INTRODUCTION TO PAK SUZUKI

Pak Suzuki Motor Company Limited (PSMCL) is public limited company with its shares quoted on Stock Exchanges in Pakistan. The Company was formed in August 1983 in accordance with the terms of a joint venture agreement between Pakistan Automobile Corporation Limited (representing Government of Pakistan) and Suzuki Motor Corporation (SMC) - Japan. The Company started commercial production in January 1984 with the primary objective of progressive manufacturing, assembling and marketing of cars, Pickups, Vans and 4x4 vehicles in Pakistan. The Companys long term plans inter-alia includes tapping of export markets. The foundation stone laying ceremony of the Companys existing plant located at Bin Qasim was performed in early 1989 by the Prime Minister then in office. By early 1990, on completion of first phase of this plant, in-house assembly of all the Suzuki engines started. In 1992, the plant was completed and production of the Margalla Car commenced. Presently the entire range of Suzuki products currently marketed in Pakistan is being produced at this plant. Under the Governments privatization policy, the Company was privatized and placed under the Japanese management in September 1992. At the time of privatization, SMC increased its equity from 25% to 40%. Subsequently, SMC progressively increased its equity to 73.09% by purchasing remaining shares from PACO. The Suzuki Management immediately after privatization started expansion of the existing plant to increase its installed capacity to 50,000 per annum. The expansion was completed in July 1994. However capacity remained substantially under-utilized until 2002 because of economic recession. Thereafter realizing growth in demand, the Company increased capacity in phases. The first phase was completed in January 2005 when capacity was enhanced to 80,000 vehicles .The second phase was completed in January 2006 and capacity was raised to 120,000. The third phase was completed when on 6th February 2007 Prime Minister of Pakistan Mr. Shaukat Aziz inaugurated 150,000 vehicles capacity expansion facilities. On 25th April 2007, the Board of Directors of Pak Suzuki Motor Company Limited (PSMCL) and Suzuki Motorcycles Pakistan Limited (SMPL) approved Scheme of Arrangement (The Scheme) to amalgamate SMPL into PSMCL with effect from 1st January 2007. The scheme was approved by the shareholders of the respective Companies at the Extra-Ordinary General
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Meeting held on 30th June 2007. The scheme was sanctioned by the Honorable High Court of Sindh (the court) on 17th September 2007. The certified copy of the Order of the Court sanctioning the scheme was filed with the Registrar Companies Karachi on 1st October 2007, from which date the scheme became operative. PSMCL and Suzuki Motor Corporation (SMC) Japan held 41% and 43% shares in SMPL respectively. Pak Suzuki issued and allotted 1,233,300 ordinary shares of Rs.10/- each to the qualifying shareholders of SMPL @ one ordinary share in Pak Suzuki for every twenty one shares held by SMPL shareholders as on the date of final book closure i.e. 29th October 2007.The trading of shares of SMPL on Karachi and Lahore Stock Exchanges ceased from the same date. The Company continues to be in the fore-front of automobile industry of Pakistan. Over a period of time, the Company has developed an effective and comprehensive network of sales, service and spares parts dealers who cater to the needs of customers and render effective after-sale service country wide.

1. Statement of Ethics and Business Practices

i. Pak Suzuki insists on integrity and honesty of its employees in doing business. Any unfair or corrupt practice to solicit business is fundamentally inconsistent with business codes of Company. ii. iii. Pak Suzuki believes in compliance to regulatory obligations. 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 Companys business code of conduct. iv. v. Pak Suzuki believes in transparency in business transactions and they are to be recorded accurately and fairly in books of accounts in accordance with standard procedures. Pak Suzuki expects its employees to act in Companys best interest while holding confidential Information. Company expects its employees neither to solicit internal information from others nor to disclose Companys data or any other material information to any un- authorized person/body. vi. vii. Pak Suzuki believes in individuals respect and growth. Its employment policies do not discriminate on the basis of race, religion, gender or any other factor. Pak Suzuki does not believe in political affiliation.

2.

