...The Marketing Mix and 4 Ps Understanding How to Position Your Market Offering How to use the 4Ps, with James Manktelow & Amy Carlson. What is marketing? The definition that many marketers learn as they start out in the industry is: Putting the right product in the right place, at the right price, at the right time. It's simple! You just need to create a product that a particular group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy. Then you've got it made! There's a lot of truth in this idea. However, a lot of hard work needs to go into finding out what customers want, and identifying where they do their shopping. Then you need to figure out how to produce the item at a price that represents value to them, and get it all to come together at the critical time. But if you get just one element wrong, it can spell disaster. You could be left promoting a car with amazing fuel-economy in a country where fuel is very cheap; or publishing a textbook after the start of the new school year, or selling an item at a price that's too high – or too low – to attract the people you're targeting. The marketing mix is a good place to start when you are thinking through your plans for a product or service, and it helps you avoid these kinds of mistakes. Understanding the Tool The marketing mix and the 4 Ps of marketing are......
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...Marketing Mix MKT/421 February 11, 2013 Ron Stripe Marketing takes a day to learn. Unfortunately it takes a lifetime to master – Phil Kolter. Marketing involves so much more than simply selling a product or service. It involves planning and preparations that requires an organization to connect with their customers on a much deeper level. A marketing mix is one of the most valuable tools an organization can utilize to create such a connection. The marketing of an organization includes so many variables; therefore, it is necessary to categorize these variables by product, price, place, and promotion, which are the 4P’s of the marketing mix. These categories are the framework for just about every successful organization in today’s market. An organization like Fisher-Price understands how important a marketing mix is to compete in a market that is saturated with developing young minds; which in fact, was the driving force behind their refreshing new approach to stay connected with today’s moms. The Marketing Mix What is a marketing mix and how does it affect an organization? The answer to this question is what all business owners and managers need to know to contend in the highly competitive market of this day and age. The term "marketing-mix," was first coined by Neil Borden, the president of the American Marketing Association in 1953. It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are......
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...Marketing Mix “The four P approach has led to a manipulative attitude to people” (Gummesson, 2002:285). “What marketing deserves is new approaches, new paradigms, which are more market oriented” (Gronroos, 2002:140). “We propose that the mix has now reached its vanishing point, and we argue that marketing requires a new paradigm” (O’Malley & Patterson, 2002:50). What is common among the above three quotations is the fact that they are all against the Marketing mix. They also share the common belief that it’s time for a radical change, one where the 4Ps are rejected for a new paradigm. But the importance of the 4Ps is being undermined. Despite its limitations, they still form the base which is being used by modern organizations. This paper attempts to show the importance of the marketing mix for modern marketers and that it cannot be relegated from modern marketing strategy. The paper is divided into six parts. Beginning with the introduction it then moves on to the development of the marketing mix theory. The third part contains the literature review of the mix. The fourth asserts that marketing mix in conjunction with RM and CRM can result in a successful marketing strategy and the fifth uses Lexus as an example to prove this assertion. It ends with the conclusion. What Is Marketing Mix? The Oxford Dictionary of Business and Management’s definition of the Marketing Mix is of “the factors controlled by a company that can influence consumers’ buying of its products”......
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The 4p’s of the Marketing Mix:
...THE 4P’S OF THE MARKETING MIX: PRODUCT Geographic Nokia mobile phones by Series Nokia 1000 series 1011·1100/1101·1110/1110i·1112·1200·1208·1600·1610·1650 • Nokia 2000 series 2110i·2115i·2310·2600·2600 classic·2610·2630·2650·2651·2700 classic·2730 classic·2760 • Nokia 3000 series 3100/3100b/3105·3110·3110 classic·3120·3120 classic·3155· 3200/3200b/3205·3210·3220·3230·3250·3310·3315·3330·3410· 3500 classic·3510/3590/3595·3510i·3600/3620/3650/3660·3600 slide· 3720 classic • Nokia 5000 series 5070·5100·5110·5130 Xpress Music·5200·5210·5220 Xpress Music· 5230/5235·5300·5310 Xpress Music·5320·5330 Mobile TV Edition· 5500 Sport·5510·5530·5610·5700·5730·5800 • Nokia 6000 series 6010·6020/6021·6030·6070·6085·6100·6101·6103·6110/6120· 6110 Navigator ·6111·6120/6121/6124 classic·6131/6133·6136·6151· 6170·6210·6210 Navigator ·6220 classic·6230·6233·6255i·6260 Slide·6265·6270·6275i·6280/6288·6290·6300·6300i·6301·6303 Conclusion Nokia’s mission is to regain its leadership position in the smartphone market. The company sees greatest potential for achieving its objective in the partnership with Microsoft. According to the environment analysis the most serious problem for the company is the threat from existing rivals. Apple Inc and Samsung are the market leaders, companies with innovative products and great marketing strategies. Apple is using differentiation strategy when introducing its products, and Samsung is using segmentation strategy for......
