This internship report is about Pak Elektron Limited where I completed my internship in Corporate Sales Department under the Marketing Appliance Division. My working was in the appliances division of PEL, so the report is more focused on PEL’s appliances division and an overview of power division is also given in this report. This report starts from an introduction of the company which includes the group profile and the history of company. PEL is public limited company under the flag of Saigol group, one of the top business groups of Pakistan. Saigol group has different companies in different industries like textiles, sugar, power and electronics. Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan and was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. In next Vision and Mission statements of PEL are written in this report. After it I will mention the corporate profile of PEL which includes the list of Board of Directors. Then there are the details about PEL’s divisions and their products. PEL consists on two divisions; 1) Appliances Division
2) Power Division
Appliances division has the products of Refrigerators, Air Conditioners, Micro wave Ovens, Washing Machines Diesel and Petrol Generators and Water dispensers. The major products of appliances are refrigerators and air conditioners and they have a variety of models and features. PEL’s water dispensers are newly introduced in the market. Power division consists on the products of EPC Contracting, Power Transformers, Distribution Transformers, Drytype Transformer, Energy Meters, Switchgears and Transformer services. After it report will explain the major departments of PEL and the working of these departments. The major departments are Marketing, Corporate Sales, Corporate Services, Human Resource Management, Industrial Relation and Administration, Accounts, Finance etc. Then this report will give you a view of marketing strategy of the
company and explain the market segmentation, targeting and positioning along with four Ps of marketing. In next turn report will give u a view of competitive strategy of the company. Here I also explain Porter’s five forces analysis of the company and BCG Matrix will also explained. there is Porter’s five forces model for the company. Fives forces include bargaining power of suppliers, bargaining power of buyers, Threats of new entrants, Threat of substitutes and Rivalry amongst industry competitors. The forces of bargaining power of suppliers, Threat of new entrance and threat of substitutes show a favorable condition for the company but the bargaining power of buyers and rivalry amongst the industry competitors are unfavorable forces for the company. In the next portion of report, I will explain about PEL’s macro environment and present the PEST (Political, Economic, Social, Technological) Analysis. The Economic and political situation in Pakistan is not satisfactory for the company but in social and technological environment PEL has certain opportunities. After PEST analysis, report will give a comprehensive SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of the company. After it, report will explain you about my duties performed as internee during my internship at Pak Elektron Limited. This report will also mention about the problem encountered by me in the company. In next report will give you about my learning during internship and its future effects on my career. The next report will explain you my recommendations and the conclusion on the basis of my knowledge and experience in the company. The last portion of the report will describe the references, glossary and annexure.
INTRODUCTION Group Profile
In 1948, the Saigols migrated from Calcutta and initiated their business in Lyallpur (later named to as Faisalabad), the textile city of Pakistan, under the banner of Kohinoor Industries Limited Kohinoor Textile Mills The Saigols set up the first major textile unit - The Kohinoor Textile Mills under the umbrella of Kohinoor Industries Limited. The Kohinoor Textile Mill has state-of-the-art quality control from raw material to finished product manufacturing. Its laboratory is top rated amongst the best laboratories in Pakistan for testing of textile raw materials, other inputs and yarn. Initial Capacity:25,000 spindles Current Capacity: 71,648 spindles Pak Elektron Limited (PEL) In 1978, the Saigol Group of Companies purchased major shares of Pak Elektron Limited. At that juncture, the company was only manufacturing transformers and switchgears. With the Saigols in management, PEL started expanding its product range by entering into Air Conditioner manufacturing. The PEL Group comprises two divisions 1. Appliances Division 2. Power Division Pak Elektron Limited alone has a turnover of over 180 million US Dollars. Saritow Spinning Mills & Azam Textile Mills
In 1987, the Saritow Spinning Mills and Azam Textile Mills were established under the banner of Saigol Group of Companies. Saritow Spinning Mills is a spinning unit with 25,440 spindles capacity. Facilitated with the most modern and efficient Japanese and European machinery, its knitted yarn is renowned in the Far East and Europe for its fine quality. Azam Textile Mills is reputed for its carded and combed yarn, which is quite popular for premier knitting and weaving. Kohinoor Power Company Limited In 1991, the first power unit commissioned in Pakistan, in the Private sector, was Kohinoor Power Company Limited. Its present production capacity is 15 MW. Kohinoor Energy Limited 1995, another power unit, Kohinoor Energy Limited, was established. Kohinoor Power Limited is a 120 MW power plant located on the outskirts of the city of Lahore. This project has an annual turnover of $80 million.
