Business Case Study: Challenges and Opportunities for K&N's

This case study analyzes K&N, a family-owned poultry business that has become a market leader in Pakistan. The study examines the company's situation, including its vertical integration strategy, market position, and challenges such as competition from the wet market and the need to expand. It explores the problem of increasing broiler-chick production and the potential of the Halal market. The analysis evaluates alternatives, including leadership styles, domestic and international market expansion, and the impact of the competitive landscape. The study recommends strategic actions for K&N to maintain its market leadership by focusing on leadership transformation, expansion into new markets, and leveraging its brand reputation and the potential of the Halal food market. The case highlights the importance of adapting to market dynamics and capitalizing on emerging opportunities for growth in a challenging business environment.

K&N Case
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Table of Contents
1.0 Situation Analysis......................................................................................................................3
2.0 Problem Statement.....................................................................................................................3
3.0 Alternatives and Evaluation of Alternatives..............................................................................4
4.0 Recommendation and Justification............................................................................................8
5.0 Implementation..........................................................................................................................9
6.0 Appendixes..............................................................................................................................10

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1.0 Situation Analysis
The organization is a family owned business and was started as a sole proprietor in 1964.
It has grown tremendously to a renowned company in Pakistan and globally. The company
specialized in processed chicken products and broiler-chick producers. The company is leading
in Pakistan for processed food. The projection of the sales was 2011 chickens at $250million.
K&N have registered international standing that culminated to visitors visiting the facility to
learn and they were surprised on the status of the farm and have never thought that such a facility
could exist in Pakistan. The state of the farm as well as the performance gave satisfaction to
Khalil and Adil since they have succeeded in an industry full of challenges such diseases, poor
standards, unclear regulations and tax system, and wet market. The company created quality
regulations for quality food as well as safety hence gaining strong reputation. This put the
organization at the top and attracted lots of customers including companies such as KFC which
promoted K&N in its advertisement.
2.0 Problem Statement
The company had the desire to increase broiler-chicks so that they can get own broiler
chicks for their own processing plant. Even though chicken was selling in Pakistan, the project
was expensive to run and the only way out is to increase the volume so that the company get to
spread the overhead costs to maintain the prices low and competitive to completive with wet-
market. The other reason that is calling for expansion is urbanization, middle class growth,
employment, and business raises the demand for chicken. The other strategy is advertising,
expand and challenge the safety of the wet market. Additionally, expanding into other regions is
probable. Even though there was a ban, this was lifted and exportation is now open. UAE is an
opportunity for K&N. The market for Halal for is wide and this is another opportunity for K&N

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to enter since this Muslim territory and no one has ever come up with Halal products that meet
the standards of this market. The challenge is how to create a Halal brand that met expectations.
3.0 Alternatives and Evaluation of Alternatives
1. Leadership Style and Organization structure
Current leadership model: The organization model of leadership has been vertical integration.
The K&N has stacked the only principle of remaining relevant and continuing to produce
quantities of healthy chicks that meet the need of the market. With the potential of being able to
feed a nation of 187 million people in a cheap way, the barriers on the way of doing it is a
problem. The wet-market is the issue. The wet-market is a barrier because a customer buys a big
bird instead of small bird that is cheap and with options of getting smaller storable cut, reducing
overall sales and transfer the burden of preparation to the family. Despite this, the free market
system reigns where there is freedom. When compared, processed chicken allow market
planning and profits sharing as well as the level of quality and there is enforcement of industry
standard, health and hygiene.
Future Growth Opportunities: The leadership strategy employed by the organization over years
has been vertical integration strategy. This has seen the company progresses since 2001 to 2011.
In examining the past, it is clear that the organization has a gap of about 6.2 million broilers.
This shows that demand is high. The options are to consider growing local sales, exporting to
neighboring nations, and/or invest in tapping the growing Halal market. The company created
quality regulations for quality food as well as safety hence gaining strong reputation. This put the
organization at the top and attracted lots of customers including companies such as KFC which
promoted K&N in its advertisement.