Corporate Strategy

Pak Suzuki is built on the idea of a responsible corporate citizenship thereby managing quality, environmental, safety & occupational health matters as an integral part of our business. In fulfilling this responsibility Pak Suzuki adheres to the following fundamental principles: i. We are committed to provide top quality products at competitive price to the satisfaction and requirement of our customers.
ii.

We conduct our operations in compliance with applicable environmental, occupational health & safety laws and regulations. Even where existing laws & regulations are not adequate we undertake to operate in a responsible manner by assuring the HS&E integrity of our processes and facilities.

iii.

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

iv.

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

v.

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

SITUATION ANALYSIS
In order to plan in a better way we have to perform situation analysis of general environment, product environment and customer market.

1. General Environment
As we know most of people in Pakistan associated with middle class families and havent got enough money to buy a Luxurious car. So they purchase economical vehicles such as Suzuki Mehran, Alto and bikes for their convenience. Nowadays our life becomes very fast and every one try to reach their destination as soon as possible and life style of people is continuously changing. Time is the main factor to reach and complete the work so people shift from public Transport to their personal convenience, so everyone prefers to have his/her own car. According to environment of Pakistan Pak Suzuki will be most suitable in available vehicles from middle class to upper class.
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2. Product Market
i.

Sales volume and growth Product variety and prices Sales volume and growth

ii.
i.

Year 2010 was better than last year for Pakistan's automobile industry. The industry for cars and light commercial vehicles witnessed a growth of 38% in sales volume. The industry sold 148,237 units during the year against 107,768 units last year. Despite the signs of recovery from deep recession the level of demand is still far below than 2007 when industry had sold 200,782 units. Operating Results Of Company the total (Cars & Motorcycles) net sales revenues increased by 62% from Rs.26.234 billion to Rs.42.642 billion. In which 79,138 units of automobiles are included. The growth in demand for automobiles was 52%. The production volume of automobile was increased by 54%. The production volume of automobile increased from 51,032 units to 78,840 units. Despite increase in production, 47% capacity of automobile plant remained un-utilized.
ii.

Product varieties and prices

Following are some Products varieties and their prices: SWIFT The European inspired exterior gives The Swift 1300 cc a distinctive look. A unique stylish design that turn a heads where you go, the spirited engine makes for exhilarating drive and gives you ultimate freedom where the road takes you. Price:

1.3 DLX, PKR. 1,131,000/1.3 DX, PKR. 1,031,000/-

Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Eminent Blue. LIANA 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.
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Price:

Liana 1.3 RXI MT, PKR. 1,232,000/Liana 1.3 RXI MT, CNG, PKR. 1,301,000/-

Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue. CULTUS (1000cc) 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. Price:

Cultus VXRi, PKR. 905,000/Cultus VXRi CNG, PKR. 965,000/-

Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue ALTO (1000cc) 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. Price:

Alto VXR, PKR. 707,000/Alto VXR, CNG, PKR. 771,000/-

Colors: Olive Green, Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue MEHRAN Mehran is Pakistans largest selling car. Mehran has bright roomy and comfortable cabin which keeps body relaxed and has a strong and lighter body shell resulting in smooth drive due to reduction of unpleasant noise harshness and vibration. 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. Price:

Mehran VX, PKR. 495,000/Mehran VX CNG, PKR. 556,000/Mehran VXR, PKR. 547,000/Mehran VXR, CNG PKR. 605,000/-

APV

Colors: Pearl Red, Graphite Grey, Solid white, Silky Silver, Eminent Blue

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 with 1500 cc. Price:

APV 1.5L, PKR. 1,909,000/APV 1.5L CNG, PKR. 1,984,000/-

Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue JIMNY JIMNY 4X4 JEEP 1300cc (Imported) Steady, sturdy and smart, Suzuki Jimny with new wide tread brings you the ultimate pleasure of a real4-wheel drive. It has got all the sporting spirit to go along for adventurous free souls. Price: Jimny JLSX M/T, PKR. 1,924,000/Jimny JLDX M/T, PKR. 2,073,000/-