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical equipments and home appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programs. PEL is now technology forerunner and market leader in providing new products and services to meet ever changing and technology intensive needs of its customers. PEL’s EPC contracting division delivers custom designed and built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum solutions for power utilization to all kinds of industries and commercial customers. PEL aims to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global developments in technology and product design. Ever increasing local market share,
growing export orders, numerous successful power projects and greater than ever base of satisfied customers are evidence to these aspirations. Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both are equipped with latest technology, state of the art testing facilities and environment friendly production process. At the heart of PEL’s operations is its human resource. PEL invests heavily on professional development, skill improvement and well being of its human resource. PEL’s employees are its most valuable asset and PEL keeps them very dear.
“To excel in providing engineering goods and services through continuous improvements”
To provide quality products and services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources To focus on personal development of our Human resources to meet future challenges To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility
BOARD OF DIRECTORS
Mr. M. Naseem Saigol Mr. M. Azam Saigol Mr. Murad Saigol Mr. Haroon Ahmad Khan Mr. Homaeer Waheed Mr. Muhammad Rafi Khan Mr. Gul Nawaz (NIT Nominee)
(Chairman / Chief Executive)
Mr. Masood Karim Sheikh Mr. Tajammal H. Bukharee Mr. Wajahat A. Baqai
(NBP Nominee U/S 182 of the Ordinance) (NBP Nominee U/S 182 of the Ordinance) (NBP Nominee U/S 182 of the Ordinance)
ORGANIZATIONAL HIERARCHY of PEL
1. Hierarchy of Pak Elektron Limited
The company comprises of two divisions: 1. Appliances Division 2. Power Division
PEL’s Appliances Division is the flag carrier of the Saigol Group. This Division of PEL consists of home appliances manufacturing. Milestones In 1981, PEL window type air conditioners were introduced in technical collaboration with General Corporation of Japan. In 1986-87, the company started manufacturing of refrigerators in technical collaboration with M/s IAR-SILTAL of Italy. In 1987, PEL deep freezers were also introduced in technical collaboration with M/s Ariston of Italy. In 2006, the Company has started manufacturing of split type air conditioners of various capacities as the customer choice has shifted from window type to split type air conditioners. The product has received good response from the market, which encourages the company to multiply its production in the coming years. Today, PEL has become a household name. Its products are not only in great demand in the local market but the Company has also started exporting its appliances to foreign markets.
PRODUCTS OF APPLIANCES DIVISION
Appliances Division has the following products;
PEL’s refrigerators are available in 6 series of different colors, models, prices and capacities. The series are as follow 1. 2. 3. 4. 5. 6. Xpression Series Premier Series 6-Series Delux Series Smart Series Mini Series
PEL has 28 different models in the above 6 series in different prices, which gives customers a wide range to select PEL refrigerator according to their needs. PEL uses Danfoss compressors and Galaxy doors in all its series except Mini series in which Reciprocating compressors and PCM doors are used. PEL offers warranty of 5 years compressor & 1 year parts & service to the customers except Mini series where PEL offers warranty of 3 years compressor & 1 year parts & service to the customers. The refrigerators are available from the capacity of 60 to 420 liters. PEL’s refrigerators are environment friendly and are CFC (chlorofluorocarbons) free, CFCs are a family of chemicals that contain chlorine, fluorine and carbon. The chlorine content in these compounds causes the depletion of the ozone layer. The refrigerators are with the direct cool properties and PEL is using energy saving technology in its products to save energy and giving benefits to the customers.
