Department of Management Sciences

Bahria University Islamabad Campus

Strategic Management

Strategic Analysis of Pak Suzuki Motor

Company Limited
Submitted To: Professor Shahid Nawaz

Submitted By:
M. Sikandar Ali Shah (01-222182-018)
Ayesha Zaheer (01-222182-030)
Afza Masood (01-222182-031)
 Pak Suzuki Motor Company Ltd. Report
Chosen firm is PAK SUZUKI MOTOR COMPANY LTD. The ordinary shares quoted
on Pakistan Stock Exchange (PSX) as of the year end Dec, 2018 are 82,299,851. • I
visited Suzuki Islamabad Motors – located in I-9/3, Industrial Area, Islamabad, met Mr.
Nayer, who is the Manager of this dealership branch. Suzuki Islamabad Motors is an
authorized dealer of Pak Suzuki Motor Company, dealing with Sales Services and Spare
Parts (SSS) along with the After Sales Services.

Vision:
“To be recognized as a leading organization that values customers’ needs
and provides motoring solutions with strong customer care.”

Mission Statement:
To provide automobile of international quality at competitive price.

 Develop products of superior value by focusing on the customer.

 Establish a refreshing and innovative company through teamwork.
 Strive for individual excellence through continuous improvement.

Introduction
Pak Suzuki Motor Company Limited (PSMCL) is a public limited company with its share
quoted on Pakistan Stock Exchange (PSX). The company was formed in August 1983 in
accordance with the terms of a joint venture agreement between Pakistan Automobile
Corporation Limited (representing the Government of Pakistan) and Suzuki Motor
Corporation (SMC) Japan. The company started commercial production in January 1984
with a primary objective of progressive manufacturing, assembling and marketing of Cars,
Pickups, Vans and 4x4 vehicles in Pakistan. The company’s long term plans inter-alia
includes tapping of export markets.

The Foundation stone laying ceremony of the company existing plant located at Bin Qasim
was performed in early 1989 by the Prime Minister then in office. In early 1990, on
completion of first phase of this plant in-house assembly of the Suzuki engine started. In
1992, the plant was completed, and production of the Margalla Car commenced.

Under the Government’s privatization policy, the company was privatized and placed
under the Japanese management in September 1992. At the time of privatization, SMC
increased its quality 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.

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However, the capacity remained substantially underutilized until 2002 because of the
economic recession. Thereafter, realizing growth in demand, the Company increased
capacity in phases. The first phase was completed in July 2005 when capacity was
enhanced to 80,000 vehicles. The second phase was completed in July, 2006 when capacity
was raised to 120,000. The third phase was completed on 6th February 2007. Prime Minister
of Pakistan, Mr. Shaukat Aziz inaugurated 150,000 vehicles capacity expansion facility.

On 25th April 2007, the Board of Directors of Pak Suzuki Motor Company Limited and
Suzuki Motor Cylces Pakistan Limited approved Scheme of Arrangement 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 Meeting on 30th
June 2007. The scheme was sanctioned by the Honorable High Court of Sindh 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 21
shares held by SMPL shareholders as on the date of final book closure i.e. 29th October
2007. The trading in shares of SMPL on Karachi and Lahore Stock Exchanges ceased from
the same date.

The Company setup a new plant to Motorcylces at Bin Qasim. All the operations of
motorcycles have been shifted to the new plant effective from July 2011. The Company
continues to be in the forefront of automobile industry of Pakistan. Over a period, the
company has developed an effective and comprehensive network of sales, service and spare
part dealers who cater to the needs of customers and render effective after-sale service
country wide.

Products:
 Automobiles
 Motorcycles
 Heavy Bikes
 Outboards

Finance:
Pak Suzuki Motor Company Limited operates in the Motor vehicles and car bodies sector.
Pak Suzuki Motor company is in rivalry with three other companies in this sector in
Pakistan: Indus Motors Co Ltd (2017 sales of 112.27 billion Pakistan Rupees [US$843.16
million] of which 93% was Manufacturing), Honda Atlas Cars (Pakistan) Limited (62.80
billion Pakistan Rupees [US$471.65 million] of which 97% was Manufacturing), and

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Hinopak Motors Limited (22.48 billion Pakistan Rupees [US$168.81 million] of which
100% was Buses & Trucks).

