Atlas Honda Limited

COMPANY INFORMATION
THE BOARD OF DIRECTORS
Mr. Yusuf H. Shirazi Mr. Saqib Hussain Shirazi Mr. Aamir H. Shirazi Mr. Motohide Sudo Mr. Sanaullah Qureshi Mr. Sherali Mundrawala Mr. Takemi Ishikawa Mr. Tariq Iqbal Ahmed (Chairman) (CEO) (Director)

COMPANY SECRETARY
Mr. Sohail Ahmed

AUDITORS
Hameed Chaudhri & Company Chartered Accountants

LEGAL ADVISORS
Mohsin Tayebaly & Co

BANKERS
Bank Al-Habib Limited Credit Algricole Indosuez
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Atlas Honda Limited

Deutch Bank AG Emirates Bank International P.J.S.C. Habib Bank Limited Muslim Commercial Bank Limited National Bank Of Pakistan The Bank Of Tokyo Mitsubishi Limited United Bank Limited

REGISTERED OFFICE
1-McLeod Road, Lahore.

FACTORY
F-36, ESTATE AVENUE, S.I.T.E., KARACHI 26-27 KM, LAHORE-SHEIKHOPURA ROAD, SHEIKHOPURA

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Atlas Honda Limited

INTRODUCTION OF ATLAS HONDA LIMITED
Atlas Honda limited is a joint venture between the Atlas group and Honda Motor Company, Japan. The company was created by the merger of Punjdarya Limited Sheikhoopura successor to Atlas Epak Limited, Dhaka. Since taken over by the government of Bangladesh and Atlas Autos Limited in 1991. Both these motorcycle-manufacturing concerns were established by the Atlas group. Atlas Honda Limited manufactures and markets Honda motorcycles in collaboration with Honda Motor Company. The company also manufactures shock absorbers under a technical assistance agreement with Showa Of Japan, world leaders in shock absorber company Honda motor cycles are by far the best selling motorcycle in the country with an unmatched reputation for high quality, reliability and after sales services. Atlas has undertaken to develop local manufacturing capabilities to the highest economically feasible level. While a major role in localization has been assigned to vendor industries, atlas has the countries largest in house manufacturing capacity in the industry at its Karachi and Sheikhupura plants. To support the production facilities the company has established an R&D (research and development) wing and tool making facilities, which are growing rapidly in size and functions as the company expands.

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Atlas has managed to execute nine joint ventures / technical assistance agreements between local venders and foreign manufacturer for transfer of technology. Atlas management is striving to modernize company operations by adapting applicable aspects of research and theory and more specially Honda’s unique philosophy of hard / soft technologies to the realities of Pakistani conditions. Company management structures, system, and processes are changed frequently to meet demand of customer needs, growth and new technology efforts are being made to develop participation of all levels of personal in decision making and substantial and effective delegation has been established at levels where applicable. Various participation programs such as “AALA MAYAR” Quality circles movements, launched in 1985, are strongly encouraged to allow constructive self expression and team work. The company training and development program encourage each member to develop himself and contribute to his full potential. Atlas Honda is playing a pioneering role in creating conditions for easy and confident use of motorcycles all over the country. A vast and growing network of over 1500 motorcycles sales service and spare parts dealers has been established. To backup the system, atlas has setup technical training statement centers in Karachi Lahore and Faisalabad, which provide several courses of varying duration, and complexity for motorcycles mechanics and users each year. Mobile training facilities take the latest know-how, technology and maintenance of motorcycles to major rural and urban centers around the country.

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Atlas Honda Limited

VISION OF AHL
Atlas Honda limited, being Japanese, always believe in quality leadership customer satisfaction and satisfaction of shareholders. The executives and managers at AHL are keen about the staff cooperation and dedication. That’s why promoting teamwork culture is the core activity of the company. The vision of AHL as follows: “To remain a market leader in the motorcycle industry and emerge

as a globally competitive center of production and exports.”.
The above statement clearly predicts the overall scenario of the management at AHL.

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Atlas Honda Limited

MISSION STATEMENT
Mission Statement, the statement that further reveals the practicalities of any organization, comparable to its vision statement. The Mission Statement at AHL is highlighted below: “To be a dynamic profitable growth oriented company through market leadership excellence in quality and service optimizing value for the shareholders and maximizing exports To give attractive return to business associates and shareholders as per their expectations. Be a responsible employer and reward employees according to their abilities and performance. To be a good corporate citizen in order to fulfill its social responsibilities. To create and foster a network of researchers, engineers, who will make unique contribution to the development of motorcycle industry ensuring satisfaction of our valuable customers and protection of the environment by producing emission friendly green products. ”. The Honda Company’s purpose is indispensable to all Honda associates, when it comes to understanding the reason for the existence of the company. Top management at AHL try to ensure that mission statement: a) Is appropriate to the purpose of organization. b) Includes commitment to comply with requirements and to continually improve the effectiveness of quality management system.