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Challenges of Managing Business in Pakistan: The Pakistan’s GDP is expected to grow by
4.5%. International retail franchises are opening retail shops in Pakistan and this is because there
is improvement on the quality of retail services. The level of literacy is reducing in which there is
a high level of education; also there poverty level has gone down. Besides the, the country is
affected by inflation, high interest rates on loans, cheap labor, low productivity, low literacy
level, and no skilled personnel, no constant power supply. The company is run by Khalil as CEO
and Adil as Director who joined after completing his undergraduate degree. Khalil is responsible
for strategy formulation and implementation. The company has 4, 134 employees and have 64
branches spread in Pakistan. Even though proceeds were awkward, the business remained in
profit through care full management and commitments in finances. The company has been self-
funded all through its progression. The organization has been all along a single entity but it
transformed into K&N’s Poultry and K&N’s Foods. The reason was to meet international
administration needs. K&N’s Poultry developed mature stock, old chicks, broilers and feeds,
whereas K&N produced processed meat, ready to cook and fully to cook products.
2. Expansion to Other Unexploited Markets
Domestic Growth: The strength of the wet-market is a challenge to the growth of the domestic
market in Pakistan because most of the Pakistani people buy their chicken from the wet market.
Another challenge to the growth of the market is that Pakistanis ascribe to the Muslim Faith and
believe that birds slaughtered in the wet market follows the Halal principles and hence fit for
consumption. Irrespective of this, there is a believe that the market is going to shift as soon as the
upper and the middle class continue growing and the government permitting foreign investors
100% ownership which is going to open way for international companies to Pakistan.

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On the other hand, the entrance of hyper markets serves to promote the benefits such as
price and convenience in the current state. Irrespective of this, the relationship of K&N has not
been all rosy. Even as the relationship becomes rosy, there is more than meets the eye. The
retailers have entered and become more and more demanding over and above the local citizens.
Outstandingly not long after the global stores arrived into the market, uptown chains
establish in relation to the terms they had confirmed from Pakistani suppliers and quickly made
proportional request themselves. Retail chains do not rule here as they do somewhere else,
however we do now have a substantial lot of comparable concerns that others knowledge.
Rivalry from imported chicken was a developing issue in 2011. A 2009 general business
agreement among Malaysia as well as Pakistan had prompted the development of importations of
finished poultry foodstuffs. Subsequently, in any event native manufacturers shut down its very
own manufacture and plant and began bringing in value added chicken items in mass, which
were then repacked in little marked packs for retail. Other noticeable issues incorporated the
most part exchange trade.
International Markets: The imposing of bans to businesses is making trade very difficult in the
competitive world. Prior to 2011, K&N was not able to export Chicken because there was OIE
ban on the flue concerns. Irrespective of this K&N got the market from the neighboring
countries. When the ban was lifted, it was another problem in getting all the requirements once
again. Selling products to the neighboring nations is easy and fast, however there is the issue of
losing the market once the country has established its own strategies for the same products.
The Global Halal Market: It is estimated that the global Halal market is huge and has not been
exploited. The global Halal market is estimated to be around 680 billion in 2011. A wider
prospect open to K&N’s was the international marketplace for Halal diet. Khalil projected the

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worth of the worldwide Halal diet marketplace to be in the expanse of US$680 billion at 2011.
Even if the results can be disputed, this is alarming since there is an estimated Muslim
population approximating 2.2 billion.
The only issues that are in this untapped market are the standards for certification of
Halal foods. The reason for this is that Islam was practiced only in some parts of the world and
thus it not well rooted by many. Muslims need assurance when buying Halal products, whether
the product has been trounced in a suitable manner and that the feeds and handling processes
were likewise Halal. As a result of this, it appears that there is huge potential given the fact that
Pakistan is the second largest Muslim nation in US.
K&N’s Foods: The company produced 49% to 45% products that were meant for sale and this
comprised of different categories of chicken products. The broilers that were processed were
9,000 birds. These were birds in one processing plant. The company in HACCP certified and it is
also ISO 9001: 2008 certified.
The K&N’s Brand: The company branded itself as a leader processed chicken over the years
and this has been through marketing and investment. The challenge that the company
experienced was to raise safety awareness among its consumers without affecting their
confidence. The company builds and maintained brand recognition in Pakistan The promise of
Halal food will also be one way to strengthen the brand name to the Muslim customers.
Customers: The organization sold its products to a wide spectrum of clients cross Pakistan and
globally. It is established that the company produced 40% of its products and half of this was
exported and a remained for the local market.
Retail: The selling of food through retailing was made through the local shops, street vendors, as
well as local domestic retailers a cross Pakistan. The presence of K&N in Pakistan has been felt

