Acknowledgement

We are unable to find words to express our humble gratitude to our Almighty Allah who has been extending best of his blessings towards us since we came into being. We owe our most sincere recognition to our instructor Sir Dr. Manzoor A. Khalidi for the precious time he dedicated us in helping to understand the core concepts of Strategic Management. His continuous support and guidance from the initial to the final stage made it possible for us to deepen our knowledge in same. We would also like to thank our fellow classmates for reviewing our report and offering constructive criticisms. It has been an enjoyable experience learning the course of Strategic Management. This report enhanced our level of acquaintance & information about contemporary Strategic Management trends in Pakistan and helped us to know, how far Management Theories are being practiced in corporate organizations.

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Background. PELPakistan Electronic Limited incorporated in year 2007 with principal aim to provide the Engineering, Procurement & Construction services to LPG sector clients and within short span of time PEL engaged with the National & Multinational organizations specifically from LPG sector and proven the capabilities of its professionals with the tremendous track record for the supplies & services of various LPG Plants equipments, as well as the Turn-Key projects for setting up the LPG Bottling plants. Step by Step PEL enhanced its procurement services scope to Oil & Gas, Fertilizer, Construction and Energy sectors for their requirements of Engineering Equipment, Machinery Spares and piping products where it is enjoying handsome business in cooperation with its foreign associates. PEL is not only limited to the procurement but also provide after sales service support for the specified products. PEL sourcing engineers have capability to source out the products according to the customers demands supported with internal evaluation that can provide the superior value to our customers considering technical, commercial and lead time aspects. PEL deals in a wide range of products including: Product Lines Heat Exchangers Pressure Vessels Boilers Fire Water Pumps Chemical Cleaning Pumps Effluent Pumps LPG Multichannel Pumps Compressors Consultancy for Turn Key solutions for LPG Autogas Filling Stations: Consultancy for Turn Key solutions for LPG Bottling Plants:

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Major Competitors: The major competitors of PEL Pakistan include: LPG Consultancy Services Kazmi Engineering Global Corporation Target Agencies Intl (Pvt.) Ltd Rana Trading Indus Basin

PEL Timeline.

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STEP 4 COMPANYS VISIO & MISSION Vision: To be acknowledged in national and international markets as a source of top quality services in engineering, procurement, construction, logistics, operation and maintenance, based on the companys technical and managerial know -how, with a strong commitment to Health, Safety and Environment (HSE). Mission: Create superior value for our customers, suppliers, and employees through an unwavering commitment to excellence, innovation, execution and consistent application of our core values that promote SOLIDARITY, HONESTY & PERFORMANCE.

PROPOSED VISION & MISSION STATEMENTS Vision: To be the leading Engineering Solutions provider in Pakistan, by providing world class products and services in all areas in which we serve our clients, creating a new horizon in the our business.

Mission: To be the leading engineering solution company, by dealing with our suppliers & clients in a truly professional manner. PEL Pakistan aims to offer quality products & services at competitive prices while rigorously following the guidelines of honesty and integrity. We aim to provide the excellent career growth opportunities to enthusiastic and committed professionals who value customer satisfaction & business ethics. We believe in providing innovative products & solutions, by staying always ahead of the competition and following the principles of Health, Safety & Environment.

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STEP 5
COMPANYS OBJECTIVES
1. The continuous improvement of all products and services through total involvement of employees. 2. The development and strengthening of joint ventures and partnerships with external and internal customers and suppliers. 3. Providing innovative and higher quality products to achieve total customer satisfaction by understanding their requirements and anticipating their future expectations or needs through: 4. Monitoring Annual Targets for quality improvement in all areas and function of the organization. 5. Valuing people by understanding and drawing upon their strengths i.e. abilities and knowledge and make efforts for their training and development. 6. With a dedicated team of professionals the company is striving to improve the quality of life in Pakistan homes through reliable equipment for power distribution and home appliances. 7. The growth in the size of the organization develops better business practices and builds up greater resources. 8. The aspiration to capture the complete product family of the product.

STEP 6

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ORGANIZATIONAL STRUCTURE & DESIGN AT PEL Chain of Command - A proper chain of command exists in this organization. Starting from top management to middle level managers and ultimately ending up at lower staff. A clear reporting criterion is developed at all levels. Span of Control - The span of control is usually limited to a team of 4-5 individuals. - Both supervisors as well as subordinates capabilities affect the final output. Centralization - The decision making process solely lies with the top management and the final decisions are pushed down to middle level managers and subordinates .