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...Assignment on- (4Ps of Marketing Mix) (Principles of Marketing) [pic] Submitted to Mohammed Masum Iqbal Assistant Professor Faculty of Business & Economics Daffodil International University Submitted by Md. Nahid Kadir ID No : 122-11-2574 Section : A Date of submission: April 21th, 2013 Marketing Mix 4p’s The Marketing mix is a set of four decisions which need to be taken before launching any new product. These variables are also known as the 4 P’s of marketing. The marketing mix consists of- Product Price Place Promotion Marketing Mix 4p’s [pic] The marketing mix principles are controllable variables which have to be carefully managed and must meet the needs of the defined target group. All elements of the mix are linked and must support each other. PRODUCT STRATEGIES When an organization introduces a product into a market they must ask themselves a number of questions. • Who is the product aimed at? • What benefit will they expect? • How do they plan to position the product within the market? • What differential advantage will the product offer over their competitors? Three levels of a product Level 1: Core Product. What is the core benefit your product offers? Customers who purchase a camera are buying more than just a camera they are purchasing memories. Level 2: Actual Product. All cameras capture memories. The aim is......
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...approachable manner, communication is referred to as soft skill. Because this is a skill that is learned gradually as you go on with experience, as well as being sustain by precise training McDonald’s adopts multi-channel communication methods to ensure that all its messages are delivered to staff. These include the use of print, online and other forms of technology such as video conferencing. Culture Culture is defined as a specific assemblage of mental, physical, and emotional knowledge of a society or a group of people in society and it contains, in addition to art and literature, the way of life and living, religion, value systems, traditions and beliefs. Culture affect business: Marketing: Right from the first day, McDonald realized the importance of marketing in the branding process. Marketing is a characteristic of McDonald. Until now, the money invested in advertising and promotion of McDonald always occupies a fixed rate of turnover of the store. In addition to advertising on television to make the customer feel good, McDonald also participated in funding for sports programs, especially the prestigious sporting events in the world as the World Cup and Olympic Games to reinforce the international power of the brand, besides McDonald participate in funding programs vary by region. Human resource management: Structure: Employees of McDollald’s include three groups, those are restaurant workers, corporate staff, and franchise owners. There are between 50 and......
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Marketing Mix(4p's) of Square Toiletries Ltd
... | | www.bizbangladesh.com - |- My Business Zone -| | | | | | Square Toiletries Ltd | | Bizbangladesh.com | | | | - | Home | | - | Company Info | | - | Products/Services | | - | Contact us | | | | | | | | - | Our Trade Leads (0) | | - | Mail to Us | | | | | | | | About Us ~ | Square toiletries limited (stl) started in 1988 as a division an iso 9001 certified company. in 1994 square toiletries limited began its journey as a private limited company. now stl is the countryâ€™s leading manufacture of international quality cosmetics and toiletries products. | | | Year of Establishment : | 2007 | ~ Contact Info ~ | | Company Address: | 72, Mohakhali, Dhaka-1212 | City / Province: | | Country: | Bangladesh | Phone Number: | + (+880-2) 8861531-40 | Fax Number: | + | Contact Person: | Md. Shamsuzzan | Position: | Executive, Commercial | Email | Email to this company | HomePage: | Click to visit | | | | No Product info found ~ | | | | About us | Advertise with us | Contact us | Site map | | | | Home | Copyright © www.bizbangladesh.com | | | | | | * * * Sign Up * Sign In Top of Form Bottom of Form * Research documents * Book Notes * AP Notes StudyMode - Premium and Free Essays, Term Papers & Book Notes 1. Home » 2. Miscellaneous » 3. Recreation & Sports Merril Shop By......