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Atlas Honda Limited

c) Provides a framework for establishing and reviewing the specified objectives. d) Is communicated and understood within the organization. e) Is reviewed for continual suitability.

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Atlas Honda Limited

COMPANY POLICY
CUSTOMER
Our customers are the reason and source of our business , it is our joint aim with our dealers to ensure that the customer enjoy the highest level of satisfaction from use of Honda motorcycle.

QUALITY
To ensure that our product and service meet the set standards of excellence.

LOCAL MANUFACTURING
To be the industry leader in indigenous of motorcycle parts.

TECHNOLOGY
To develop and maintain distinct business advantage through continuous induction of improved hard and soft technology.

SHAREHOLDERS
To ensure health and viability of business and the safeguarding shareholder by maximizing profit, payment of regular satisfactory dividend and adding values of the shares.

EMPLOYEE
To enhance and continuously update each member’s capabilities and education and to provide an environment to encourage practical expressions
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Atlas Honda Limited

of individual potential in goal directed team efforts and compensate them attractively, according to their abilities and performance.

CORPORATE CITIZEN
To comply with all government laws and regulations and to maintain high standards of ethics in all operations, and act as a responsible member of community.

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Atlas Honda Limited

QUALITY POLICY
 Commitment to provide the high quality motorcycles & parts  Right work in first attempt and on time  Maintain and continuously improve quality  Training of manpower and acquisition of latest technology  Safe, clean and healthy environment  Market leadership and prosperity for all.

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Atlas Honda Limited

PHILOSOPHY AT AHL
The center of AHL’S philosophy is based on the company’s principle. Underlying the company’s principle are two fundamental beliefs: 1. Respect for individuals and 2. Three Joys. 1. RESPECT FOR INDIVIDUALS At AHL individuals are counted as a member of team that is working for the achievement of specific targets. So here every individual from the top management to the employees is categorized as an important part of the company. Also every associate is honored for his or her efforts and contribution. Associates at Honda are motivated to think creatively and act on their judgment and initiative. All members at AHL are equally recognized, no discrimination is made on the basis of race, age, sex, religion, national origin, educational background and social and economic status. 2. THREE JOYS AHL believe that each person working, or coming in touch with our company directly or through our products, should share a sense of joy through the experience. This feeling is expressed as “ Three Joys”. AHL’S goal is to provide joys to those who:

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 Produce their Products.  Sell their Products.  Buy their Products.

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Atlas Honda Limited

CULTURE OF ATLAS HONDA
During my stay at atlas Honda Limited Karachi I have found a unique blend of different valuable cultural variables that includes  There is egalitarian system in the whole organization i.e. there are equal opportunities and chances of progress for all employees.  There is power delegation at every level.  There is lesser power distance between top-level management and lower level management for example each and every employee can have an easy access to even the CEO of organization.  There is room for innovation. Each employee is encouraged to pave a better way for innovation.
 There is practical implementation of TQM

(total quality

management) and continuous improvement which is inherited in Japanese culture , in the form of KAIZEN ( a slight change towards improvement ) and AALA MAYAR.  There exists equality in overall organization, which is well represented by the thing that the lower level workers and top level management even the CEO of the organization wear the same uniform.  Employees are very much cooperative with each other.  Management and employees are open to market challenges.  There are no unnecessary bindings of excessive rules and regulations.

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 There is effective interdepartmental communication between all the departments.  There are no communication gaps between top-level management and lower lever workers.  There is almost 100% job security for employees, so employees are devoted towards their jobs and are well satisfied with their jobs. There is almost zero percent job turn over.  Customers’ satisfaction is the major focus of the organization. Customer is king for the organization.

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Atlas Honda Limited

DEPARTMENTS
I have visited following departments of ATLAS HONDA LTD, Karachi.  Human resource  Finance  Maintenance  Vender procurement  Production  Information technology  Marketing

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HUMAN RESOURCE DEPARTMENT
This department has three sections 1. Human resource 2. Administration 3. Industrial relations HUMAN RESOURCES This section performs following functions  Recruitment & selection of employees  Training & development of employees  Succession planning of employees ADMINISTRATION This section performs following functions  Facilitation of company guests and executives  Employees’ Mess management  Utilities administration  Miscellaneous administrative activities INDUSTRIAL RELATIONS This section performs following functions  To build a healthy cooperation between management and workers.