The air conditioners are available in three types; • • • Split Air Conditioners Window Air Conditioners Floor Standing Air Conditioners
Split Air Conditioners PEL presents Cool life Split AC which is a technologically advanced model especially designed for Pakistani market. This masterpiece from PEL provides maximum cooling even at very high temperatures while minimizing electricity consumption. The wide range of models and prices gives customers more choices to select PEL’s product. The air conditioners are available in the different prices, capacities and models. Split air conditioners are available in three capacities 1 ton 1.5 ton 2 ton Features of PEL Split ACs The key features of PEL’s split air conditioners areas follow;
Free Installation Kit Compressor Warranty
Auto restart function Environment friendly refrigerant R22 Anti-rust outdoor unit Easy-cleaned panel
Self diagnosis and auto-protection Two-direction air flow (SLR)
Trapeziform Inner groove tube Hydrophilic aluminum fin Window Air Conditioner PEL presents Cool life Split AC which is a technologically advanced model especially designed for Pakistani market. This masterpiece from PEL provides maximum cooling even at very high temperatures while minimizing electricity consumption. The Window ACs are available in capacity of 1.5 and 2 ton, and with manual and remote control function. Features of PEL Window Ac The following are the key features of PEL window air conditioners; 1. Super quiet operation 2. Maximum dehumidification 3. Best after-sales service 4. Anti-rust cabinet 5. Environment friendly refrigerant Floor Standing Air Conditioners PEL presents Cool life Split AC which is a technologically advanced model especially designed for Pakistani market. This masterpiece from PEL provides maximum cooling even at very high temperatures while minimizing electricity consumption. The floor standing air conditioners are available in the three models and capacities; FS 600 - 5 Ton
FS 480 - 4 Ton FS 300 - 2.5 Ton Features of Floor Standing Air Conditioners The key features of PEL Floor Standing Air Conditioners are as follow; Free Installation Kit Compressor Warranty Auto restart function Environment friendly refrigerant R22 Anti-rust outdoor unit Easy-cleaned panel Self diagnosis and auto-protection Two-direction air flow (SLR)
Trapeziform Inner groove tube Hydrophilic aluminum fin
PEL the trustful company name in home appliances all over the country, now introduced all new models of "PEL Silverline" Microwave Ovens. Now PEL customers can have different models of PEL Microwave Ovens in which they can enjoy the grilling feature as well. PEL Microwave Ovens are available in different sizes and inner cavities (steel & painted). Cook, Bake, Roast or Grill with the all new PEL Microwave. With cutting edge technology and advanced features. PEL presents 26 different models of ovens with different prices, models and capacities.
Features of Microwave Oven Smart Intelli-menu 360 degree cooking system Enersave features 5 years Magnetron Warranty Preset cooking menu's Cook-Bake-Roast-Grill Energy Savings Peace of Mind
Magic Clean PWM7700 The PEL Semi Automatic Luxury Wash - 7700-N equipped with Japanese technology has a 100% rust proof plastic body with a big multi pilaster. It can handle heavy loads and has a quick dry spin. In addition, it supplements a drain switch that quickly drains out all the excess water. So treat yourself with the Luxury Wash - washes away heavy loads and dries them up quickly. Magic Clean PWM512 The PEL Econo Wash 512 is made from Japanese Technology with 100% rust and shock proof unbreakable plastic body with the capacity of 10 Kg. It's a top load with a powerful motor that provides a brighter wash and has a build in energy saver that gives you excellent energy efficiency. So save the energy with this Econo Wash - consumes less electricity as it gives more output. Features of PEL Washing Machines The key features of PEL washing machines are as follow; One year parts & service warranty
Japanese technology Super large multi pulsator Quick dry spin Drain switch to drain all excess water Semi automatic Ability to wash extremely heavy loads Low noise & easy operations 100% rust & shock proof unbreakable plastic body
Water dispensers are a welcome addition to PEL range of home appliances. PEL’s Silverline and Life-Stream water dispensers make life a little easier and fridge space a bit more plentiful. While Cold water refreshes your mood in burning summer, Hot water on demand is great in the office for packets of soup, instant coffee and tea. Features Hot & cold water Refrigerator Separate Freezer Compressor Cooling Stainless Steel Water Tanks Super Quiet Design Energy Saving CFC Free
1 Year Warranty
PEL presents generators for domestic and commercial use. PEL’s generators are available in diesel and petrol in four capacities; 1.1 KVA Generators 2.5 KVA Generators 3.3 KVA Generators 5.2 KVA Generators
PEL was founded in 1956 and has since been serving the Power utilities, industries, individual customers, housing and commercial projects by providing reliable, customized and cost effective solutions. Backed by the innovative genius of Saigol Group, PEL is now technology forerunner and market leader in providing new products and services to meet ever changing and technology intensive needs of its customers. PEL’s EPC contracting division delivers custom designed and built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum solutions for power utilization to all kinds of industries and commercial customers. PEL aims to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global developments in technology and product design. Ever increasing local market share, growing export orders, numerous successful power projects and greater than ever base of satisfied customers are evidence to these aspirations.