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...PRINCIPLES OF MARKETING BCOM (HONS) RISK MANAGEMENT AND INSURANCE BA ISAGO UNIVERSITY COLLEGE PRINCIPLES OF MARKETING CBU 1209 EFFECTIVE USE OF MARKETING MIX TO GAIN COMPETITIVE ADVANTAGE A marketing mix is a business tool used in marketing to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to the market. It is a combination of tactics used by a business to achieve its objectives by marketing its products or services effectively to a particular customer group. The marketing mix is traditionally referred to as the 4P’s namely; Product, Price, Promotion and Place, but later graduated to being called the 7p’s with an additional People, Process, and Physical Evidence (Londre 2010). These last three are sometimes referred to as the "soft elements" of the mix and are regarded as being relevant to internal rather than external aspects of the organisation, although they are all relevant to the customer (Londre 2010). For a business to effectively survive and make profit, they need to make sure that they are marketing; the right product; to the right person at; the right price in; the right place, and at the right time. For example; if one manufactures pens, and the target market is school children, then it would be appropriate to market coloured ballpoint pens (product) at a lower price (price), selling them through newsagents and stationers (place), and promoting them through point of sale...
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...THE APPLICATION OF THE MARKETING MIX AND EXTENDED MARKETING MIX FOR SERVICES IN A BUSINESS ORGANIZATION OF YOUR CHOICE The marketing mix refers to variables that a marketing manager can control to influence a brand’s sales or market share (Ellis, 2006). The marketer E. Jerome McCarthy proposed the four Ps classification in 1960, which has since been used by marketers throughout the world (Wikipedia, 2014). These variables are summarized as: product, price, promotion, and place (distribution). The 4P’s are also known as product marketing mix because their application is traditionally for marketing of products. Robert F. Lauterborn proposed a four Cs classification in 1990 which is a more consumer-oriented version of the four Ps (Wikipedia, 2014). They are: consumer, cost, communication and convenience. In this discussion we concentrate on McCarthy’s 4P’s. The extended marketing mix is, as the name suggests, an extension of the marketing mix which was traditionally for products (Bhasin, 2014). As services came more into the picture it was seen that the 4p’s could not justify the marketing mix. Bhasin further reports that the extended marketing mix was brought forward by adding the following 3 elements: Process, Physical evidence and People to make the 7P’s. These 3 more elements were necessary to explain the marketing of services. Therefore this extended marketing mix is also known as the service marketing mix. The marketing mix and extended marketing mix can be......
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Operation Management at Square Fashion Ltd
...OPERATIONS MANAGEMENT AT SQUARE FASHION LTD 1.0 INTRODUCTION Operations Management (OM) is defined as the design, operation and improvement of the systems that create and deliver the firm’s primary products and services. A business education is incomplete without an understanding of modern approaches to managing operations. Operations management provides a systematic way of looking at organizational processes. The concepts and tools of OM are widely used in managing other functions of a business. The employees must know how operations work effectively to perform their jobs. The best way one can have a comprehensive understanding of the various aspects of Operations Management is to study a business process involving the production of goods and nothing can serve the purpose better than analysing the production of garments. With that end in view, the group studied the OM of one of the leading export-oriented garments of Bangladesh, the Square Fashions Limited (SFL). SFL is one of the leading export-oriented garments in Bangladesh. The company has earned a high reputation for its quality of products among foreign buyers, mostly the European countries. They are the producers of apparels of world-class brands like Puma, Marks & Spencer, and Crocodile. Export-oriented garments firms face stiff competitions in the global market for their place in the list of preference of the buyers and SFL is no exception to that. With frequent cancellation of orders for or rejection of......
