a corporate chain but if it has more then one outlet as Haji Kareem Bakash has then it would be called as single store “Multi unit” organization

• The basic objective of a retail outlet is to have a proper balance between• · Customers merchandizing needs• · Retailer’s performance standards.• So in right merchandizing blend a retail outlet need to consider following

things.• · The right product• · The right quantity• · The right time• · The right place• · The right price• · The right promotion / appeal• And in retailers performance standards the retailer must have some

standards to judge his financial performance because his objective is not only to satisfy his customers by offering them product of their own choice but also to earn profit.

• Now we will see that how Haji Kareem Bakash the departmental store fulfills these tasks.

• In this the first one• 1. The right Product:• It includes the products that provide the merchandizing utilities, intrinsic qualities and

augmented extras• So the products they offer are• · Ladies garments• · Male garments• · Children wears• · Cosmetics• · Shoes• · Grocery items of all type• · Male and female luxuries• · Home appliances• · Food items etc.• 2. The right quantity:• The want to cater the upper class by offering them things of their own choices so they

bring changes in their product lines according to the wishes of their customers so they can win the loyalty of their customers and provide them products at their demand.

• 3. The right Place:• They deal in their local markets and their trading areas are Mall, Liberty and

Allama Iqbal Town.• They want that their retail outlet to be visible to al the passing customer traffic.

They have selective coverage because of the nature of their store outlet.• While designing their layout they keep in view that all the items are visible to the

customers. They keep hot selling products as well as new products at the eye ball level.

• They divide their retail store into three sections in each branch where• · Ground floor contains garments of female, children and their accessories.• · Basements contain grocery items, appliances and other items of daily home

use.• · On the first floor they keep men’s wear and their accessories.• 4. The right time: • They also believe on the issue of the right time the right times are• · Start of the month• · All seasons of the year • 5. At right price:• They mostly want to deal with the upper class having high incomes so they have

high prices of their products. They provide quality products and for that quality and good services they charge higher prices. They deal with the class who go their to buy the expensive products of high quality.

• 6. The right appeal:

• They go for

• a) Product appeal:• Focus here is on the appropriateness of right product

• b) Price appeal:• Focus here is on the appropriateness of the right price by giving

them high quality.

• c) Patronage appeal:• They make appeal about the rightness of the location at which they

are dealing.• They go for segmentation in which they want to cater upper class

classification is based on • · Income• · Areas • They use various promotional strategies to attract customers

• The also want to earn profit so they conduct various ratios to check that up to what extent they are meeting the requirements of the organization’s profit.

Strategic retail management is a process planning implementing and monitoring the activities of organization to achieve the desired goals or results.So to achieve above concerns the HKB make strategic retail management plan it consists of two components.

• These are the long terms plans involve defining the course of action of the retail organization. HKB includes following four components of strategic plans in defining their long term course of action.

• HKB’s Mission • · Providing everything under one roof.• · Customer satisfaction.• · Quality products• HKB’s Objectives• · Increase the customer traffic.• · Increase in sale value by 25%• · Increase the no. of loyal customers.• · Build a store image of selling high quality products.• · Increase the labor productivity by 10%• · Increase the merchandize turnover by keeping hot selling products.• · Increase the return on sale by 5%

• HKB’s Portfolio• Includes various type of SBU’s hold and managed by HKB there are.• · Men’s fabrics department• · Shirting, suiting• · Ladies• · CRT (Children ready to wear)• · Handbags• · MRT (Men ready to wear)• · Cosmetics • · Stationary• · Grocery• HKB’s Opportunities • a) Growth opportunities:• HKB is adopting following growth opportunities for their long term survival.• In intensive growth the following strategies are adopted.• (i) Market Penetration• To increase the sale of current SBU stores within existing markets.• (ii) Product Development• To increase sales within existing markets by developing new goods / services mix.• In diversification growth they follow• (i) Conglomerate diversification • The retail organization can diversify by adding new businesses that are totally unrelated to its

current SBU’s in hopes of appealing the entirely new markets.• (b) Performance Opportunities:• They are trying to utilize all their resources to increase productivity so they are going for • · Increase return on sale• · Increase return on assets• · Increase in inventory turnover etc.

• To meet the objectives of strategic plans of HKB makes retailing plans in which it defines how to implement the strategic plans. If we see the retailing format of HKB following things are identified.

• Strengths of HKB• · High quality products• · Consistent quality • · Variety of products• · High services• Weakness / competition• They basically say that they don’t have any sort of competition but a few

small specialized stores are their competitors which are located in their surroundings just like Raja sahib and Hafiz garments who are offering fewer prices.

• Their weaknesses for which most of the people don’t visit this store are the high prices but they are trying to overcome this problem by offering high quality.

• Market Selection• They offer products to upper class so they go for segmentation to satisfy the

needs of the segments they open their outlets at those places where they can mostly attract the upper class at very high reputed areas. When they are asked why they opted this place to open the outlet they say that for “present and future production”

• 1. Product Strategy:• Various product strategies of HKB are following so that customers

can be satisfied• · Keep all the products of customer’s choice.• · Put the new as well as hot selling items at eye ball level• · Offer products of high quality• · They mostly provide all type items so that all needs of customers

are satisfied.• 2. Pricing Strategy• HKB follow “Skimming Pricing Strategy”• In this prices of the products are changed to high prices. The reason

for this strategy is that they need to attract high class which are attracted by the high prices and believe that high prices lead to high quality. They mostly charge high price of the new products so that people attract by this and use it as symbol of high quality.