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Atlas Honda Limited

FINANCE
Atlas Honda has a well established finance department. It is totally computerized .it has its own system which is prepared by IT department. Finance department has further following sections.  Finance  General ledger  Costing  Taxation  Sales  Payables  Payroll FINANCE This section deals with the • Banking matters • Fund management • Import accounting. COSTING It is an important section of finance department, which deals with all costing matters including all material, labor, and overhead costs.

TAXATION

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Atlas Honda Limited

It deals with all tax and custom duty related affairs. PAYABLES This section deals with the following activities.  Vender payables  Utility payables  Insurance payables  Tax payables  Club payments  Other payable PAYROLLS This section controls the salary system of the organization. All the system is computerized. First of all the attendance of all employees is recorded and at the end of the month salary of all employees are paid after all deductions* * Tax deductions, absenteeism deductions and all other deductions

GENERAL LEDGER Finally all the transactions are recorded in general ledgers. General ledger for each account is maintained separately. There is a computerized system, which then produce different statements.

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VENDOR PROCUREMENT DEPARTMENT
At present, 82 vendors are working with the company. This department performs following functions • This department is responsible for all the relations and dealing with different vendors. • This department motivates vendors to produce excellent quality and train them to achieve the highest level of quality. • This department also deals with the CKD (complete knock down). • This department performs VIP (vendor improvement programe). Under this programe, the department representatives go to the vendors and train them for new methods to produce better quality at reasonable price.

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PRODUCTION DEPARTMENT
It is very important department as it produces the main product of the company, which will eventually generate revenue. The production department has twelve different shops. Each shop is responsible for different production functions. These shops include • Raw material shop • Cutting shop • Press shop • Dying shop • Welding shop • CKD shop • Switch assembly shop • Tire shop • Engine shop • Washing shop • Final assembling shop • Inventory shop The productions department is very efficient. The average per motorcycle assembling time is four minutes. The production department of Karachi plant can produce 250 motorcycles per day.

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Atlas Honda Limited

INFORMATION TECHNOLOGY DEPARTMENT
Atlas Honda has a sophisticated IT system. All the departments are linked through network. Each and every department is computerized. This computerization has reduced the burdens on employees. Particularly the employees of finance department have different soft wares to support their work. All these soft wares have been developed by company’s own IT department. Mostly soft wares are developed in-house and in some special cases outsourcing is also being used.

VISION STATEMENT OF IT DEPARTMENT
I.T Department is dedicated to provide reliable information base using most modern technology to potential users at all levels. Our professionals individually and collectively, will constantly improve their competitive skills and excel in providing quality service covering all the aspects of the technology. By embarking into the digital age we will accelerate the positive effects and mitigate the challenges as knowledge grows when shared. We will innovate in a research-oriented manner with technologies to create our own future and value added activities for profitable relationships with our stakeholders, thus encouraging intellectual curiosity for our products, service and insight that will help people around the world, shape the ways business and education will be done in future. Our professionals and their competitive skills will be the hallmark, that combined with technology innovation, expert skills and teamwork, will keep us leaders in "CHANGE" to open new doors.

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MAINTENANCE
This department is responsible for all the maintenance of the whole factory, offices and even the houses of top management. In order to provide effective, efficient and timely maintenance this department has two type of information.  It has Machine wise spare parts report  Machine and equipment list Seventeen employees are there in this department. Three are engineers and others are workers. It provides two types of maintenance.  Corrective/ Breakdown maintenance  Preventive maintenance

CORRECTIVE/BREAKDOWN MAINTENANCE
The same department also carries out Emergency/breakdowns of machines & equipments and plant maintenance work. If any of the above problems occur then the concerned department sends a Work Request to this department, then this department resolves the problems according to the Work Request.

PREVENTIVE MAINTENANCE

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In this maintenance system department tends to provide and follows a comprehensive preventive maintenance program. According to this program the department set a sequence of maintenance activities for all the machines of different production shops on continuous basis. Some machines are checked on monthly basis and others are maintained on some other fix intervals in order to prevent any breakdown and to streamline the production process.

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Atlas Honda Limited

MARKETING DEPARTMENT
Marketing department is divided into three parts on behalf of its functions. • Sale • Service • Spare parts

SALE
It is an important division of marketing department. It is the profit centre of the company. It deals with three types of sales. 1. INSTITUTIONAL SALE The company provides the direct sale to the institutions. Company provides the motorcycle to following institutions. • Police departments • CSD (canteen store department) • TCS (technology communication supplies) • Pesticide companies • Many others 2. INDIVIDUAL SALE This is the usual sale to the individuals. This usually follows the following path. Company Dealer Customer

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3.

EXPORTS Company also exports CG 125 to Sri Lanka, Nepal and Bangladesh.