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...As part of the marketing mix, promotion includes all activities that involve communicating with the customer about the product and its benefits and features. Once a company has worked on the product and price elements, it is time to start a conversation with the consumer about the product. This includes raising awareness through different mediums to increase sales, as well as to create and foster brand loyalty. Information provided to the customer at this stage helps them in making purchase decisions regarding the product. Often, there is substantial cost associated with promotional activities. But since the result is often an increase in sales or customer loyalty, there is thought to be long term return on this investment. There are many ends that a company may try to reach through a promotion including but not limited to an increase in sales, acceptance of new products, brand equity creation and brand positioning, addressing competitor actions and rebranding. As briefly mentioned in the introduction, promotion is the communication aspect of themarketing mix. It is creating a channel for conversation with the targeted consumer base. Through promotion, the company aims to attract the customer’s attention and give them enough information about the product to foster enough interest to motivate them to purchase. The team tasked with these activities will begin by understanding the dynamics of the target audience and deciding which modes of promotion are likely to help meet......
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...Chittagong Independent University (CIU) Chittagong Independent University (CIU) MARKETING MIX PROCEDURES: - A Case Study on “BSRM Xtreme 500W” Submitted to: Mr. Abu Sohel Mahmood Assistant Professor Independent Business School Chittagong Independent University Submitted by: Shaikat Saha ID: 15151009 ACKNOWLEDGEMENT I like to take the opportunity to express my sincere gratitude to those without the blessings and cooperation this report would not have been possible. First of all, I am grateful to Almighty Allah who has created all the things and make it possible to enjoy them for our good selves. He also gives me opportunity to finish this report in time. I like take the opportunity to thank my supervisor – Mr. Abu Sohel Mahmood, Assistant Professor, Independent Business School, Chittagong Independent University, for his guidance, constant and spontaneous support and constructive suggestion. Without his help this report could not have been possible. This is the way by which I can extend my heart felt thanks to the contributors of generous help I have received from many sources of BSRM Group of Companies. I like to express my tributes and gratitude to BSRM Group of Companies, Head Office, Ali Mansion, Sadarghat Road, Chittagong, Bangladesh for giving me the opportunity, appointment for discussions and collection of data from internal sources. I will never forget the contribution of all the staff and managers of BSRM Group of Companies, Head...
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Marketing Mix of the 4p's
...discrimination Marketing mix or the 4 P’s of Marketing -Price -Product -Promotion -Place COMPETTIVE PRICING This is competitive pricing, asda is competing against other big supermarket stores such as tescos, morrisons, sainsburys to persuade consumers of the amount of “product cheapness” DESTROYER PRICING Primark is destroyer pricing because it sets its product prices so low it allows many other companies and competitors to not match it. Therefore in this way the competitors will slowly lose more of its customers and they eventually they would get driven out of the market. PRICE SKIMMING The iphone 5 in example of price skimming. When the new product is likely to generate high volume of initial sales (due to the new product) the high price will be charged in order to maximise profits. Gradually the price will lower as its popularity and trend descends due to other competitors such as Samsung. Car insurances, using the example of “Churchill” are price discriminative because of the basis of age and perceived risks. Other examples are that the more mileage you use car the less expensive it is. PRICE DISCRIMINATION PRICE PENETRATION Walmart can be used as a example of “price penetration” because it is a low cost retailer. It introduces new product categories to its customers and it also enters new geographical market Cost-plus pricing Sony is cost-plus pricing because it put its cost at an acceptable price make profits 4P’S......
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Marketing Mix (4 P’s) Analysis and Competitors Evaluation: a Study on Square Toiletries Company Ltd
...History SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. SQUARE today is more than just an organization, it is an institute. In a career spanning across five decades it has pioneered the development of the local business in fields as diverse as Pharmaceuticals, Toiletries, Garments, Textile, Information Technology, Health Products, Food Products, Hospital, etc. With annual turnover above US $ 450 million and with a workforce more than 22,000, square today is a true icon in Bangladesh business sector. The journey begins Square started out as a small scale pharmaceutical venture in 1958.It was a partnership effort of four young and enterprising men whose determination and passion saw it through the turmoil of the incipient period. By its fourth year, Square turned into a profit making organization. Milestones: SQUARE 1958: Debut of Square Pharmaceuticals as a partnership farm 1964: Converted into a Private Limited Company 1974: Technical Collaboration with Janssen Pharmaceutica, Belgium, a subsidiary of Johnson and Johnson Intl, USA. 1982: Licensing agreement signed with F.Hoffman-La Roche Ltd., Switzerland. 1985: Achieved leadership in pharmaceutical market of Bangladesh among all multinational and national companies. 1988: Debut of Square Toiletries Ltd. As a......
