32811048 Strategic Analysis of Pak Suzuki Motor Company PDF

Preview

Summary

Download 32811048 Strategic Analysis of Pak Suzuki Motor Company PDF

Description

Strategic Analysis Pak Suzuki Motor Company Limited

Muazzam Imtiaz Roll Number: 22 MBA (Morning) 4th – A

Page |2

ACKNOWLEDGMENT

In the name of Allah, Most Gracious, Most Merciful Praise be to Allah, the Cherisher and Sustainer of the worlds; Most Gracious, Most Merciful; Master of the Day of Judgment. Thee do we worship, and Thine aid we seek. The way of those on whom Thou hast bestowed Thy Grace, those whose (portion) is not wrath, and who go not astray. Ameen

I am heartily thankful to our Strategic Management teacher, Sir Shahid Yaqoob, whose encouragement, guidance and support from initial to the final level enabled us to develop the subject Strategic Management. With his dedicated lectures we were able to practically understand and apply what we have learned in the classes.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |3

EXECUTIVE SUMMARY

This project is about the strategic Analysis of Pak Suzuki Motor Company. During the project, I’ve done the detailed study of Pak Suzuki Motor Company Limited like their company profile, mission, vision and corporate values. Then I observer the some of the major products manufactured and assembled by the Pak Suzuki Motor Company limited which include SWIFT, LIANA, CULTUS, MEHRAN, APV etc… With the help of Internal and External analysis, I’ve sorted out some of their strengths, weaknesses and the opportunities and threats prevailing in the market. Also the PEST analysis was conducted to observe the external factors that may influence the performance of the company. Then I did prepare the External Evaluation Matrix, which scored 2.98 that means company is trying best to utilize their opportunities by avoiding the threats. And Internal Evaluation Matrix which scored 2.99 shows that company has solid internal strengths and they are overcoming the weaknesses quite well. Then the TOWS matrix helped us to suggest some of the strategies to the company which can be helpful for them in future outlook. The BCG matrix helped me to study the important products of the company; I did identify in which stage the products are and tried to do the SBU analysis for each product. With the study of Pak Suzuki Motor Company Limited, I’ve learned that they are doing well in the Pakistani market and are leading market shareholder. They are producing Cars at affordable prices for the low income to middle income people. But they are unable to compete with Corolla and Honda in Luxury and semi-luxury cars. They need product development strategy to follow so they tried to get into the Honda and Corolla market by introducing Suzuki LIANA but that couldn’t make its space. Now they have again tried that by launching Suzuki SWIFT which is a 1300cc fully loaded car. I recommend Product Development strategy for PSMC to pursue in order to compete with HONDA and TOYOTA. Then they will be able to grow their market share and growth.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |4

TABLE OF CONTENTS

Sr. no.

Contents

Page #

1

Introduction

5

2

Product Mix

7

3

Internal and External Analysis

10

4

SWOT Analysis

10

5

PEST Analysis

11

6

External Factor Evaluation Matrix (EFE)

13

7

Internal Factor Evaluation Matrix (IFE)

14

8

SWOT or TOWS Matrix

15

9

BCG Matrix

16

10

SBU Analysis

17

11

Internal External Matrix

18

12

Space Matrix

19

13

Grand Matrix

21

14

QSPM Matrix

22

15

Conclusion

23

16

Recommendations

24

17

References

25

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |5

INTRODUCTION

Pak Suzuki Motors Company Ltd. is a company assembling and distributing Suzuki Japan's cars in Pakistan. Currently they are one of the most successful motor companies in Pakistan. The firm was founded in 1983 as a joint venture between PAK and Suzuki, formalizing the arrangement by which AWAMI Auto Ltd. had produced the Suzuki SS80 from 1982. Suzuki originally owned 25% of the stock, and has gradually increased their holding; they now own 73.09%. The company now assembles a wide range of Suzuki vehicles and aims to produce 150,000 vehicles per year. (2005 production was 100,000)

Our Vision

To be Excellent All Around

Our Mission

To provide automobile of international quality at competitive price

These are Mission and Vision Statement of Pak Suzuki, and they always try to improve skills of employees by imparting training and inculcating in them a sense of participation. 

To achieve maximum indigenization and promote the automobile vending industry.



To contribute to Pakistani society through development of industry in general and automobile industry in particular.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |6

Statement of Ethics and Business Practices Here are the code of ethics and Business Practice of Pak Suzuki Motors Company, 1. Pak Suzuki insists on integrity and honesty of its employees in doing business. Any unfair or corrupt practices to solicit business is fundamentally inconsistent with business codes of company 2. Pak Suzuki believes in compliance to regulatory obligation 3. Pak Suzuki believes in free and fair business practices and open competitive markets. Developing any association with competitors to distort the pricing and supply of products is contradictory to company’s business code of conduct. 4. Pak Suzuki believes in transparency in business transaction and they are to be recorded accurately and fairly in books of accounts in accordance with standard procedure. 5. Pak Suzuki expects its employees to act in company’s best interest while holding confidential information. Company expects its employees neither to solicit internal information from other nor to disclose company’s data or any other material information to any un- authorized person/body. 6. Pak Suzuki believes in individual’s respects and growth. Its employment policies do not discriminate on basis of race, religion, gender or any other factor. 7. Pak Suzuki does not believe in political affiliation.