FUNCTIONS PERFORMED BY SALE SECTION The sale section of the marketing department performs the following functions • Forecasting of sale • Booking of motorcycles through dealers • Managing the payment • Manage the dealership network The company follows the policy of advance booking which means company first receive the payment and then produce the product according to demand and this is the reason that the company has a very low amount of receivables and most of the receivables are based on the sale made to institutions. SHOW ROOM Sale section also deals with the showroom. There is only one company owned showroom in Karachi and this showroom is meant only for the display of motorcycles. In the past the company used to sell the motorcycles from the showroom but now a days company doesn’t sell the motorcycles through its showroom. But in some special cases the company sells the motorcycles from showroom to the persons that have relationship to the company employees.

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Atlas Honda Limited

SPARE PARTS
This is another important division of the marketing department. Basically company doesn’t consider it as profit center rather a supportive section to produce better customer service. It has separate distribution system and different parts dealers in different regions.

SERVICE
The second major section of the marketing department is service section. The service section deals with • Antenna or service dealers • Warranty and training centre ANTENNA OR SERVICE DEALERS These are the authorized dealers of the company. The company provides them autonomy while dealing with the claims and these dealers have the autonomy to replace the defected part without consultation with the company. Company provides two free tunings after the sale of motorcycle. Basic reason for the establishment of these dealers is to satisfy their customer and increase the customer loyalty. WARRENTY CENTRE In Karachi the company has a well-established warranty and training centre. this centre handles the service section. Warranty and training section performs the following functions
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Atlas Honda Limited

• Deals with the claims • Training to different service dealers CLAIMS The company has a policy that customers’ claims will be settled if these are made within the six months or 1000 km coverage (whatever occurs first) warranty conditions. TRAINING Warranty center not only provides training to their antenna and service dealers but also the mechanics of ordinary workshop in order to develop the skilled four stroke mechanics. Company organizes the workshops on regular basis and invites antenna and service dealers from all over the Pakistan to participate in these workshops and training program.

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Atlas Honda Limited

MARKETING MIX
There are four elements of marketing • Product • Price • Place • Promotion

PRODUCT
Atlas Honda has two basic products • Honda CD 70 • Honda CG 125 Both of them are the four stroke motorcycles. Both the products have a good repute in the market and that is the reason that Honda has approximately 63% market share now a days. The basic reason of the success is the quality maintained by the company throughout its career. These two models of HONDA are being manufactured in Sheikhupura and Karachi. Each plant has a capacity to produce 250 motorcycles per day, but still the market demand is not being fulfilled. In order to increase market share marketing department perform following activities • New model • Changes in design • In-house production

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Atlas Honda Limited

NEW MODEL In order to get more market share atlas Honda has been introducing new models over the time. The latest model was launched by company in 199293. Previously there was a small fuel tank but in the new model company introduced a large fuel tank as compared to the previous one. But the company always maintained the quality of its motorcycle. CHANGES IN DESIGN There was a great demand from the customers to launch a new model but it is a difficult job to launch a new model so in order to fulfill the customer wants the company has a policy to change the stickers of fuel tank and side covers and some other nominal changes in indicators headlights etc. time by time, in order to satisfy customers needs. But the engine and other main accessories are the same. INHOUSE PRODUCTION At the outset of company 90-95% parts were imported from Japan and were assembled in Pakistan. With the passage of time company introduced the concept of localization. Company encouraged the local vendors and suppliers to produce the parts of motorcycle according to the level of Honda international. So in order to maintain the quality, the parts made by local vendors were approved by the Honda international and then they were used in local production. So now Atlas Honda has managed to localize almost 89% of the parts. Still 11% parts are being imported from Japan. Atlas Honda also provides assistance to their vendors to maintain high quality. They send their engineers to check the quality and to train the vendors in
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order to produce the required qualitative product. This all is done under the head of marketing department.

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COMPETITORS BRANDS & MODELS
Yamaha Yb-100 Excellence Yama-4 Suzuki SD-110 SD-Flash Sohrab JS-70 JC-125 (china) • Pak hero • Hero • Star • Lifan • Jailing PH-70 RF-70 RF-125 DS-70 C-70 (CBU) LF-70 LF-150 JH-70 (Remot-Self) JH-70 (Without)

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PRICE
Atlas Honda has two products and their prices are as under Honda CD70 Honda CG 125 same price all over the Pakistan. Initially Atlas Honda was the only producer of qualitative four-stroke motorcycle in Pakistan. So they were taking the advantage of this monopolistic situation and using the price skimming strategy and were charging higher prices. Till 17th may 2003 company had the high prices for its motorcycles. Due to these high prices the competitors found a gap and entered into the market with low prices and start capturing market share. After the intense research work Atlas Honda was in a position to reduce prices. The major objective to reduce the prices was to increase the market share and to utilize full production capacity. So company has reduced Rs. 10,000 in HONDA CD70 and almost Rs. 5000 in CG 125. Rs. 58500 Rs. 73000