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Dell 4p's of the Marketing Mix
... | Dell Inc.’s Marketing 4P From the successful selling of the range of products being offered by Dell Inc, especially the rapid increase of the sales of Dell Laptop, other than the established brand name and the reputation of Dell Inc. worldwide, part of the success factors can be attributed to the successful marketing effort by Dell Inc. In this assignment, we will be doing a research on the Marketing 4Ps Mix (product, promotion, price, place) being implemented by Dell Inc to market the range of home users’ laptops. [pic] PRODUCT As for the case study of Dell Inc, the point on product worth highlighting is that, the vision and mission of setting up the company itself, is to solve and fulfill IT consumers’ needs, want, and demands. The original idea of setting up the company by Michael Dell, the founder of Dell Inc, is “to eliminate the retailer and sell directly to the consumer”. To quote Michael Dell, he said this before, “as a customer, I was disappointed that when I went to a computer store, the salespeople didn't really know about computers”. This shows that Michael Dell has had the vision and commitment of satisfy the IT consumers’ needs, wants and demands, which is the essence of a product means to consumers. The above paragraphs summed up the commitment of Dell Inc.’s to solve IT consumers’ needs, wants and demands, which in and of itself is an excellent product marketing. Dell’s Laptops/ Notebooks [pic] The range......
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Financial Performance Evaluation and
Ratio Analysis of Square Toiletries Limited
Square Toiletries Ltd (STL) is one of the largest FMCG Company in Bangladesh. It is promoting more than 20 brands in different section like health and hygiene, oral care, hair care, beauty products, laundry products etc. As a local brand they gain consumer’s trust by their quality products.
This report applies Financial Performance Evaluation of Square Toiletries Limited. It means how well the company performs. The main data is collected from the annual financial reports of the company from 2010 to 2014 which are provided by the employees of the company. Different financial ratios are evaluated such as liquidity ratios, asset management ratios, profitability ratios, debt management ratios and finally measure the best performance of the company. The graphical analysis and comparisons are applied for the measurement of all types of financial ratio analysis. Liquidity ratio is conveying the ability to repay short-term creditors and its total cash. It determines the performance of short term creditor of the company under the three categories such as current ratio, quick ratio and cash ratio. Asset management ratio is measured to know how the company is using and controlling its assets. Profitability ratio and debt coverage ratio are also measured to know overall market position of the company in the current market.
Overview of “SQUARE”
SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.
SQUARE today is more than just an organization, it is an institute. In a career spanning across four and half decades it has pioneered the development of the local business in fields as diverse as Pharmaceuticals, Toiletries, Garments, Textile, Information Technology, Health Products, Food Products, Hospital, etc. With an average Annual turnover of over US$ 200 million and a workforce of about 3500 the SQUARE Group is a true icon of the Bangladesh business sector.
Square group is not just successful company; it is a symbol of achievement. The journey of the company has been tough but it managed to sail through and have made it to the list of top companies of Bangladesh. Square Pharmaceuticals, which is the flagship company of the conglomerate is the leader among the pharmaceuticals companies in Bangladesh and currently gaining popularity across the globe.
It was a partnership effort of four young and enterprising men whose determination and passion saw it through the turmoil’s of the incipient period. By its four year SQUARE turned into a profit making organization. Today SQUARE Group is becoming a leading local corporate conglomerate in Bangladesh.
Square group has consistently been at the top position since 1958 and has worked hard to achieve all the success which has come its way so far. The company has turned into a public limited company in the year 1991. The total turnover of the company was more than $163 million in the year 2010 with a steady year on year growth of 16.72%.
Corporate History of Square Toiletries Limited:
Square Toiletries Ltd. is one of the largest and leading FMCG (First-moving consumer goods) company in Bangladesh with a turnover of USD 75 million. The company is marketing 20 Brands in different segments like health & hygiene, oral care, hair care, fabric care etc. Major Brands of the company are Jui, Chaka, Senora, Magic, Meril Protective Care & Meril Baby. Square is also exporting its finished products to 13 countries- UAE, Germany, UK, Australia, Malaysia etc.