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Mechnistic V/S Organic Organization - PEL falls in the category of both Mechanistic & Organic Organization due to existence of mixed trends. 1. 2. 3. 4. 5. Like Cross functional teams Cross hierarchical teams Free flow of information Centralization & Decentralization High & Low formalization.

Corporate Information BOARD OF DIRECTORS Mr. M. Naseem Saigol Mr. M. Azam Saigol Mr. M. Murad Saigol Mr. Muhammad Zeid Yousaf Saigol Mr. Haroon Ahmad Khan Syed Manzar Hassan Mr. Syed Zubair Ahmad Shah Mr. Akbar Hassan Khan Ms. Tahira Raza Mr. Khalid Siddiq Tirmizi Mr. M.Khurram Khawaja AUDIT COMMITTEE Mr. Azam Saigol Ms. Tahira Raza Syed Zubair Ahmad Shah
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Chairman / Chief Executive Officer

Managing Director NIT Nominee NBP Nominee U/S 182 of the Ordinance NBP Nominee U/S 182 of the Ordinancerdinance BOP Nominee U/S 182 of the Ordinance NBP Nominee U/S 182 of the Ordinance

Chairman/Member Member Member

Mr. Haroon Ahmad Khan HR & REMUNERATION COMMITTEE Mr. Azam Saigol MR. Akbar Hasan Khan Mr. Syed Zubair Ahmad Shah Mr. Haroon Ahmad Khan COMPANY SECRETARY Mr. M. Omar Farooq

Member

Chairman/Member Member Member Member

CHIEF FINANCIAL OFFICER Syed Manzar Hasan AUDITORS M/s Yousaf Adil Saleem & Co. Chartered Accountants LEGAL ADVISORS M/s Hassan & Hassan Advocates

FCA

(A member firm of Deloitte Touche Tohmatsu)

STEP 7

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PESTEL ANALYSIS
A good fit between the environment and the company will allow the company to be viable in the market. Therefore, we will first perform a PESTEL analysis by examining the following factors: politics, economics, social, technological, environment and legal. a) POLITICS:

Europe, EU notably, is a common market and shares same or similar set of values and political systems. It is fair to say that Europe is a highly homogenous market. Europe has enjoyed security and political stability for a very long time, since the end of the Second World War. Governance is one of the catchy words used to describe the European governments. Europe, as an important polar in the world today, adopts a comparatively more pragmatic approach towards relations with China, hence, Chinese companies and products, though from time to time, the two bark at each other on trade related issues, mostly exportation of products from China to EU.
b) ECONOMICS:

Technically, Europe (hereinafter we refer to European Union as Europe) is the largest economic entity in the world, with 25 members coming together. European economies have been growing slowly but steadily in the past years, and the 2.7% GDP growth in 2006 (13 EU countries) beat the expectations of many economists and observers. The interest rate within EU is 3.25%, the inflation is kept around 2%, and the unemployment has been going down as well, currently around 8%. European economic growth is driven by increased fixed assets investment, innovation as well as increasing consumption, which bodes well for companies that produce consumer products. Germany and UK as growth engines within the Euro zone perform well in the past several years and other up and coming nations, like Spain, are also delivering better than expected growth results, showing a stronger than usual growth momentum in Europe. European markets for household appliances are estimated to be around 147.7 billion US dollars, one of the largest markets in the world, and the consumers are of premier type. Europe is one of the most investment friendly economies in the world, taking in an annual amount of USD 70 billion Foreign Direct Investment. c) SOCIAL: As mature and developed market, Europeans have a strong preference for quality and big brand products, the level of income distribution in Europe is relatively even and the average education is also at a high level. More and more families become dual income earning and women are increasing inclined to work, hence, more disposal income for consumption on per capita basis, The society is greying steadily, and the ageing population has more to spend on consumer products, Europeans, compared to Americans
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and Asians, pay more attention to the quality of life, and the pace of work is slower, and enjoying life is probably more appreciated than anywhere else, EU as a common market allows relatively free movement of people (though there are some restrictions on newly acceded EU members), which is a plus for consumer products as when people move from one country to another, they are more likely to buy new consumer products than bringing with them the used ones.
d) TECHNOLOGICAL:

Europe is one of the innovation centers in the world and has been leading in the design and manufacture of household appliances, home to many multinationals in this area, e.g., Siemens, Bosch, Europe is amongst the economies that spends heavily on R&D, Technology transfer in Europe is not a politically sensitive issue, but transfer to outside parties, still meet with difficulties and resistance.
e) ENVIRONMENTAL:

Europe is one of the most environmentally conscious parties in the world today and has introduced very stringent environmental regulations, Europe has imposed very high standards on the environmental friendliness of electric appliances (WEEE and ROHS), effective as of August 13, 2005, posing challenges and opportunities for household appliances makers around the world Europes energy is very dependent on external supplies, most notably, Russia. It is, however, keen on diversifying its energy supply as well as exploring alternative energies, such as wind, solar, amongst others.
f) LEGAL:

Europe has one of the most developed legal frameworks in the world, including competition law, employment law, product safety regulations and others, and the enforcement is also one of the best and strictest. The PESTEL analysis has clearly shown that the EU boasts of premier consumers, political stability, sound economic performance, and favorable investment climate and environment. The renewed growth momentum led by Germany and UK recently will also contribute to the increase of the consumption of household appliances in Europe, an advantage for PELs expansion into Europe and implementation of its strategy of building a global brand.

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PORTER FIVE FORCES ANALYSIS

a) THREAT OF NEW ENTRANTS: The barriers to new entrants in home appliance industry are pretty high not only because this sector is a typically capital intensive one but also due to the high customer loyalty with brand preferences, therefore, the threat of entry is quite low. Given that there are already multiple global brand products wrestling with local products in Europes household appliances market, the entry of a new brand such as PEL into this market can prove to be extremely difficult. However, PELs strength, as will be discussed later in this paper, in quality products, innovation, first-class services, and environmental protection feature will turn out to be advantages that help the company to crack into the European market. b) BARGAINING POWER OF SUPPLIERS: Most of the suppliers of household appliances are either located in Asia or some central European countries. Considering that more and more companies tend to find overseas suppliers to lower the production cost, the bargaining power of suppliers is also quite low since their products are not unique and the switching cost is quite low. As one of the largest home appliance producers in Asia, PEL has quite some control over suppliers which enables them to further lower down the bargaining power of suppliers. A vertically integrated company which engages in the design, manufacture, marketing, distribution, and after sales services of its own products, PEL is able to exercise strict control over the quality of the supplies and services provided. c) BARGAINING POWER OF CONSUMERS: Although Europeans are mature customers and have plenty brand products on the markets at not so high switching cost, the actual bargaining power of consumers are low to medium for the following reasons: Customers focus less on price, more on quality and the services associated with the products: though the quality of most of the brand products on the European markets is satisfactory, the lack of service-oriented attitude of the large multinational home appliance producers leaving consumers not many choices. Value the application of cutting-edge technologies and state-of-the-art design: most of the multinationals including those big European and US names are often reluctant to tailor their products to each country as it is too costly and cumbersome to modify and improve their products to suit local customer needs since they already have successful business in these markets.

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 Strong consciousnesss of environmental protection elements when purchasing household appliances: Most of the home appliance producers on the European markets are well aware of this and have made a lot of efforts to produce environmental friendly products. Given that the switching costs of home appliance are not high, consumers have quite high bargaining power in this aspect. To sum up, although in theory the bargaining power of consumers in Europe should not be low, in reality, the lack of product variety, innovation and the slow responsiveness for customer service on the European market leave consumers not too many choices, therefore, their bargaining power is low to medium. D) RIVALRY AMONG EXISTING COMPETITORS: There are two types of competitors for PEL in the European market, i.e. manufacturers of global brand such as (LG, Siemens, GE, Whirlpool, etc.) and local brand companies (Orient, Haier, dawlance etc.). Both of them have their targeted clients and wellestablished reputation, though at different levels. The two dominant parties have been in the market place for very long time, and developed their own loyal customers, therefore, the rivalry among existing competitors are high. It would be very difficult for PEL to win the market share from these competitors unless PEL can identify unique positioning in the market and appeal to the clients. E) THREATS OF SUBSTITUTES: There is basically no substitute to household appliances as people by any means needs to cook, store fresh food or use the fridge functions. There are certain products which have begun to have substitutes, such as computer and internet TV becomes more and more popular among the young generation, however, it wont happen overnight that computer and internet can replace TV as it requires high technological development in these areas which will take at least some years. To sum up, by applying Porter Five Forces Model, we can arrive at the conclusion that EU is one of the top markets for household appliances companies and customers exhibit a clear pattern of assumption that is more focused on quality, experience, and environmental protection. PEL has some clear advantages to enter into this market and great potentials to develop, given its prior experience inside China and in other markets, such as the US. However, it also faces some new challenges vis--vis competitors. A good positioning strategy will be of great importance for PELs success in the European market.