The company uses the single price strategy. It means the product has the

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COMPETITORS’ BRAND PRICES
Yamaha Yb-100 Excellence Yama-4 Suzuki SD-110 SD-Flash Sohrab JS-70 JC-125 (china) Pak hero PH-70 Hero RF-70 RF-125 Star DS-70 C-70 (CBU) Lifan LF-70 LF-150 Jailing JH-70 (Remot-Self) 46000 JH-70 (Without) 42000 40000 85000 40400 52000 46000 70000 42500 43500 62000 64000 76500 Rupees 61800 62500 63300

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PROMOTION
Promotion mix is • Advertisement • Sales promotion • Personal selling • Publicity ADVERTISEMENT Atlas Honda uses the print media as well as electronic media for advertisement. In print media the company gives advertisements in newspapers and it also uses billboards on the road side for the promotion of the product. On electronic media, company gives their advertisement on GEO channel during hourly news. Company has a contract with AdCom (advertising agency) for all of its advertising activities. SALES PROMOTION Atlas Honda also promotes its product through different sales promotional activities. • Company sponsors different functions and activities in main cities. • Company provides rewards and incentives to their dealers on achieving targets. Company send their successful dealers to different trips all over the world.

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PERSONAL SELLING The company does personal selling as well, not to individuals but to institutional customers.

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DISTRIBUTION
Atlas Honda gained good market share due to its strong distribution network. For distribution atlas Honda has divided the whole country into two regions. 1. South region 2. North region SOUTH REGION It includes following territories • Karachi (Karachi region covers whole Sindh province) • Quetta (This covers whole Baluchistan province) NORTH REGION It includes following three territories • Multan (Its includes all lower Punjab cities) • Lahore (It covers cities from upper Punjab) • Rawalpindi (It covers Islamabad and NWFP.)

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“5S” DEALERS
This is a new emerging trend set by atlas Honda. Now days the company is emphasizing on “5S” facilities to their customers through “5S dealers”. 5s stands for the following five facilities 1. Sale 2. Service 3. Spare parts 4. Special sale 5. Second hand sales SALE It includes only the sale of new motorcycles. SERVICE It includes after sale service to the customers like Warranty claims, Tuning of motorcycles, Repair of motorcycles etc. SPAREPARTS Company provides spare parts facility to their customer . SPECIAL SALE It deals with the credit facility. In special sale, the dealer provides the customer with credit facility at his own behalf. Atlas Honda does not provide any support for credit sale.

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SECOND HAND SALE Dealer also deals in second hand Honda motorcycles. The company wants that the customer might not switch to other brand even in second hand motorcycles.

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SALES PROFILES

MARKETING PERFORMANCE
HIGHLIGHTS OF 2002 / 2003 SALES
CATEGORY MARKET INSTITUTION POLICE EXPORT TOTAL 2001/2002 2002/2003 76800 8400 2300 2500 90000 101800 11400 3800 117000 difference 25000 3000 -2300 1300 27000 % 33 36 52 30

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SALES TRENDS

ATLAS HONDA LTD
SALES TREND 2001/02-2002/03
150,000 100,000 50,000 0 2001/02 2002/03

HONDA 90,064 117,209

YAMAHA 22,024 28,000

SUZUKI 8,062 14,000

CHINESE 8,000 36,000

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SALES GRAPH

ATLAS HONDA LIMITED SALE 1999 ~ 2003
130000 110000 90000 70000 50000 30000 10000 CD70 CG125 TOTAL 1999~00 43073 15524 58597 2000~01 57791 20330 78121 CD70 CG125 2001~02 62828 27236 90064 TOTAL 2002~03 80000 37000 117000

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MARKET SHARES 2 WHEELER MARKET SIZE IN PAKISTAN 2002-2003

BRAND HONDA YAMAHA SUZUKI CHINESE TOTAL

JULY~JUNE 2002-03 117000 28000 14000 36000 195000 60% 14% 07% 18% 100%

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FINANCIAL ANALYSIS
In order to know whether a firm is using its resources efficiently or not, financial analysis is necessary. The information derived from these types of analysis is used to determine the overall financial position of the company. I have calculated certain ratios which will be helpful to determine the existing financial position of AHL. TYPES OF FINANCIAL RATIOS Different ratios can be calculated from financial statements. Major categories are as follows. A. Liquidity ratios B. Leverage ratios C. Activity ratios
D. Profitability ratios