STL has been built around one core asset, and it is its people. That is what makes working so special here. STL believes that work is more than a place you go every day. It should be a place of exploration, professional growth and creativity. It’s about being inspired and motivated to achieve extraordinary things. STL wants its people to take pride in their work. After all, it’s the combined talents, skills, knowledge, experience and passion of our people that make us who we are.
Currently STL is employing over 2,000 employees ensuring their consistent welfare and security. Due to its sociable working environment and highly motivated employee, STL is enjoying one of the lowest employee turnover rates. STL emphasizes on equal employment opportunity resulting in 38% women employees. Besides, STL also provides employment opportunity to physically challenges persons.
Board of Directors
A Quarterly Report on business operation and financial position is presented before the Board of Directors for their information and review, for implementation by the Executive Management. Every month co-ordination meeting is held congregating all the department heads to discuss priority issues and solve problems, if any.
The Executive Management is headed by the Managing Director, the Chief Executive Officer (CEO) who has been delegated necessary and adequate authority by the Board of Directors. The Executive Management operates through further delegations of authority at every echelon of the line management. The Executive Management is responsible for preparation of segment plans/sub-segment plans for every profit centers with budgetary targets for every item of goods and services and is held accountable for deficiencies with appreciation for exceptional performance. These operations are carried out by the Executive Management through series of team-bound initiatives.
Vision & Mission
We attempt to understand the unique needs of the consumer and translate that needs into products which satisfies them in the form of quantity products, high level of service an affordable price range in a unique way products which satisfies them in the form of quality products, high level of service an affordable price range in a unique way
- To treasure consumer understanding as one of our most valued assets and thereby exerting every effort to understand consumers’ dynamic requirements to enable us in offering maximum satisfaction.
- To offer consumer products at affordable price by strictly maintaining uncompromising stance with quality. With continuous R&D and innovation we strive to make our products complying with international quality standards.
- To maintain a congenial working environment to build and develop the core asset of STL – its people. As well as to pursue for high level of employee motivation and satisfaction.
- To sincerely uphold the responsibility towards the government and society with utmost ethical standards as well as make every effort for a social order devoid of malpractices, anti environmental behaviors, unethical and corruptive dealings.
Square Toiletries Limited only considers an event of expense or an event when sales has occurred that is they follow the accrual-basis accounting which does not consider whether cash payment is done or not. Although they do not have the policy of selling on credit STL sometimes do make sales and purchases on credit. For this reason, they have the terms such as accounts payable and accounts receivable on their balance sheet. If STL does not get all the bills at the end of a specific period, they will have to close their accounts for that particular period as a result getting the accuracy of the pending issues (Accounts Payable and Accounts Receivables) for a particular period sometimes become very difficult for STL. In this stage STL could have gone for cash-basis accounting where the terms such as accounts payable and accounts receivables would not have existed on their balance sheet. An expense would have been recorded only after an expense has occurred. Also, collection of money would have been recorded only after money has been received from the suppliers although this method is no longer used in any of the organizations now days.
STL makes sure that each and every of their suppliers give tax because tax is an income for the government. As a rule of government, on behalf of their suppliers, STL deducts tax on suppliers’ income and deposit it to the government treasury (Sonali Bank, Bangladesh Bank) on the suppliers’ name and will deliver the chalan copy to their suppliers. Here, STL acts as the collecting authority. However, STL can only deduct tax on the suppliers’ income only if they supply a minimum of TK. 200001 raw materials.
Product of STL
- Meril Protective Care
- Meril Baby
- Meril Splash
- White Plus
- Select Plus
Statement of the study:
This study is based on the performance evaluation of Square Toiletries Ltd. So I am going to analyze the financial condition according to the following questions:
- How STL is performing according to their liquidity ratios?
- How STL is performing according to their activity ratios?
- How STL is performing according to their profitability ratios?
- Overall, how STL is performing?
For preparing my internship report I followed some steps which includes the selection of financial reports, identification of their balance sheet and income statement, ratio analysis, mathematical calculation, graphical analysis and finally comparing their present situation with previous years.