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EXTERNAL FACTOR EVALUATION

EFE MATRIX Key External Factors

Weight Rating Weighted Score

Opportunities

1 2

Government announced expansion in power projects Development of New Electronic Park in the country Government has heavy taxes imposed on the import of electronic parts Some competitors are closing / winding up their business Demand for electronic appliances is increasing by 10% annually due to changing family structure Due to power shortage, demand of electronic invertors is increasing

0.10

4 4

0.40 0.20

0.05

0.10

0.40

0.15

0.45

0.15

0.45

0.05

0.20

Threats 1 Increasing power and gasoline shortage in the country Increasing inflation and decreasing buying power of consumers Labor rates have increased by 15% 0.05 3 0.15

0.05

0.15

0.10

0.10

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Owned Plants and equipment, the company has no contingency plans for natural disasters like earth quakes etc Competitors have acquired local manufacturing plants of raw electronic parts Increasing prices of electricity will decrease demand of heavy electronic items like A/C by 15%.

0.05

0.10

0.10

0.20

0.05

0.10

TOTAL

1.00

2.90

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COMPETITIVE PROFILE MATRIX

PEL Pakistan Target Agencies Intl (Pvt.) Ltd Rating Score

Competitive Factor

Weight

Rating

Score

Advertising Product Quality Price Customer loyalty Financial Position Market Share Sales Distribution Customer Services Production Capacity

0.09 0.08 0.20 0.08 0.07 0.14 0.10 0.12 0.10 0.12

3 2 4 1 2 4 2 4 3 3

0.27 0.16 0.8 0.08 0.14 0.56 0.2 0.48 0.3 0.36

4 4 3 2 1 3 3 2 2 2

0.36 0.32 0.6 0.16 0.07 0.42 0.3 0.24 0.2 0.24

Total

1.00

3.35

2.91

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INTERNAL AUDIT

DEPARTMENTS
There are 6 major departments in PEL they are:(i) Marketing Department (ii) Finance Department (iii) Production Department (iv) Human Department (v) Administration Department (vi) Research &Development Department

1. MARKETING DEPARTMENT This department is headed MANAGING DIRECTOR YOUSAF. H. ISHAQ. Then Further down in hierarchy there are: Brand Managers. Manager Distribution Credit. Customer service officers.
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 Institutional sale Manager. There are six branches of PEL in Pakistan. They are headed by Regional Sales Manager (RSM). The sales policies are recommended by head office for all regions. The policies for customer service are defined by General Manager Customer Service at head office. Targets are given to regional sales Manager of each particular region and then the RSM gives further target and incentives to sales officers to achieve the demand targets. In Lahore the market is divided into 3 areas: Abid Market Patiala Market Out skirts In Abid Market there are 20 dealers and 30 sub dealers. In Patiala Market there are 16 dealers and 21 sub dealers. In outskirts there are 35 dealers In Lahore there is: RSM (1) Area Sales Manager (2) Sales executive (10) Marketing department controls the 4Ps in the company i.e. Product, Promotion, Placement, Pricing. They are also responsible for the alteration and Modification in the different brands of the company and of new product e.g. they can suggest color change, size of product etc. which is being demanded by the customers. They try to bring innovations in the products to make them attractive for the customers and to compete with the competitors i.e. Dawlance, General, and Waves etc. There are print as well as electronic media for promotion activities.