• 3. Placement Strategy• They need to open outlets at those places where the can attract more

customers so the reason for opening retail outlet at Mall, Liberty and Allama Iqbal Town is

• “Future and Present protection”• They also want retail outlet visible to all the people.• 4. Promotion Strategies• They use following things for promotion of HKB• · Print media advertising • · Bill boards• · Banners• · Brushers• · Pamphlets• They are not using electronic media or even the entire broadcast media

for the advertisement purpose because in their opinion no single channel attracts their target customers and also they are not sure about the timings that at which time people see the particular channel so they believe more on out door advertisement then broadcast because there is more waste in broadcast media

• .They are providing the following services• · Car parking to some extent • · Home delivery to loyal customers• · Guidance in choosing the right product

HKB has 2 types of competitions.1) Inter type competition 2) Intra type competitionWhen we asked from them they said that they have no competition but if we see their retail format and items they keep the competition exists because in the area in which they are operating there are many small specialized stores are operating who are offering almost similar products and relatively at lower prices.

• In Pakistan there are no legal constraints and rules defined by government of Pakistan regarding retail business but few steps taken b government of Pakistan in this regard are

• · Taxation• · Make sure to check the expiry of the grocery items• · Inspection are made by government

Customer’s Point of view regarding HKBTo know the point of view of various customers regarding HKB we asked them various questions and the answers were as follows: -1. 80% of the customers from whom we asked about their purpose of visiting outlet say that they come for shopping and the remaining 20% came for window shopping.2. All the customers are satisfied with the quality of the products they offer they say that quality is the factor which appeals them to visit the store.3. About services of the HKB customers have following views.80% customers says they are excellent20% customers says they are averageNone of them say s they are poor

• 4. About environment of HKB the views are• 35 % of customers say it is excellent• 65 % of customers say it is satisfactory• None of them say it is poor• 5. About the prices of the products of HKB the views of the people are• 10 % customers are highly satisfied• 90% customers are just satisfied• Nobody is dissatisfied • 6. People who visit HKB says that go for high prices because 90 % of

the people believe that high prices means high quality and 10 % are disagreed to this phenomenon.

• 7. Out of 90 % who go for high prices just to ensure high quality says that if the prices are decreased they would still purchase the products that show the creditability of the store that people have faith in this store.

• 8. When customers are asked about the reasons of the people who don’t visit this outlet they say that the prices of HKB’s products are very high and people can’t afford it that is the reason they are avoiding to visit the store for shopping purpose.

• 9. Customer’s point of view regarding location of HKB is• 50 % of the customers say that location is excellent

• 50 % of the customers sat that location is average• None of them say that it is poor.10. Suggestions of customers for HKB are as follows: -• · Add music and books• · More advertisement • · More economical packages• · Widening parking facility• · More neat and clean environment• · Wider area• · More co-operation with customers• · Separate corner for sale

· Overcome the deficiencies · Expansion· Increase the image as an outstanding store Following new products are going to be introduced in near future which is not offered by any other departmental store of Lahore.· “Swatch” for which HKB is only distributor all over in Pakistan.· A new cosmetic product is introduced with the name of “Red Earth”· “Armani” men’s product· “BO” electronic product

The strengths of HKB are as follows: -· Providing variety of products under one roof.· Customers who visit this store are of the view that high prices leads to high quality so high prices are its strengths.· They are providing high quality products.· There location is excellent they want to target the upper class people so they have to open there outlet at those places where these high income people do the shopping.· Strength is the “Swatch” because they are the only distributor of swatch in Pakistan.· More then 50% of there customers are from the cities other then Lahore.· They have cash counters on every floor in every section so people don’t have to wait for paying the bills

• The weaknesses of HKB are as follows: -• · High prices are there strength for the upper class people but it is a

weakness too because they are loosing a large market because of high prices the low income people can’t afford to visit theses stores.

• · They are using market segmentation in which their main emphasis is on upper class people so they loose other class people and low income people are ignored.

• · The parking facility is there but it is not up to the requirement of customers.

• · They are in the Myopic situation because they think that they have no competition.

• · They don’t know about the regulatory aspects of the retailing which are prevailing in Pakistan.

• · According to the international rules of departmental stores the covered area of departmental store should be 75000 to 100000 square feet but their covered area is 50000 square feet so they are not fulfilling the situation.

• The opportunities for HKB are as follows: -• · By providing better car parking facility they can attract

more productive customers to visit their outlets.• · They must provide home delivery service currently they

only delver the things the loyal customers forget to pick from there counters or any other place.

• · They should provide friendlier environment.• · They have less focus on ads if they can advertise a

little aggressively they can increase their sales.• · They should open more outlets in other good key areas

to attract their target customers.

• The threats to HKB are as follows: -• · Inter type and intra type competition.• · People are switching due to high Prices.• · Consideration of continuous changes.• · People are switching because of absence of basic facilities like car

parking.

· Placement of cameras for security checks.· Widening parking areas.· Department wise management to have more control.· Add music and books to attract more customers· Use more elements of promotional mix i.e. use broadcast advertisement.· There should be separate doors for in and out.· Lift should be added for customer convenience. Reference:Asist:Manager Munawar Raja CIMA/ACA www.hkbstores.com/