LIQUIDITY RATIOS It measures the firm’s ability to meet its short-term obligations as they come due. If a firm is unable to pay its current liabilities through its current assets it can become insolvent in future. This ratio includes: 1) Working Capital = Current Assets-Current Liabilities 2002 Rs. 347,904,000 2001 Rs. 327,842,000

Working capital of AHL has increased in 2002 as compare to 2001, which is a good sign for the company. It means firm has enough cash to meet its short-term obligations.
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2) Current Ratio = Current Assets / Current Liabilities 2001 1.48 above 1.s 3) Quick (Acid-Test) Ratio = Current Assets – Inventory / Current liabilities 2001 64.8 % 2002 83.5 % 2002 1.38

A little bit decrease has occurred in year 2002 but still it is not good as it is

It also shows an increase as compare to previous year, so AHL has enough cash available to pay all its current assets. Cash Ratio = Cash Equivalents + Marketable Securities / total assets 2001 15.7 % 2002 32 %

cash ratio has gone up in 2002. it’s a good indicator but company can earn more by investing it in some other activities. LEVERAGE RATIO It measures a firm’s long-term solvency problems whether a firm is able to pay its long-term debts or not. This includes following Ratios: 4) Debt – Equity Ratio = Current Liabilities + Long Term Liabilities / Stock Holder’s Equity
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2001 0.57

2002 0.616

This ratio has gone up from previous year. It is a good indicator as this ratio is going up. It means company is making progress. 5) Debt Ratio = Total Liabilities / Total Assets 2001 55% good indicator. ACTIVITY RATIO It indicates how efficiently management utilizes its assets in generating revenues. It can be measured by: 6) Total Asset turnover = Sales / Total Assets 2001 3.16 2002 3.015 2002 56%

This ratio is almost same in both years. it means there is stability . this is a

Ratio has decreased from previous year. Fixed Asset turn over = Sales / Fixed Assets 2001 10.46 2002 10.31

It has approximately the same as in 2001. AHL is more efficiently utilizing its fixed assets, as fixed assets are more productive. So it is a good sign.
7)

Inventory Turn over Ratio = Cost of Goods Sold / Inventory
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2001 7.92 times

2002 10.36 times

There is increase in this ratio, which shows good performance. It shows that company has increased its sales in this year to a great extent. 8) Average age of Inventory = 365 / Inventory Turn Over 2001 45 days 2002 35days

It shows that after how many days inventory is being sold out. It has also reduced to 35 days in 2002, which shows that AHL is making progress. This is because the sales have gone up in year 2002. PROFITABILITY RATIOS It measures the overall record of management in generating profit. If a firm does not earn adequate profit, its long run survival will be threatened. 9) Gross Profit Margin = Gross Profit / Net Sales 2001 9.7 % 2002 13.31

This ratio has increased in 2002. It means that management is efficiently controlling its variable cost, and the efficiency of the firm is increasing as the gross profit margin is increasing.

10)

Operating Profit Margin = EBIT / Net Sales 2001 4.69 %
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2002 7.48%

Atlas Honda Limited

It has increased in year 2002 it shows, AHL has a good control over its expenditures. 11) Net Profit Margin = Net profit after Taxes / Net Sales 2001 2.5% 2002 4.9 %

Net Profit Margin has also increased. Profit margin is almost double in 2002 than in 2001. it shows that company is on its way to progress. If a company is not able to earn profit, it will be no longer in the industry. It shows the strength of the company. 12) 2001 7.91% Return on total assets = Net Profit / Total Assets 2002 14.76 %

It measures the firm’s ability to utilize its assets to generate profit. It has been increased in year 2002; it means that the productivity of assets to generate profit has been increased. Same assets are now generating more profit. 13) Taxes 2001 44 % 2002 40.9 % Dividend payout Ratio = Dividends / Net Profit after

Dividend pay out ratio has been reduced but it cannot be a bad indicator always. Profit may be reinvested which is a good approach by management to be successful in long run.

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SWOT ANALYSIS
STRENGTHS
Atlas Honda Ltd. has following strengths.

QUALITY PRODUCT Atlas Honda Ltd. has quality products, which is one of its major strengths.

GOOD IMAGE Company has a good and favorable image in the market and in the mind of customers.

EXCELLENT SERVICES Company provides excellent services (after sales services) to its customers.

FINANCIAL STRENGTH Atlas Honda ltd. is financially strong company which is its another strength.

INTENSIVE DISTRIBUTION NETWORK Company has intensive distribution network (dealers) through out the country which is it strength.
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COMMITTED EMPLOYEES Company has committed and devoted employees that are loyal to the company, which is another strength of the company.

FOUR STROKE TECHNOLOGY Four-stroke technology is being used in Honda motorcycles that is again another strength of the company. This is the latest technology being used in this industry.