Suzuki Authorized Dealers in Islamabad/Rawalpindi:

 Suzuki Rawalpindi Motors
 Jan Motors
 Kazmi Corporation
 Suzuki Islamabad Motors
 Suzuki Federal Motors
 Azeem Motors
 Central Motors
Rawalpindi
 Chaudhary Motors
Liaquat Bagh, Rawalpindi,
385-D, 6th Road, Rawalpindi
64/13, Bank Road, Saddar, Rawalpindi,
147/1, Murree Road, Rawalpindi
Plot # 376, I-9, Industrial Area, Islamabad
8-Khayaban-e-Suharwardy, G-6/1, Islamabad
94-B, Street 7, I-10/3, Industrial Area, Islamabad
57-A 8/9, Akhtar Plaza, Bank Road, Saddar,
H- 24, Murree Road, Opposite St. Patrick School

How Pak Suzuki is Creating Value (Competitive Advantage)??

Finance Arrangement Program is the most convenient and hassle-free way of getting your
car financed. Now you can sit back & relax at your home or office and apply online! Suzuki
Finance arrangement program is a one of its kind innovative financing solution having
multiple value-added benefits.
The Advantages of getting your car financed through Suzuki Finance Arrangement
Program are:

 Fast & Hassle-free processing

 Equity as per your affordability
 Comprehensive Insurance at lowest rates
 Priority Deliveries
 Peace of mind with free 3rd Year Extended Warranty
 Best competitive & affordable rate
 Transparent Deals

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 Internal Analysis of the Pak Suzuki Motor Company Limited
Value Chain Analysis:
PRIMARY ACTIVITES
1. INBOUND LOGISTICS:
Suzuki sources raw material from
different countries like, Japan,
Korea, Thailand but most of the
components are source from Japan
SMC i.e. Suzuki Motor Company.
The complete assembly is
imported from Japan. The mode of
payment is through a Letter of
Credit and the estimated lead time
required is 4-5 months. The parts
are shipped by Sea or Air and Port
Qasim deals with the handling of
the cargo arriving from Japan, Korea and Thailand. There are three department involved
for procuring components from vendor
a. Imports Part Purchasing IPP
b. Local Parts Purchasing LLP
c. General Purchasing GP
Supplier Network: Pak Suzuki has played an impetus role in the engineering sector by
promoting and encouraging the downstream vendor industries in the private sector.
Currently there are about 143 local vendors for difference parts whereas there are more
than 10 foreign suppliers for some major components.
IPP: Deals in Procurement of Components (CKD, KD, Spares), CNG Cylinders, Raw
Materials (Steel Sheet, Plastic Resins, CED Paint), PMEs and their Spares from foreign
sources.
LPP: (Deals in Procurement of locally developed Components from local Vendors)
GP: (Deals in Procurement of Plant Consumables (Paint, Industrial Gases, Lubricants,
etc.), PMEs and their Spares, Administrative Procurement (Computers, Mobile Phone,
Stationery, etc.) from local suppliers.
2. OPERATIONS

a. Shipment Monitoring & Control

b. Legal Matters – Customs Clearance
c. Insurance: Marine Insurance, Motor Insurance, Fire & Allied Insurance &
Miscellaneous Insurance.

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 d. Interaction with Different Govt. Agencies for;
 Import / Export Policies
 Proposals for Trade Policy (Coordination with PAMA)
 Coordination with Ministry of Commerce and EDB
 Coordination with FBR in respect of Custom Laws and import /export related
notifications and rules.
 Payment through TT Remittance

3. OUTBOUND LOGISTICS:
Pak Suzuki has the largest distribution network in Pakistan. There are currently 74 dealers
of Pak Suzuki which are spread all over the cities of Pakistan. The dealers are strategically
placed across the nation to provide customer service at the premium quality.

Mode of Payment: LETTER OF CREDIT, DP CONTRACT & T/T REMITTANCE

Mode of Shipment: By Sea & Air

Port of Discharge: Port Qasim & Karachi Port

The main objectives of outbound logistics include arranging components from vendors at
competitive prices, in right quantity and at right time and order local components at
competitive prices & look out for all possible ways to reduce cost of parts.
 FOB
 Material Cost
 Labor Cost
 Transportation Cost
 Financial Cost
 Profit Margin
 Issuance of LOI.
 Receipt of schedule confirmation
4. MARKETING & SALES:
Over all low-cost provider strategy
 Tough price competition between competitors.
 Firm sets out to become the low-cost producer in its industry.
 Used by new comers to attract buyers.
Sales Analysis: Pak Suzuki Motor Company Limited reported sales of 101.81 billion
Pakistan Rupees (US$764.59 million) for the year ending December of 2017. This
represents an increase of 33.0% versus 2016, when the company's sales were 76.52 billion
Pakistan Rupees. Sales of Automobile saw an increase of 33.3% in 2017, from 74.47 billion
Pakistan Rupees to 99.26 billion Pakistan Rupees.
Localization: The company continues to pursue localization in order to reduce the cost
of product and keep the prices competitive besides saving foreign exchange.