FINANCE DEPARTMENT The department is controlled by General Manager finance, Mr. Manzer Hussain this department is divided into 3 sections:Finance Accounts Credit Control (i) Finance

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Finance deals with Banks (ii) Accounts Accounts deal with costing system, Billing & booking transactions as well as internal auditing. (iii) Credit Control This section of finance department deals with Credit and recovery procedures. PRODUCTION DEPARTMENT This department looks after the manufacturing of products. This department is given targets by top management to produce a specific number of products which are ascertained by previous sales data and market conditions. This department is responsible for quality control as well i.e. it sees there are no defects or any shortcomings in the product. It also overseas new technologies and also to remain updated regarding any new machinery or other equipment for better product performance. After manufacturing a new product it is sent to Germany for technical assessment to Danfoss Company. After approval from it then its bulk production is started. PLANT CAPACITY AND ACTUAL PRODUCTION
Sanctioned Installed Capacity 2001 Electric motors Transformers Energy Meters Air conditioners Refrigerators/Deep- Freezers Compressors Actual Production 2001 Nil 351 MVA 431,862 NOS 3,494 TONS. 766,399 CFT Nil

25,612 HP 1500 MVA 600,000 NOS. 36,250 TONS. 89,525 CFT 360,000 NOS.

HUMAN RESOURCE DEPARTMENT

This department oversees the selection criteria for employees i.e. it sets different guide lines for selection of employees. After selection of employees it also offer the training and to upgrade their skills. The head of HR department is called HR manager. It has 180 employees working in it. Among which 27 are doing clerical job.

FUNCTIONS
Recruitment Selection Training

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Transfer Firing decisions Labor Affairs Staff welfare Manpower planning for next 5 years.

RESEARCH & DEVELOPMENT DEPARTMENT This is the most important department regarding the future of company as a market leader this department is constantly in-touch with market to know about customer preferences and specification for products. After thorough analysis of customer expectations this department then gives its recommendations to the top management to being changes in the product for market success. This department conducts surveys in market to get information. This department is also responsible for bringing new technologies in the products.

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INTERNAL FACTOR EVALUATION (IFE)

IFE MATRIX Key Internal Factors Weight Rating Weighted Score

Strengths
1 2 Low Cost & Energy efficient Products Company owned and well equipped plants Buyers from Government institutions Increase in Production Capacity Strong financial position due to strong parent group Company owned ware houses Strong receivables collection system 0% markup on installment sales
0.06 0.06 0.02 0.06 0.10 0.10 0.07 0.12 3 2 3
0.30 0.14 0.36

1 3 2 2 3

0.06

0.18 0.04 0.12 0.30

3 4 5

6 7 8 Weaknesses 1 2

Low market share No after sales support centers and minimum customer service centers 2 Weak distribution channels Weak marketing strategies Employees turnover rate is very high Low incentives for distributors No products exchange offers

0.02 0.10

4 2

0.08 0.20

3 4 5 6 7

0.05 0.06 0.02 0.06 0.10

3 3 2 4 4

0.15 0.18 0.04 0.24 0.40

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TOTAL

1.00

2.79

STEP 10
SWOT MATRIX
Strengths S 1. Low Cost & Energy efficient Products 2. Company owned and well equipped plants 3. Buyers from Government institutions 4. Increase in Production Capacity 5. Strong financial position due to strong parent group 6. Company owned ware houses 7. Strong receivables collection system 8. 0% markup on installment sales Weaknesses W 1. Low market share 2. No after sales support centers and minimum customer service centers 3. Weak distribution channels 4. Weak marketing strategies 5. Employees turnover rate is very high 6. Low incentives for distributors 7. No products exchange offers

Opportunities O

SO Strategies

WO Strategies

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1:[S5,O2]: Open branch in Lahore to expand local market 1. Government announced expansion coverage. {Market Development} in power projects 2:[S4,O3]: In addition to 2. Development of New import the equipment, we will Electronic Park in the also start to provide Installation services. country. {Forward Integration} 3. Government has 3:[S1,O1,O5]: Import Highheavy taxes imposed tech machinery/equipments to on the import of introduce in local market. electronic parts {Product Development} 4. Some competitors are closing / winding up their business. 5. Demand for electronic appliances is increasing by 10% annually due to changing family structure 6. Due to power shortage, demand of electronic invertors is increasing

1:[W1,O1] Import equipments for other sectors as well (e.g., Textile, Leather etc.) {Concentric Diversification} 2:[W3,O4] Open New Branches in UAE. {Market Development} 3.[W5,O2] Import more LPG equipments to lower operational inefficiency & raise revenues. {Market Penetration}

Threats T 1. Increasing power and gasoline shortage in the country 2. Increasing inflation and decreasing buying power of consumers 3. Labor rates have increased by 15% 4. Owned Plants and equipment, the company has no contingency plans for natural disasters like earth quakes etc.