PEL Power Division is one of the major electrical equipment suppliers to WAPDA & KESC. Since 1956 the company manufactures transformers, energy meters, switchgears, kiosks, compact stations and shunt capacitor banks. PEL also has had the privilege of getting its equipment approved and certified from well-reputed international consultants such as: Preece, Cardew and Rider, England Harza Engineering Company, USA Snam Progeti, Italy Societe Dumezm, France Miner & Miner International Inc. USA Ensa, France
PRODUCTS OF POWER DIVISION
The Power Division of PEL has the following products; EPC Contracting Power Transformer Distribution Transformer Drytype Transformer Energy Meter Switchgear Transformer Services
MAJOR DEPARTMENTS OF PEL
Marketing department is main nerve of any organization as far as PEL is concerned. This department consists on 8 employees and Head of this department reports to Director Operations. The perceptions and feelings formed about an organization, its products / services, and its performance is what is known as its “brand.” The Marketing Department is responsible for creating meaningful messages through words, ideas, images, and names that deliver upon the promises / benefits an organization wishes to make with its customers.
2. Marketing Process Model
The products marketed and managed in Appliance Division are as follows:
Refrigerators Microwave ovens Split and window Air Conditioners Water Dispensers Washing Machines Generators
The primary duty of marketing department is to make an overall marketing plan for each product and also analyze the current market situations by monitoring the competitors separately and constructing strategies accordingly. It also performs the function of advertisement budget allocation for the whole year and to develop promotional plans for retailers, wholesalers, and end consumers within limited financial budget. PEL Marketing AD department is a blend of following departments: Corporate Sales Department Consumer Marketing Department
Customer Service Department Distribution & Credit Control Department Dispatch
CORPORATE SALES DEPARTMENT
Corporate Sales Department is very important department which generates the revenues for the company. The Head of this department reports directly to Director Operations. This department consists on Coordinators and Technical Coordinator. employees in which Business Development Manager, Senior Sales Officer, Area Sales Managers, Sales Officers, Sales
S.O S.O S.C 3. Hierarchy of Corporate Sales Department S.O
First of all company analyze the total market potential. Find out the PEL potential from the total market potential. Then find out the corporate sales potential. To analyze the
market potential, they use various resources like overall sales of their company & their competitors throughout the year. 2nd resource they use the report from the custom department on the import of compressors or other raw material that help them to analyze the total market potential. After analyzing the market potential they set the sales target for a year with mutual understanding, with set target, sales officers go in the field & get order from customers. They use different inquiry tools to access their customers like they visit market institutions, use the old references, they also find out their customers through advertisers & tenders, fax, e mail and are forwarded to Business Development Manager. When sales officers visit their customers they demand some pre-qualification steps including some certificates, 1. Name , postal and registration office address 2. Legal status of firm 3. Full particulars, organizational set-up along with firm’s brochure 4. Financial soundness certificate, Annual Report, 5. Details of plant and machinery installed 6. Details of similar projects completed 7. Certificates of Income tax and Sales tax registration 8. Pakistan Engineering Council certificates 9. Company Status, 10. Company Profile. After the pre-qualification Company sent quotation to the customer prepared on standard F-MKT-01A signed by BDM that include Assessable price, sale tax, extra sale tax, excise duty, price per unit and their terms and conditions. Terms & Conditions: 1 Offer validation 2 Delivery Time: 3 Payment Terms: 4 Warranty:
5 Installation Charges: 6 Sales Tax registration Number 7 National Tax Number On the basis of quotation company and customer negotiate with each other on the prices. The company has a technical and financial capability to met customer requirement. This may require consultation with General Manager Manufacturing. After revised quotation finally customer issues purchase order. After issuing the purchase order by the customer, customer makes pre-delivery inspection or inspection at site in which he will check the availability of stock. After the inspection customer issues the inspection note and it is the proof that inspection has made. After the issuance of inspection note company issue the order form, check the availability of stock, if stock is available then order form approved by manager Distribution and Credit Control department. Against this order form, delivery order is issued from dispatched department after that delivery order approved by manager distribution and credit control. In case of free delivery dispatched department issues the goods received note and give it to the driver of vehicle, which gives receiving from the customer. After that, • •