AVAILABILITY OF PARTS The Spare Parts OF the motorcycles are easily available all over the country which is another strength of the company.

LARGEST SERVICE NETWORK The company has the largest service network through out the country.

RESEARCH AND DEVELOPEMENT The company has an R&D department which suggests the production department to use latest technologies. MARKET RESEARCH
Company has a sophisticated market research system. With the help of this system company is able to get knowledge about competitors activities and market trends.

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LATEST PRODUCTION FACILITIES The company has latest production facilities which increases the production level and quality.

INNOVATIVE CULTURE The culture of the company is very rich which is supportive for employees to innovate new ways to improve the things.

VENDOR IMPROVEMENT PROGRAM Company has a vendor improvement program. With the help of this program company is able to convince vendors to produce better quality for the company productions. LOCALIZATION Till now company is in a position to localize its productions up to 89%. Almost 89% of parts to be used in production are in house.

LESS EMPLOYEE TURN OVER Employee turn over is very less at Atlas Honda ltd. this shows that the employees are well satisfied with their jobs.

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WEAKNESSES
HIGH PRICE The price of Honda motorcycle is relatively higher than others.

LACK OF NEW MODEL Company has not introduces any new model with major changes from a long time.

LESSER PROMOTIONAL ACTIVITIES Company has lesser promotional activities. Usually it do not use electronic media to promote the motorcycle but now company is adopting the strategy to use the electronic media as well for promotion.

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OPPORTUNITIES
“5S” CONCEPT New concept of “5S” is an opportunity for company to develop. With this new concept company has introduced two new “S” other than sales, spare parts and service. These are special sales and second hand sale. According to this new idea dealers will help the customers to replace their second hand motorcycle with new one and customers can get motorcycle on credit as well.

POOR QUALITY OF CHINESE BRANDS Chinese brands that are available in the market are not comparable with HONDA motorcycle in quality terms. So the poor quality of Chinese brands is an opportunity for the company as the company believes that people using Chinese brand will eventually switch back towards HONDA because of relatively poor quality of Chinese brands.

GOVERNMENT RULE OF LOCALIZATION Recently government of Pakistan has passed a rule for the motorcycle industry in Pakistan. According to this rule, within few years only that motorcycle company will be able to sell their brands which will localize its production at a rate of 5% to 10 % each year. HONDA has localized its production up to 89% till now. So the company is leading the industry in this regard. This is an opportunity for company as it has more government support because of this reason (localization).

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Atlas Honda Limited

THREATS
MARKET CONDITIONS OF KARACHI Karachi is most populated city of Pakistan. So it is a huge market for the company. But now a days snatching of new HONDA motorcycle is very common in Karachi. Because of this reason people are reluctant to buy new motorcycle. So it is a great threat for the company. NEW CHINESE BRANDS There are more than 15 Chinese brands of motorcycle available in the market. These are competing HONDA in price terms very badly. So it is a threat for the company.

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Atlas Honda Limited

SURVEY
(DURING
MY STAY AT

ATLAS HONDA

LTD.

I

HAVE CONDUCTED A SURVEY

(RESEARCH)

UNDER THE SUPERVISION OF NATIONAL MANAGER SALES AND MARKETING MANAGER

.)

MARKETING RESEARCH PLAN
Objective:
What is the impact on sales of different brands of Motorcycles after price reduction?

Topics:

Dealer Related:
 How much price has been reduced?  Why prices have been reduced?  Impact of price reduction on sales?  Is there any chance for further price reduction?

Public Related:
Why do people prefer to buy specific brand of motorcycle?

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Atlas Honda Limited

METHODOLOGY
I have conducted interviews of dealers and customers based one the questionnaires given here. I have gone to dealers’ outlets in order to get forms filled by the dealers and went to different markets in order to approach customers. TARGETED LOCATIONS My main target market for dealers was “Akbar Road” and for customers’ identification, we have chosen Zainab market, Tariq Road, Akbar market and Karachi University. TIME FRAME I have spent three weeks for this research project.

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Atlas Honda Limited

QUESTIONNAIRES
QUESTIONNAIRE (FOR DEALERS)
1. Name of Dealer__________________________________________________ 2. Name of dealership/outlet__________________________________________ 3. Since how long are you in this industry_______________________________ 4. Had you been dealing in other brands_________________________________  Yes  No 5. If yes, what are those brands________________________________________ 6. Why have you chosen this specific brand to deal in______________________ 7. What strategy have you used to cope with the decreased prices of the motorcycle industry? _______________________________________________________________ 8. What was your old price and what is your new price?____________________ 9. To what extent would you like to further reduce your prices? ______________ 10. How much your sales have been changed?  Previous average sales_______________________________________  New average sales__________________________________________ 11. What impact does it has on the prices on second hand motorcycles? Models 1999 2000 ____ ____ ____ 2001 ____ ____ ____ 2002 ____ ____ ____