Colors: Solid white, Silky Silver BOLAN VAN The Suzuki Bolan Hi-roof gives you everything you ever wanted in a van, Spacious interior for comfort, tough engine to carry large loads and plenty of room for passengers to enjoy a comfort-able day long ride. Air-conditioned model (dual thrust) has been recently introduced. Price: Bolan VX, PKR. 574,000/Bolan VXR, PKR. 633,000/Bolan VX CNG, PKR. 640,000/Bolan VXR CNG, PKR. 701,000/-

Colors: Pearl Red, Solid white, Silky Silver RAVI PICK UP Suzuki Ravi is the veritable cargo vehicle with an amazing capacity for load bearing and durability. Undoubtedly, the unrivalled commercial vehicle in its class, Ravi is the breadwinner for millions in Pakistan. This light commercial vehicle referred to as the mini revolution, replaced the animal-drawn vehicles in Pakistan. Price: Ravi VX, PKR. 522,000/6

Ravi VX CNG, PKR. 586,000/-

Colors: Pearl Red, Solid white, Silky Silver.

3. Customer Market
Customer market and customer buying behavior can be categorized as Demographic factor, Usage pattern and behavior and preference of specific and benefit.
i.

Demographic factor:

Target market of Pak Suzuki according to Age, Gender and Income:

Age: 20 year to upwards Gender: Male and Female Income: Starting from Rs.20000 Life Style: Customer Life style of Pak Suzuki in terms of AIO: Can be described as:
o o o

Activities: Early Professional, Executives, House Hold, and Business Purpose. Interest: Personal Use, Luxury. Opinion: Sensitive, Conscious, Responsible and Social.

ii.

Usage pattern and behavior:

Mostly People use such vehicle for their convenience e.g. go for job and for family use, for Business Purpose along with comfortable drive, relaxation and affordability.
iii.

Preference of specific end benefit:

Customers who use such vehicle are sensitive, conscious and responsible people. They tried their level best to save time as much as possible so they want something which is quality wise good and also affordable.

SWOT ANALYSIS
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1. Strength
1. Highest market share with low price vehicles

2. Resale of local assembled cars 3. Large distribution channel 4. Rising per capita income with changing demographic distribution 5. Highly innovative and deep product line 6. Highly maintained supply chain 7. Well managed and highly competitive staff
8. Well defined and beurocratic organizational structure

9. Easy available of spare parts

2. Weakness
1. Scarcity of raw material 2. Bargaining power of supplier is low
3. Lack of coordination & linkage with government and semi government supporting

bodies 4. Less technical training institute 5. Less distribution channels in sub urban

3. Opportunities
1. Increasing demand for cars 2. Efficient Efi engine 3. Large market size to operate 4. Global spare part market 5. Space saving small size CNG cylinders
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4. Threat
1. Local competitors like Toyota, Honda and Hyundai 2. Foreign investment and setup production facilities 3. Smuggling of auto parts 4. Inflation rate 5. Heavy taxes 6. Competition from import cars 7. Increase in fuel prices

PEST ANALYSIS
Uncontrollable environment are those external factors which can prohibit us or can create hurdles between us and our business. It is also called pest analyses which are as follow:
1.

Political Environment

Pakistan has to face lots of ups and down since its independence. So many governments have been broken down by military authority and most of the time marsh law applied on Pakistan. In this scenario no entrepreneur was willing to invest in Pakistan except few, due to this market environment wasnt good in Pakistan. Anyhow Pakistani government never has been trust worthy for any investor.

2. Legal Environment
As all countries, Pakistan also has some legislation about each sector. But like developing countries it is hardly being imposed by authorities. Only due to corruption government encourage smuggling and black marketing. When anyone supported by government or give more commission to Govt. get inside in the market and they have very soft behavior by government for any legal action. Such unethical activities destroy all law and legislation.
3.

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 government policies encourages by different foreign assistance and renewed access to global market since 2001. By the following policies government succeed to reserve the situation of economy during last passed years.