ST Strategies 1. [S5, T1]: Invest in Joint Ventures with international companies in Intl. Markets. {Conglomerate Diversification} 2.[S3,T2]: Buy Competitors Business to increase market share & achieve Economies & Scale. {Horizontal Integration}

WT Strategies 1. [W5, T5]: Joint Venture with Rana Trading to grab the international business opportunity. {Defensive} 2. [W5, T5]: Focus on Fire Safety Segment in LPG. {Defensive}

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5. Competitors have acquired local manufacturing plants of raw electronic parts 6. Increasing prices of electricity will decrease demand of heavy electronic items like A/C by 15%.

Alternative Strategies based on SWOT Matrix

Key Internal Factor Key External Factor Resultant Strategy

Little Market Presence (Weakness)

Untapped International market (Opportunity)

Market development
=
Open Branch in UAE

Focus Strategy
High Operational Costs (Weakness) + Power Crisis (Threat) =
Focus on Fire Safety segment in LPG market.

High Reputation (Strength)

Demand in LPG market (Opportunity)

Forward Integration
=
Provide Installation Services

Sole Supplier for US Fire Pump (Strength)

Intense + Competition (Threat)

Horizontal Integration
= Buy Competitors facilities

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STRATEGIC POSITION AND ACTION EVALUATION (SPACE)

INTERNAL STRATEGIC POSITION

FINANCIAL STRENGTH (FS) Company's financial position is very strong with high equity Daily sales outstanding ratio is far better with industry average Company has very limited liability and debt ratio is below average in comparison with industry average. TOTAL COMPETITIVE ADVANTAGE (CA) Company has a government owned buyers base Government has approved a high budget for power projects Company has the only provider of electronic inverter in the country TOTAL EXTERNAL STRATEGIC POSITION INDUSTRY STRENGTH (IS) Due to strong financial status company has acquired some competitors Market has a growth potential due to increase in demand of electronic appliances Industry faces a severe shortage of gasoline

RATINGS 3 1 4

8 RATINGS -5 -2 -2

-9

RATINGS 4

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Regulators imposed heavy taxes on the electronic products TOTAL ENVIRONMENTAL STABILITY (ES) The law and order situation and political instability is very high Increasing inflation in the country will make industry progress slow Risks are high because company has no contingency plans to handle any natural disaster. TOTAL Conclusion:
ES average = -15/4= -3.75 IS average = 13/3= 4.33 CA average = -9/3= -3.00 FS average = 8/3=2.67

4 13 RATINGS -5

-2

-4

-15
Directional Vectors: X-axis: -3.00 + 4.33 = 1.33 Y-axis: -3.75 + 2.67 = -1.08

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SPACE Matrix

FS

+6

Conservative

+5 +4

Aggressive

+3
+2 +1

CA

-6

-5

-4

-3

-2

-1 -1 -2 -3

+1

+2

+3

+4

+5

+6

IS

Directional Vector

Defensive

-4 -5 -6

Competitive

ES
Description: The strategy to be recommended is Competitive which includes Backward, Forward, & Horizontal Integration, Market Penetration, Market Development, Product Development & Joint Ventures.

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BOSTON CONSULTING GROUP (BCG) MATRIX BCG Matrix

Relative Market Share Position
High 1.0 High +20 Medium .50 27 Low 0.0

Industry Sales Growth Rate

REVENUES 5M 5 Million

Medium

Low -20

Cash Cows

Dogs

PRODUCTS/ SERVICES 1

PEL Pakistan
TOTAL

% PROFITS % MARKET MARKET REVENUES PROFITS SHARE GROWTH RATE 100 1.06 100 27 +16 100% 1.06 M 100%

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INTERNAL -EXTERNAL (IE) MATRIX

PRODUCTS/ SERVICES 1 PEL Pakistan TOTAL

REVENUES

5M 5 Million

% PROFITS % MARKET MARKET REVENUES PROFITS SHARE GROWTH RATE 100 1.06 100 27 +16 100% 1.06 M 100%

Description:
The I-E Matrix suggests that PEL Pakistan should pursue Grow & Build strategies which include Intensive and Integrative strategies.

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GRAND STRATEGY MATRIX (GSM)

RAPID MARKET GROWTH Quadrant I

WEAK COMPETITIVE POSITION

Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric Diversification
STRONG COMPETITIVE POSITION

SLOW MARKET GROWTH

Description: PEL Pakistan has strong competitive position and rapid market growth, suggesting Intensive strategies and integrative strategies for a more promising growth rate.