Corporate Strategy Pak Suzuki is built on the idea of a responsible corporate citizenship thereby managing environmental, safety & occupational health matters as an integral part of our business. In fulfilling this responsibility Pak Suzuki adheres to the following principles:

1) We are committed to provide top quality products to the satisfaction and requirement of our customers.

2) We conduct our operations in compliance with applicable environmental, occupational health & safety laws and regulations.

3) We recognize the interrelationship between energy and the environment, and we promote the efficient use of energy throughout our system.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |7

4) We ensure safe disposal of waste generated from our facility 5) We minimize the discharge of waste materials into the environment by utilizing responsible pollution control practices.

6) We will continuously seek opportunities to improve our adherence to these principles.

As it is clearly mentioned in their Vision Statement that to be excellent all around, and they always operate in Environment friendly. And their Product will always be the environment friendly. With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark a company’s financial indicators on a worldwide basis. World stock markets have recently witnessed a return to fundamental financial analysis. Sound management as opposed to hype will in the long run generate shareholder value.

PRODUCT MIX Following are some varieties of Cars with their and Prices: SWIFT (1300cc) Price: Rs. 1,049,000/The European inspired exterior gives Swift a distinctive look. A unique stylish and design that turns a head where you go. The spirited engine makes for exhilarating drive and gives you ultimate freedom where the road takes you. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue LIANA (1300 & 1600 cc) Price: Rs. 1,230,000/The Suzuki Liana available in 1300 cc manual transmission and 1600cc automatic transmission takes you out of ordinary and into the realm. Liana is entirely different car, its style, dimension and comfort will inspire you to see every day as an open door to a new age. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |8

CULTUS (1000cc)

Price: Rs. 897,000/CULTUS is the blend of space and craft. Its trim body Conceals ample space & flexibility for both passenger and storage. CULTUS ensures everyone, exceptional Value and quality. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue

ALTO (1000cc) Price: Rs. 662,000/Alto has a bright, roomy and comfortable cabin which keeps body relax and strong and lighter body shell resulting in smooth drive due to reduction of unpleasant noise harshness and vibration. Its small turning radius and compact body make parking a breeze. Colors: Olive Green, Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue

MEHRAN (800cc) Price: Rs. 514,000/Unrivalled in its class, MEHRAN is Pakistan’s largest selling car. More smart features like head turning lamp, matching front grill and a two spoke steering wheel gives it the tidy look. Functional economy, peak performance or unmatched fuel efficiency, MEHRAN VXR is the leader. Colors: Pearl Red, Graphite Grey, Solid white, Silky Silver, Eminent Blue

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

Page |9

APV (1500cc) Price: Rs. 1,775,000/APV 1500 cc (Imported) The New APV gives you everything you ever wanted in your vehicle. Spacious interior for comfort, tough engine to carry large loads and plenty of room for passengers to enjoy a comfortable day long ride. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue

JIMNY (1300cc) Price: Rs. 1,850,000/JIMNY 4X4 JEEP 1300cc (Imported) Steady, sturdy and smart, Suzuki JIMNY with new wide tread brings you the ultimate pleasure of a real 4-wheel drive. It has got all the sporting spirit to go along for adventurous free souls. Colors: Solid white, Silky Silver

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

P a g e | 10

EXTERNAL & INTERNAL ANALYSIS SWOT Analysis

Strengths:  Highest Market Share  Low Price Vehicles  Resale of Local Assembled Cars  Large Distribution Channels  Rising per capita income with changing demographic distribution  Highly Innovative and deep product line  Highly maintained supply chain  Well Managed and highly competitive staff  Well defined and bureaucratic organizational structure  Complete understanding between Distributors  Easy availability of spare parts Weakness:  Scarcity of raw material  Lack of coordination and linkage with Government/semi government supporting bodies  Less focus on Looks and Design  Less Technical Training Institutes  Less distribution channels in sub urban areas Opportunities:  Increasing Demand for Cars  Efficient EFI engines  Large Market size to operate Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

P a g e | 11  Global spare part market  Space saving Small size CNG cylinders Threats:  Tough Competitors like Toyota and Honda  Foreign Investment and setup production facilities  Smuggling of Auto Parts  Inflation rate  Heavy Taxes  Competition from cheaper imported cars  Increase in Fuel Prices