4. 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 transportation source in Pakistan, people use buses, pickups for journey. They also have their own convenience like cycle, bikes, vehicles etc and lots of people are pedestrian, but now people who havent any source of transportation they also want something for their convenience because they want to save their time as much s they can. People want to use such vehicle which looks beautiful and also affordable.
5.

Technological Environment

Technological factor is also very important and we havent 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 cant hold on it.
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CONSUMER AND MARKETING MIX RESEARCH

Perception of people about Suzuki Products: Pak Suzuki product should have excellent fuel consumption and good resale value. Easily availability of spare parts everywhere even in rural areas. The quality of product is made according to Pakistan roads and infrastructure. Product line extension with the very low difference of price. 3S (Sales, Service and spare Parts) at your door step.
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Brand Loyalty.

People want such vehicle which doesnt effect on their prestige and also within the range of them. So after this research we come to know that Suzuki is best choice for the customer. It is safer on the road less fuel consumption and Environment friendly product. Because of these features it is also economical.
1.

Customer First

It is our Endeavor to provide top quality services to our valued customers to their entire requirement and satisfaction, through our After Sales Network across Pakistan. 87 Dealers workshops with skilled manpower to serve in all major cities are equipped with state of the art latest technology, tools & equipments and technical manpower to handle conventional and Electronic Fuel Injection (EFI) system. Pak Suzuki offers Warranty for all its products for 2 Years and 40,000 Km from the date of invoice, whichever comes first. (Warranty of 2 Years and 40000 Km for 800 cc vehicle is applied for vehicles invoiced from Jan, 2010).

2. Marketing Mix Promotion

For Promotion of Suzuki Pakistan Automobiles, we use different medias like Electronic and Print media (Televisions, Radio, Social Network Websites, Test Drive., Sponsorship, Newspapers, Bill-boards, etc), we aware our Target Audience through Above Sources in order to Create their interest.

3. Placement
The Pak Suzuki distributions channels are shown in this diagram.

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4.

Market Analysis (Porters five forces)

The strategic business manager seeking to develop an edge over rival firms cause this model to better understand the industry context in which the firm operates. Here are the porters five forces:
i. ii. iii. iv. v. i.

Potential New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Threat of Substitutes Industry Competition/Rivalry between Competitors Potential New Entrants The New Entrant category of Porter's 5 forces; we can see that it would be tremendously difficult for another car manufacturer to enter into the market.

The rate at which the industry is changing does not allow for new entrants to come into the market very easily, and the cash investment for a new firm to produce massive quantities of cars is in the billions.

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ii.

Bargaining Power of Buyers Buyers from the strong competition inside of the market find themselves in a very favorable position.

Since competition is so strong between auto makers and dealers, consumers will often do research on a vehicle before making a purchase.

The high quantity of dealers forces prices to be very negotiable and the consumer often knows exactly what the dealer paid for the car.

Thus, consumers are in an enviable position. The market supply is strong, competition between auto makers and auto sellers is very intense and there is no set price.

Everything is negotiable, for companies like Suzuki pak to continue to compete, the quality of their offerings must be excellent, dealership service must be strong and they must be focus on offering consumers a product with high durability and value.

iii.

Bargaining Power of Suppliers Pak Suzukis suppliers have been known to be some of the most dedicated suppliers in the industry.

By virtue of the just-in-by-time production concept pioneered by Suzuki, the auto industry itself has been very positive relationship develops between its suppliers and producers.

Suppliers are expected to make deliveries of parts in small quantities several times a day.

Pak Suzuki by reducing its part inventory, it has been able to speed up production costs, save money by not letting parts sit on the shelf and improve relationship with parts suppliers, which rely on Pak Suzuki for their revenue.

iv.

Threat of Substitutes Consumer preference is changing because Mini cars are being replaced by compact or midsized cars.

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Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities.

Pakistan is also likely to increasingly serve as the sourcing base for global automotive companies, and automotive exports are likely to gain increasing importance over the medium term.

v.