Before reduction ____ After reduction ____ Difference ____

12. How do you see the future of your brand and other brands_______________ 56

Atlas Honda Limited

QUESTIONNAIRE (FOR CUSTOMERS)

1. Name of respondent____________________________________________ 2. Which Motorcycle do you have___________________________________ 3. Which Motorcycle did you had before this one_______________________ 4. Why have you kept/replaced the previous one _______________________ 5. Why have you decided to buy this brand? __________________________  Friends/Relatives suggestion  Your own decision 6. If it was your own decision, why have you decided this brand  Brand loyalty  Better quality  Lesser price  Design  Economy  Others 7. Are you satisfied with this brand?  Yes  No 8. If no, why____________________________________________________ 9. If you have to buy another motorcycle, will you choose the same brand again?  Yes

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Atlas Honda Limited

 No

10. If no, why____________________________________________________ 11. Please rank these brands in preference order (most preferred at # 1 and least preferred at last) Yamaha ______ Sohrab ______ Star ______ Suzuki ______ Honda ______ Lifan ______ Pak Hero ______ Hero ______ Super star ______ Jinan ______ Jialing ______

12. Suggestions for improvement, if any ______________________________

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Atlas Honda Limited

RESULTS
SAMPLE SIZE
(I have chosen sample on the basis of random method) Dealers Customers = = 13 30

DEALERS
Among these 13 dealers, I have chosen four HONDA dealers and nine dealers of other brands including Chinese.  Dealers who have ever dealt in some other brands  Dealers who have never dealt in some other brands  = = 07 (54%) 06 (66%)

Dealers who have been switched from HONDA to some other brands = 01 There was no sale of HONDA in Karachi market before price reduction, so

REASONS: he has decided to deal in some other brand.  Dealers who have switched from some other brand to HONDA. = 01 REASONS: He has felt that in near future HONDA will capture the motorcycle market, so he has left the dealership of VESPA and started dealing in HONDA.  Impact of price reduction on sales of new Motorcycle: HONDA = Sales have increased by 3 to 4 times after the price reduction. OTHER BRANDS = Sales have decreased by one half. 59

Atlas Honda Limited

 Impact of price reduction on the prices of second hand Motorcycle: Prices of all models of HONDA (from 1999 to 2002 model) have gone down by Rs.7,000 to Rs.10,000. There is no specific market price for second hand motorcycles of Chinese brands.  Future of different brands: According to different dealers point of views, the HONDA may remain market leader but the market will be in the hands of the brand, which will be able to provide better quality at reasonable prices and will be able to provide services as well. Almost more than 80% of Chinese brands will be out of the market in near future just because of poor after sale service.

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Atlas Honda Limited

CUSTOMERS
Customers using HONDA Customers using YAMAHA Customers using SUZUKI Customers using other brands* Total number of customers *All Chinese, Vespa and Kawasaki. Customers who are satisfied with HONDA = 22(100%) 00(0%) 21(95.45%) 01(05.55%) Customers who are not satisfied with HONDA = Users of HONDA who want to repeat the same brand = Users of HONDA who don’t want to repeat the same brand = Reasons The person has told that he will not repeat Honda because he want to have some new motorcycle at lower price, so he will like to have some Chinese motorcycle because of its low price. Ranking of different Brands by Customers Position Number one Number two Number three = = = Brand HONDA YAMAHA SUZUKI = = = = = 22 (73.33%) 03 (10.00%) 01 (03.33%) 04 (13.34%) 30 (100%)

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Atlas Honda Limited

SUGGESTIONS BY CUSTOMERS: During this research project we have found some major demands from customers. Few of them are as follows.  Customers are very happy because of the price reduction by HONDA. But customers still want further price reduction by the company.  It is a major demand from the customers that now company should introduce some major change in model.  Customers want the company to introduce some new models in addition with CD 70 and CG 125.

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Atlas Honda Limited

FINDING AND SUGGESTIONS
I have found the following things important during this project  The company should try to improve the relations with dealers, as some dealers are not satisfied and happy with some of the company’s policies.  It is a better time to introduce some new model. There is an intense competition in the market so major change in model will pave a better way for the company not only to maintain the existing shares but also to increase the number of market share.  Company should increase its capacity in long run and in short run company should start night shifts to fulfill the increasing market demands of their products.  Company should develop proper measures to eliminates the rumors from the market regarding the company and its dealers  Company should control the prices of the motorcycle in the markets. We have observed some dealers at our own, selling the motorcycles to the customers above the market price. Although the company has already a system to control the price but it is not sufficient.

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