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QUANTATIVE STRATEGIC PLANNING MATRIX (QSPM)

Alternatiave-1
Heaving Marketing & Advertising Campaign AS TAS 4 3 2 4 2 2 0.40 0.24 0.08 0.20 0.04 0.04

Alternatiave-2
Opening of New Service Center

Key Internal Factors Weight Strengths Low cost and energy efficient products. 0.10 Owned and well equipped plants. 0.06 Govt. owned buyers. 0.08 Increase of production capacity. 0.04 Strong financial position and strong parent 0.05 group. Owned storage warehouse. 0.02 Strong receivable collection process. 0.02 0% markup on installment sales. 0.02 Weaknesses Low market share. No support after sales. Weak distribution channel. Weak marketing strategy. Employee turnover rate is high. Low incentives for distributor No product exchange offerings TOTAL Key External Factors Opportunities Govt. announces expansion in power projects. Development of new electronic park in a country. Govt. imposed heavy taxes on the import of electronic parts. Some competitor are closing / winding up their business Demand for electronic appliances increasing by 10% Due to power shortage, increase the demand of electronic investors.

AS 3 2 1 3 2 4

TAS 0.30 0.16 0.04 0.15 0.04 0.08

0.05 0.10 0.08 0.12 0.10 0.11 0.05 1

2 3 4 2 1

0.20 0.24 0.48 0.20 0.05

4 4 3 3 1

0.40 0.32 0.36 0.30 0.05

0.11 0.06 0.06 0.13 0.08 0.09

4 4 4 3

0.24 0.52 0.32 0.27

2 3 4 3 2

0.12 0.18 0.52 0.24 0.18

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Threats Increasing gasoline shortage in the country. Increasing inflation and decreasing buying power of the consumer. Labor rate has been increased by 15% No contingency plan of the company. Competitor has acquired the local manufacturing plant. Increasing prices of electricity will decrease the demand of heavy electronics. SUM TOTAL ATTRACTIVE SCORE 1.0

0.12 0.11 0.05 0.08 0.07 0.04

2 2 4 -

0.22 0.10 0.28 4.12

1 4 3 2

0.11 0.20 0.21 0.08 4.04

Description: The QSPM suggests the strategy of Acquiring competitor (Horizontal Integration) has a better Total Attractive Score than its alternative strategy of Expanding business in UAE (Market Development).

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Existing & Proposed Strategies

EXISTING STRATEGIES: Market Penetration. PEL Pakistan has been focusing on market penetration through using the company goodwill and cold calls to clients. Product Development: PEL Pakistan has also added some new products to its range of offerings, bPELde the consultancy services. PROPOSED STRATEGIES: Horizontal Integration: (Acquire Competitors Facilities) Since the industry is showing growth and PEL Pakistan is facing relatively high operating costs, it is therefore recommended that PEL Pakistan should acquire weaker competitors like Rana Trading. This will not only help minimize the operational inefficiency effect, but it will help increase the market coverage as well as generate more revenues for the organization. It will also reduce the problem of lack of stock inventory. This will help strengthen the market position of the company. Forward Integration: (Provide Installation Services) This is also recommended that PEL Pakistan should pursue forward integration strategy by focusing on the installation of the various equipments that it imports for its clients. This will help increase the revenues and consequently increase market share. Since company enjoys good reputation in the market, this strategy would be more feasible and beneficial for the firm. Market Development: (Expand Business Internationally) Due to the poor law and order situation, economic downfall, and political instability, the company should try and reach the international market. UAE can be a good destination for this purpose. It is good to grab the global business opportunity. Since the company has good relationship with the international partners, it can use these business relationships to expand business in UAE. Market Penetration: (In the Fire Pump Segment) PEL is the sole supplier of the US Fire Pump, which is a great competitive advantage. The company should pursue Market Penetration in order to increase the sales of Fire Pump. In this regard, it is recommended that company should launch an advertising campaign on TV and Newspaper to create awareness about the fire safety. This will help increase the sales of fire safety pump. Also, by generating more revenues company will be able to increase its market share and reduce the operational inefficiency. By focusing on this segment, the company can strengthen its market position. With the help of additional revenues from this segment, PEL can invest in other areas and in this way it can become more competitive in other sectors as well. 32 | P a g e

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