Pakistan passenger car market is moving towards cars of higher capacity. Industry competition / rivalry between competitors

Industry competition between auto makers is fierce

The typical consumer, when searching for a particular vehicle is bombarded by choices. For example, a search for ALTO (Product of Suzuki) yields a result of Course (Daihatsu) with a minimal extra amount.

5. Annual Plant Capacity

Company v/s Competitors Pak Suzuki Motor Company Limited Indus Motor Company Limited Honda Atlas (Pak) Car Limited Deewan Farooq Motors Limited Ghandhara Nissan Limited 6,000 Car Quantity 68,000 34,000 30,000 15,000

6. Business Strategies
Business Strategies planning are to be conducted in order to know about their various businesses, how each business performing. With the help of these strategies we come to know which business require investment and in the similar manner which require promotional activities. We can use the same promotional activities and with the help of the synergy, their different department (R&D, Marketing, and Sales) can be shared in different business. By
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utilizing synergy we can reduce cost of product and this strategy will help manager to identify that which SBU is falls in which categories, for that these is an analysis known as BCG Matrix Analysis which gives detail information to the managers to carry which SBU and how many resources should a company allocate to which unit. After analysis from different data we came across the BCG analysis and draw the following conclusion. i. BCG Matrix

High

Star
Jimny and Bolan

Question Mark
Swift

Market Growth

Cash Cow
Mehran, Alto, Cultus and Ravi

Dog
APV and LIANA

Low Low Swift Jimny and Bolan Mehran, Market Alto, Cultus Share and Ravi High Liana and APV

ii.

BCG positons throught the Product Life Cycle of Suzuki Priducts

Question Mark

Star

Cash Cow

Dog

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Introduction

Growth

Maturity

Decline

Time

ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

Pak Suzuki is built on philosophy of Corporate Citizenship and has committed itself to improve Environment. ISO 14001:2004 is in place and it is a key factor in operation of the company. Pak Suzuki continuously monitors the waste generated from its activities and wherever required has Environmental Control Equipment and facilities in place like waste water treatment plant. Company provides clean drinking water (tested by approved and certified laboratories) to all of its employees The Company is complying with applicable regulatory requirement and ensures its effectiveness against National Environment Quality Standard by conducting testing of effluents, emissions, etc through renowned testing laboratories. Hazardous Waste is properly disposed off as per EPA requirement.

PROFIT AND LOSS ACCOUNT

For the year ended December 31, 2010 2010 Turnover - net Cost of sales 2009 (Rs 000) 42,642,762 26,234,061 (41,638,975) (25,664,762)
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Gross Profit Distribution costs Administrative expenses Other operating income Finance costs Other operating expenses Profit before taxation Taxation Profit after taxation Earnings per share - basic and diluted Statement of Comprehensive Income Net profit for the year Other comprehensive income Unrealised gain on derivative financial instrument - net of tax Total comprehensive income for the year

1,003,787 (197,361) (636,332) 575,078 (21,349) (55,808)

569,299 (214,550) (495,200) 619,572 (12,564) (38,714)

(335,772) (141,456) 668,015 427,843 456,872 172,624 211,143 255,219 ----Rupees---2.57 3.10 2010 (Rs 000) 211,143 2,322 213,465 255,219 255,219 2009

FUTURE OUTLOOK OF THE COMPANY (OBJECTIVES)

In future company is going to offer a new activity for its potential and targeted market. Suzuki Insurance Arrangement Program It is a complete peace of mind solution to all your Auto Insurance need exclusively available at Pak Suzuki authorized dealers. This is a Customer focused Auto insurance program with the following distinct features. Best Premium Rates Online / Instant Policy Issuance (Walk in Drive out Insured) Exclusively repairs at Pak Suzuki authorized dealers workshop only Quality repairs using Suzuki genuine parts with 6 month warranty on them. Largest country wide dealer network support Call center facility
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Fastest claim settlement time

REFERENCES
www.scribd.com/ http://www.paksuzuki.com.pk/Automobile/Pages

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