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extensively. The only challenge that still exists is the poor cold supply chain. Electricity that is
not stable poses another problem.
Food Service: A number of hypermarkets entered Pakistan in late 1990 and they have grown
consistently. KFC entered in 1997 and it has expanded and currently it operates 60 stores within
Pakistan. And MacDonald which entered in 1998 expanded to 23 restaurants.
Competitors: The wet-market is the biggest contender because clients buy chicken from them
and get it prepared and a number of store sellers buy also from them for sale. This is in contrast
to the value-chain competition where competition is among the competitors themselves.
Pricing: The price of chicken varies from time to time but it ranges from PKR148 to PKR164.
The price in other retail stores was put as per the wet-market.
4.0 Recommendation and Justification
K&N have grown through thick and thin to the position it is sitting as one of the
renowned and outstanding nations. Credit is given to the founder for the financial commitments
put forth to create a prolific company. It takes a process to see the light of day. Khalil is another
soldier, following on the footstep of the father, he is strategically steering the company to the
right direction begged on strategic leadership.
The entrance of hyper markets serves to promote the benefits such as price and
convenience. Irrespective of this, the relationship of K&N has not been all rosy. Even as the
relationship becomes rosy, there is more than meets the eye. The retailers have entered and
become more and more demanding over and above the local citizens.
The company branded itself as a leader processed chicken over the years and this has
been through marketing and investment. The challenge that the company experienced was to
raise safety awareness among its consumers without affecting their confidence. The company

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builds and maintained brand recognition in Pakistan The promise of Halal food will also be one
way to strengthen the brand name to the Muslim customers.
The leadership strategy employed by the organization over years has been vertical
integration strategy. This requires transformation to adopt a pragmatic style of leadership.
Another challenge to the growth of the market is that Pakistanis ascribe to the Muslim Faith and
believe that birds slaughtered in the wet market follows the Halal principles and hence fit for
consumption. Irrespective of this, there is a believe that the market is going to shift as soon as the
upper and the middle class continue growing and the government permitting foreign investors
100% ownership which is going to open way for international companies to Pakistan.
5.0 Implementation
Target Action
Expansion Domestic market and
international market-focus on
Halal products
Investing heavily on
Halal products so that they get
meet the needs and demands
of a larger number of Muslim
community.
Leadership and Management The leadership and structure
of the organization
Change of the leadership style
so that management roles can
be broken down for ease of
management and strategy
formulations.

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6.0 Appendixes
K&N’s SWOT ANALYSIS
STRENGHTS WEAKNESS
 GDP is expected to grow by 4.5%.
 improvement on the quality of retail services
 HACCP certified
 builds and maintained brand recognition in Pakistan
 high interest rates on loans,
 low literacy level,
 no skilled personnel,
 no constant power supply
OPPORTUNITIES THREATS
 cheap labor,
 low productivity
 Halal market
 International retail franchises entering
 country is affected by inflation
 wet-market
 Pakistanis ascribe to the Muslim faith and believe
that birds slaughtered in the wet market follows
the Halal principles

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PEST Analysis
Political
 Political & economic instability leading to uncertainty in the policies and regulations in
Pakistan
 Uncertainty on the policies or raising of barriers by the government of middle east
countries for K&N's export business
 Weak political relationship of Pakistan with western countries
 Pakistan and Malaysia general trade agreement resulted in the import of value-added
chicken products
 Food security concern of the neighboring countries can impact the K&N's investment in
the business in those countries
Economic
 The high purchasing power of western Muslim population for halal products
 In 2011, chicken accounts for 50% of total protein consumption in Pakistan
 The steady growth rate of Pakistan GDP at 4.5%
 The entry of international franchise and growth of the retail segment
 Growing middle class and prediction of 100% FDI approval in retail
 The strong growth rate of the Muslim population in the EU & USA
 Strong competition from wet markets & instability in the price

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Social
 Pakistan has the second largest Muslim population
 Increase in education level & reduction in the population living below the poverty line
 Majority of the population lives in Pakistan rural area
 Availability of cheap labor but lacks the skill and have low productivity
 Majority of retail food sales are contributed by traditional mom & pop stores (95%) and
remaining by domestic (3%) and international supermarkets (2%)
 Majority of the population employed in the agricultural sector
Technology
 Inconsistent electricity supply
 absence of a national cold supply chain
 excellent state of art technologies for poultry production and processing