PEST Analysis

Uncontrollable environment are those external factors which can create hurdles between us and our business. It is also called pest analysis, which is as follow: Political Environment Pakistan has to face lots of political ups and downs since its independence. So many governments have been overtaken by military personnel and most of the time martial law was imposed on Pakistan. In this scenario no entrepreneur was willing to invest in Pakistan except few. Due to such conditions, market environment wasn’t helpful in Pakistan. The Pakistani government has never been trustworthy for any investor. Legal Environment As all countries, Pakistan also has some legislation about each sector. But like developing countries it is hardly being imposed by authorities. The corruption, smuggling and black marketing have been supported by Government related officials. The undue favor is given to those business men who have been politically affiliated and hardly any legal suite is carried on against them. Such unethical activities destroy all law and legislation. Economic Environment Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and external ongoing conflict with India. However, IMF approved the government policies, encourages by different foreign assistance and renewed access to global market since 2001.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

P a g e | 12 By following these policies government succeed to reverse the situation of economy during last five years. Socio-Culture Environment Pakistan has strong culture background and it has been follow in some particular region of Pakistan strictly. But with the passage of time it is going to change. Thoughts of people, choices, taste and style has been totally changed. If we talk about the transportation source in Pakistan, People use buses, pickups etc for journey. They also have their own bicycle and bikes and lots of people are pedestrian. But now the people who haven’t any source of transportation they also want something for their convenience because they wants to save their time as much as they can. People want to use such vehicle which looks beautiful and also affordable. Technological Environment Technological factor also very important and we haven’t control on it. Technology is grooming with the passage of time. People also want that the product that they have is full of technology. We never control on technology for example you launched the product last year and your sale volume on that time is very high but after sometime due to latest invention a lots of substitute exist in market which affect on your business so you can’t hold on it.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

P a g e | 13

EXTERNAL FACTOR EVALUATION MATRIX (EFE)

1. 2. 3. 4. 5. 1. 2. 3. 4. 5.

OPPORTUNITIES Increasing Demand for Cars Efficient EFI Engines Large Market to operate Global spare parts market Small size CNG Cylinders THREATS Tough Competitors like Toyota and Honda Inflation Rate Heavy Taxes Cheaper Imported Cars Increase in Fuel Prices Total Weighted Score

Ratings: 1 – Poor 2 – Below Average

Weight 0.15 0.10 0.10 0.05 0.12

Ratings 4 3 3 2 3

Weighted Score 0.60 0.30 0.30 0.10 0.36

0.14 0.08 0.08 0.10 0.08

2 3 3 4 2

0.28 0.24 0.24 0.40 0.16

1.0

2.98

3 – Above Average 4 - Superior

The total weighted score of 2.98 shows that company is responding above average to its external factors. They are trying to grab maximum opportunities available there and avoiding the threats to their best. Justification of Ratings: 1. The company is producing the maximum number of cars in compare with other competitors and therefore grabbing the opportunity to meet the increasing demand. 2. Pak Suzuki has introduced new EFI engine in its CULTUS model which is a 1000cc car. The EFI engine technology is never introduced before in below 1300cc cars. 3. The dealer network of Pak Suzuki is almost all around the country which help them to maximize their sales and reach in every corner of the country. 4. In new CNG fitted cars, the Suzuki is introducing new compact CNG cylinders which take less space and are lighter than their equivalent available in the market. 5. The major threat Suzuki Company could have is from Toyota and Honda, as Suzuki is still unable to meet them in 1300cc and above category of cars. The new product SWIFT is not giving the respond which was expected.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus

P a g e | 14

INTERNAL FACTORS EVALUATION MATRIX (IFE) STRENGTHS 1. 2. 3. 4.

5.

Weight 0.20 0.10 0.12

Highest Market Share Low Price Vehicles Large Distribution Channels Easy availability of spare parts Highly Innovative and deep product line

Ratings 4 4 4

Weighted Score 0.80 0.40 0.48

0.08

4

0.32

0.12

4

0.48

Scarcity of raw material Lack of coordination and linkage with Govt. bodies Less focus on Looks and design Less Technical Training Institutes Less distribution channels in sub urban areas

0.08 0.05 0.10 0.05 0.10

2 2 1 1 1

0.16 0.10 0.10 0.05 0.10

Total Weighted Score

1.0

WEAKNESSES 1. 2. 3. 4. 5.

Ratings: 1 – Major Weakness 2 – Minor Weakness

2.99

3 – Minor Strength 4 – Major Strength

The score 2.99 shows that company has solid internal position, its strengths are overcoming the weaknesses. Justification of Ratings: 1. Pak Suzuki Motor Company has large market share herein and also the largest producers of Cars which is a major strength. 2. Their prices are very affordable in the same quality that is another major strength. 3. The large distribution channel is another major strength which helps them to achieve their desired sales targets. 4. The innovation is another key strength of Pak Suzuki and the example is new Suzuki SWIFT. 5. The spare parts availability is a critical issue which cars, Suzuki has comparative advantage in spare parts availability as most of them are being manufactured in Pakistan. 6. The major weakness which I felt is the non-availability of skilled engineers and workforce. And the reason behind is lack of technical institutes under their banner. 7. They should also focus on sub-urban areas like Southern Punjab and Interior Sind which their distribution network.

Strategic Analysis – Pak Suzuki Motor Company Limited. The Islamia University of Bahawalpur – Rahim Yar Khan Campus
...