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Customer Market: Customer market and customer buying behavior can be categories:
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.25000

Life Style: Customer Life style of Pak Suzuki in terms of AIO can be described as
Activities Early Professional, Executives, House Hold, and Business Purpose
Interest Personal Use, Luxury
Opinion Sensitive, Conscious, Responsible and Social

Usage Pattern and Behavior: Mostly People use such vehicle for their convenience e.g.
go for job and for family use, for Business Purpose. Customers who use such vehicle are
sensitive, conscious and responsible people.
5. SERVICES:
There are around 87 dealer workshops which gives state of the art expertise and mechanical
manpower. Pak Suzuki offers a warranty of 2 years and 40,000 km whichever comes first.
Free services for the Pak Suzuki customer are given for the first 1.5 months or 1500
kilometers.

SUPPORT ACTIVITIES:
1. PRODUCT R&D, TECHNOLOGY AND SYSTEM DEVELOPMENT:
Pak Suzuki is run by state of the art technology along with technical support in terms of
tools and equipment. Some of the technological equipment of Pak Suzuki are:
1. Engine Analyzer
2. Smart Diagnostic Tester
3. Wheel Balancing
4. Wheel Aligner
5. A/C Equipment
6. Paint Booth
7. Car Wash

2. HUMAN RESOURCE MANAGEMENT:

Multiple training sessions are held time to time in order to train the employees. The
multiple forms of training held at Pak Suzuki are:
i. In House Workshops
ii. Simulation Training
iii. Effective Lectures
iv. Visual Based Training

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 v. Outside Training

3. GENERAL ADMINISTRATION:
Planning process through ERP: LPP sent delivery order to vendors which is monthly
basis and known as firm orders, delivery order contains order quantity, delivery dates,
packing size, minimum lot size, and starting date.

Ordering process through ERP in PSMCL: LPP issue delivery order and part tags to
vender, delivery order shows all DI’s slip detail and part tags to vender through e-mail
and vender is liable to paste part tags and delivery instruction letter along with supplier in
order to generate GRINS.
4. PROCUREMENT:

 Receiving
 Storage
 Supply to the Production Line

RESPONSIBILITIES
Head of Department: Head of department is responsible for monitoring / supervising
overall operations of Material Handling Department.

Section In-Charge: Section In-charges of department are responsible for conducting

smooth production operation. He is responsible for carrying out all activities in respect of
safety, quality, productivity and resolve administrative affair.

Shift In-Charge: Shift In-charge is responsible for shift production and to resolve
abnormalities related to production.

Department Coordinators: Integrates Management System IMS Coordinator of

department is responsible for conducting all concerned departmental activities according
to IMS:

Quality Coordinator: Quality coordinator assures and co-ordinate the production of

desired quality process.

Safety Coordinator: Safety Coordinator is responsible for conducting all departmental

activities and operation in safe and healthy working environment.

Kaizen Coordinator: Kaizen coordinator of department is responsible for achieving

kaizen targets of shop and motivate worker for it.

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 External Analysis of the Pak Suzuki Motor Company Limited
Legal Environment: The fortunes of the country's automobile sector have become bleak
after car bookings plummeted by 32% due to government curtailment on car purchase by
non-filers of tax returns. This would contribute to a massive decline in car sales and its
effect would likely be felt by December 2018, reports Express Tribune.

The ban was enforced from the 1st of July of the current financial year 2018-19 and a
source in the automobile industry shared the trend of
car booking during this period reveals annual auto
sales will plunge to 168,000 from 240,000 units.

The levying of the non-filer of tax returns ban has hit

the low-engine capacity car market. The low-engine
capacity car segment below 1000cc vehicle category
is dominated by Pak Suzuki Motor and it posted a
major decrease in sales last month with volumes
falling 27 percent to 8,683 units on a year-on-year
basis.

The biggest fall in sales was registered in its Ravi and Mehran variants of 50 percent and
42 percent respectively in August. The value of yearly sales of the automobile industry
would experience a major fall of Rs100.80 billion. Eventually, this would contribute to the
tax collection of the Federal Board of Revenue to decline by Rs32.25 billion since 32
percent of a car's price constitutes of taxes

Economic Environment: IMF approved the Government policies, encourages by different

foreign assistance and renewed access to global market since 2001. By following these
policies government succeed to reverse the situation of economy during last five years. The
unstable economic and political situation in Pakistan, higher interest rates for leasing and
financing, the significant depreciation of Pak Rupee against Japanese Yen and US Dollar
and the high import tariff and increase in the prices of raw material are the major economic
factors that affect the industry.