First I selected the annual reports of STL that I needed to do the ratio analysis. The annual reports include all the financial data of the company. I used the annual report of 2010 to 2014 for my analysis.
Secondly, from the balance sheet and the income statement I find out all the information for doing ratio analysis like liquidity ratio, activity ratio, profitability ratio etc.
Thirdly I did all of my calculation in Microsoft excel to find out the results. And also did all the graphs in Microsoft word
At the last, after the analysis of the ratios I evaluate their performance whether they are doing good or not and how much it is financially strong in the market by using my theoretical knowledge that I learn from my financial courses.
The main objective of the report is to introduce with the information contained in the financial reports of the company and to give the opportunity to use this information in preparing a report on a target company.
The objective of the study may be viewed as:
- General Objective
- Specific objective
The general objective of the study is to evaluate the financial information that is financial performance of STL.
This study also covers some specific objectives which are:
- To get clear and practical knowledge about STL.
- To highlight the financial ratios in credit analysis and competitive analysis as well as financial capability of the company.
- To identify the problematic areas of the organization.
- To get a practical idea about the organizational environment
- To make recommendation that will help to improve their performance in future
Financial Performance Analysis
Financial Performance Analysis means the process of reviewing and evaluating a company’s financial statements such as the balance sheet or profit and loss statement, thereby gaining an understanding of the financial health of the company and enabling more effective decision making.
In this part we will evaluate the financial performance of Square Toiletries Ltd by Horizontal Analysis such as trend analysis.
Trend analysis is an aspect of technical analysis that tries to predict the future movement of company’s financial condition based on past data. Trend analysis is based on the idea that what has happened in the past which gives an idea of what will happen in the future. Under trend analysis I have calculated Liquidity Ratios, Profitability Ratios, Asset Management Ratios and Debt Ratios.
Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. These ratios measure the ability of a company to pay off its short-term liabilities when they fall due. Under liquidity ratios, I will evaluate here the Current Ratio and Quick Ratio.
An indication of a company’s ability to meet short-term debt obligations, the higher the ratio, the more liquid the company is. Current ratio is calculated by dividing firm’s current asset by current liability.
Current Ratio = Current Asset ÷ Current Liability
From 2010 current ratio of STL has declined till 2013 and it has increased in the year 2014 at a low rate. It means in the year 2010 the condition of the company was better than in last four years. As the current liabilities of the company was in an increasing rate, STL was not that much capable in paying its obligations in last three years. In year 2014 STL is doing better as it was able to decrease the amount of their current liabilities.
The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. Acid Test ratio is calculated by dividing firm’s quick asset by its quick liability.
Quick Ratio = Quick Asset ÷ Quick liability
In the year 2010 the quick ratio was better than last four years but it has started to decline. In 2011 and 2014 it was same but in 2012 it has declined at a significant rate which indicates that the liquidity condition of STL was not satisfactory. In the year 2013 the ratio has increased and it was 0.31 times higher than its current liabilities.
Profitability allows us to measure the firm’s ability to earn an adequate return on sales, total asset and equity. Under profitability ratios I will evaluate Gross Profit Margin, Net Profit Margin, Return on Asset and Return on Equity of STL.
Gross Profit Margin
Gross profit margin measures the percentage of gross earnings of the company on its net sales.
Gross Profit Margin = (Gross profit ÷ Net sales) × 100
In last five years the gross profit margin of STL was stable although it is decreasing slightly from 2012. It means STL is paying its operating and other expenses without any problems. Over all we can say that STL has a gross profit of around Tk26 for every Tk 100 sales.
Net Profit Margin
Net profit margin measures the percentage of net earnings after tax of the company on its net sales/net premium.
Net Profit Margin = (Net profit after tax ÷ Net sales) × 100
The net profit margin for STL in last five years was good as it is increasing significantly. That means percentage change in sales of STL was higher than percentage change in net profit of STL. Like in 2014 for every Tk100 of sales STL had a net profit of Tk 6.33.
Return on Equity
Return on Equity measures the percentage of net earnings after tax of the company on its total Equity.
Return on Equity = (Net profit after tax ÷ Total Equity) × 100
In the last five years STL’s common share holders were able to earn a high amount from their investment. But it was fallen in 2010 as the equity portion was higher on that year still they could make a little profit from it.
Return on Asset
Return on Asset measures the percentage of net earnings after tax of the company on its total asset.
Return on Asset = (Net profit after tax ÷ Total Asset) × 100
Total return on assets for STL was increasing from 2010 to 2014 and increase was quite satisfactory. It is a very good sign for the company’s reputation. It is also indicate that there is a huge opportunities for the investor to invest in SYL
Asset Management Ratio
Assets include plant, machinery, computers and even property, all of which are necessary to run your business. The asset turnover ratio indicates how efficiently these assets generate revenue. Under this, I will evaluate total asset turnover, fix assets coverage ratio, net worth to total assets ratio.
Total Asset Turnover
Total asset turnover is measured by dividing the total premium by total asset of the company.
Total Asset Turnover = Total premium ÷ Total asset
From the year 2010 to 2013 total asset turnover ratio has increased which means in these years STL was able to generate more sales according to their total assts. In 2014 it has decreased as total assets were higher in this year but sales were still higher than last years.
Fixed Asset Coverage Ratio
Fixed asset coverage ratio is measured by dividing the total premium by total asset of the company.
Total Asset Turnover = Net sales ÷ Total Premium
From 2010 the fixed asset turnover ratio has declined in last four years. Reason behind this is the inventory has increased but sales have not increased according to this. On this situation STL should produce a bit less than usual as the sales has not increased in that way.
Inventory Turnover Ratio:
Inventory turnover ratio Measures the efficiency of a firm’s inventory management.
Inventory turnover ratio = Cost of goods sold ÷ Inventory
STL’s inventory turnover ratio is good in last four years but in 2014 it has declined as the cost of goods sold has increased in that year. Till 2010 to 2013, on an average STL was able to sold out and restock its inventory by 5 times and in 2014 it was by 3.6 times.
Days Sales Outstanding:
How many days on an average, a company takes to turnover its receivables from their customers are considered as days sales outstanding of that company.
DSO = Accounts receivables ÷ (sales ÷ 365)
In 2013 and 2014 it took a much higher time to recollect the money from their customers for STL which is a bad sign for the company. In 2011 and 2010 DSO had improved than 2009. As accounts receivable decreased and average per day sales increased DSO has also decreased on these years.
After analyzing last five years data I find out that STL’s financial position is overall satisfactory still they need to go through some changes. From the liquidity ratio I observed that it has declined in 2014 and company has a difficulty of paying its obligations although the current ratio was in increasing rate. As STL has some illiquid current ratio it has increased the liabilities portions. So STL should give more impotents in liquidity as it indicated the true liquidity of the company.
In case of inventory management ratio it was in a decline rate which indicates that STL is facing poor sales and lower cost of goods sold. It is happening may be because of not utilizing their main power for production process. Therefore proper utilization of man power as well as raw materials is required for STL in order to increase the sales rate and inventory turnover ratio.
I also observed that STL is facing cash shortage problem as their accounts payback period is higher and it took much time to pay back to its creditors. Beside that STL’s total assets turnover ratio is also fluctuation in last few year. It might happened because of they could not manage their assets in last few years and sales has declined. So STL needs to focus on their assets management properly so that they can keep their reputation among their suppliers and increase their selling rate.
However, financial ratio analysis always does not give the proper indication about the company’s performance. So one stakeholder cannot always predict or make a comment about future performance of the company from these ratios. The quality of products and experience of the management team can change the success story of a company. Therefore financial ratios do not indicate the real face of management quality of the company.
After analyzing the last five years financial data of Square Toiletries Ltd. I came to the conclusion that STL is one of the leading manufacturing company of Bangladesh with a variety of product which have a export quality and it is a self solvent company with a strong position in the manufacturing sector. Almost all of the ratios of STL’s show that they are solvent enough and they have the efficiency. However there liquidity ratio and turnover ratios needed to be improved as early as possible so that the company can reduce their liabilities. In the last I would like to add that STL’s financial management practice needed to be improved and they need to take some effective solution so that STL can hold their reputation as a business icon in the manufacturing sector.