Socio-Culture Environment: People who haven’t any source of transportation want

something for their convenience because they want to save their time as much as they
can. People want to use such vehicle which looks beautiful & affordable. Pak Suzuki Motor
Company, the auto conglomerate, came up with an innovative campaign to connect with
its customers in Pakistan. The #MyStoryMySuzuki competition encouraged individuals to
post their Suzuki memories of in the form of pictures, videos, poems on social media.

Technological Environment: Suzuki Motor Corporation has launched the all-new Jimny
4WD minicar and compact car in Japan on 5 July 2018 for the first time in 20 years. Its
authentic off-road functions and performances have been enhanced, and the all-new Jimny

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compact car has been installed with a newly-developed 1.5 liter. engine. The all-new Jimny
minicar is installed with a specially-tuned 0.66 liter R06A turbo engine, and the all-new
Jimny compact car with a newly-developed 1.5 liter K15B engine, enhancing driving
performance and dependability. Functionality is pursued in both interior and exterior
designs, with maneuverable body size, while also pursuing user-friendliness to meet
various needs by evolving its visibility, as well as roominess and ease of use in luggage
space.

Political Environment:Pakistan has faced lots of political ups and downs since its indep
endence. So many governments have been overtaken by military personnel and most of the
time martial law was imposed on Pakistan. In this scenario, today also no entrepreneur is
willing to invest in Pakistan except few. Due to such conditions, market environment isn’t
helpful in Pakistan. The Pakistani government has never been trustworthy for any investor.

Strategic Analysis by Porter’s 5 Forces Model:

Threat of New Entrants: In the New Entrant

category of Porter's 5 forces, for Pak Suzuki
Motor Company, 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.

Bargaining Power of Buyers: For companies like Pak Suzuki to continue to compete, the
quality of their offerings must be excellent, dealership service must be strong, and they
must focus on offering consumers a product with high durability and value.

Bargaining Power of Suppliers: Pak Suzuki’s suppliers have been known to be some of
the most dedicated suppliers in the industry. By virtue of the Just-In-time production
concept pioneered by Pak Suzuki, the auto industry itself has seen a very positive
relationship develop between its suppliers and producers. Virtue Time
Production Concept pioneered by Pak Suzuki, the autoindustry itself has seen a very posit
ive relationship develop 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, has been able to speed up production costs,
save money by not letting parts sit on the shelf, and improve its relationship with parts
suppliers, which rely on Pak Suzuki for their revenue.

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Threat of Substitutes: Consumer preference is changing, setting up integrated
manufacturing facilities require higher capital investments than establishing assembly
facilities. Pakistan passenger car market is moving towards cars of higher capacity.

Rivalry between Competitors: Industry competition between auto makers is fierce.

The typicalconsumer, when searching for a vehicle is bombarded by choices. For
example, a search for Suzuki ALTO yields a result of Coure (Daihatsu) with a minimal
extra amount.
Impact on Changing Trends and Events
 The auto industry had been struggling as three factors namely increasing prices due
to rupee depreciation, increasing policy rate, which has been making car financing
less enticing for the buyers and ban on non-tax filers were affecting sales.
 Massive depreciation of rupee against the US dollar has led to increase in the prices
by the existing carmakers, a huge downside of assembling cars instead of
manufacturing.
 Environmental concerns Vehicles are the main reason for air pollution in Pakistan’s
main cities. Mainly vehicles that run on diesel, pollutes the air in large level therefore
a vigilant environmental regulator is required with good skill set. Changing Climate
is also making this alarming.
 Many foreign investors have nominated Pakistan as a country of safe investment in
the auto sector. There is a huge opportunity for automobiles industry to increase its
production line in the country.
 The political unrest not only creates a threat to the automobile industry but also
almost all industries in Pakistan. It is very important for the present government to
keep the political temperature in control especially when it has the full support of
the real decision makers so they should just focus on governance instead of
unnecessarily creating a political scene.
 The previous government issued a good auto policy, which needs to be implemented
in its letter and spirit. The government is concerned about the automobile industry
therefore strong preference should be given on the development of the
manufacturing of cars and heavy vehicle.

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 SWOT Analysis
Strengths:
 Highly Innovative and maintained
supply chain
 Well Managed and highly
competitive staff
 Well defined and bureaucratic
organizational structure
 Complete understanding between
Distributors
 Easy availability of spare parts
 Highest Market Share
 Low Price Vehicles
 Resale of Local Assembled Cars
 Large Distribution Channels
Opportunities:
 Large Market size to operate
 Global spare part market
 Space saving Small size CNG
cylinders
 Increasing Demand for Cars
 Efficient EFI engines
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
Threats:
 Foreign Investment and setup
 Tough Competitors like Toyota and
Honda production facilities
 Smuggling of Auto Parts
 Inflation rate
 Heavy Taxes
 Competition from cheaper
imported cars
 Increase in Fuel Prices
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