Execution of Installation Awarding of Installation Installation forward to authorized installer of PEL Corporate Services Department Supervision of Installation Supervision of installation is done by PEL authorized technical teams
After the delivery, sales coordinator prepare the invoice of installation that includes product model, quantity, rate per unit, gross sales values, discounts, net sales values, sales tax, special excise duty, extra sales tax and net to customer. And then prepare the supply invoice annexure and bill that includes the total amount customer paid. Following documents are attached with that invoice, • • • Covering letter GRN Inspection note
Then maintain the record in concerned files therefore Earnest money, bank guarantee and demand draft etc. after the record keeping sent request to the account department to issue CDR against warranty. Mostly sales are done on credit basis so after sending the invoices to the customers they follow up them to make payments. Continuous visit are made to customer for removal of objection and collection of payments Corporate sales department received the payment from customers against this payment they made payment confirmation report and then depositing it to the Distribution and Credit Control department where this department makes their entry into the system. With the help of that data Distribution department feed into the system Corporate Sales department generate different reports. To keep the record up to date sales coordinators prepare consignee status on weekly bases and aging reports. The department has its sales officers in different cities of Pakistan and they are responsible for communicating with customer parties, sells products, installation and to make collections of credit sales. This department prepares different reports regarding sales and collection. Corporate Sales Department deals with the business parties or organizations rather than individual customers.
Customer Service Department (CSD)
CSD is a customer service department under the Marketing AD Head. Where after sales services are provided to satisfy customers having problem in their appliances. PEL is well known for their customer care services.
Distribution and Credit Control Department (D&CC)
Distribution and credit control department has 48 employees and it is a merger of two departments; Distribution Credit Control The distribution includes the activities to distribute company’s products from the factory to the stores in Lahore and different cities of Pakistan. The head of this department
reports General Manager Marketing AD as well as General Manager Finance. The basic function of credit control is to do sales accounting of Corporate Sales department and maintains ledgers. This department is responsible for check and balance of dealers, and allocates credit limitations for dealers and Corporate Sales department. It plays a role of bridge between Corporate Sales Department and Accounts Department. This department not only motivates the dealers but also check their activities. It also checks their credit limit because dealers have awarded different credit limits according to their potential of sales. Whenever any dealer’s credit crosses its limits they stop the supply and first they try to motivate dealer to clear his credit then they restart his supply. These all things happed because much of PEL’s sale is on credit.
Dispatch is another department under the Marketing AD Head. In this department all the data regarding products sending out from the factory is maintained. This department sends daily dispatch report to Corporate Sales which help to identify the orders and their status.
CONSUMER MARKETING DEPARTMENT (CMD)
This department is basically under the marketing AD department. At the start this department did not exist in the hierarchy but with the passage of time and with the success of easy installment scheme, this department came into being. The reason is that in the start this department’s target market was Lahore and its workforce had only 8 persons and now after 2 years of its establishment it has covers major cities of Pakistan and it has workforce of 45 and they are recruiting more to cover these areas fully. There are many regional offices in major cities for example in Multan, Shawl, Karachi, Hydria, Faisalabad, Gujranwala, Hattar, Rawalpindi, Sialkot, Bahawalpur, Sukkur, Sargoda and AJK (Azad Jammu Kashmir) and the head-office is in the factory that is Consumer Marketing Department.
HUMAN RESOURCE DEPARTMENT
Human Resource Department is the most important and key department of every organization. It not only deals with the employees of the organization but also help in management of the affairs of the company. HR Department’s activities are spread over the whole organization. The following areas come under direct supervision of HR department at PEL. Hiring and firing of employees Training and development Compensation system
Finance Management is the lifeblood of any company. If this area of corporate activities is improperly handled, a company may lead insolvency despite having all the resources and opportunities. Therefore proper financial management is vital for every business concern and PEL is not lacking behind over here. Functions of Finance department are: Preparation of budget, appropriation of accounts, re-appropriations, surrender and savings. Control of expenditure and ways & means position. Audit Treasury administration Administration of Taxes i.e. Sales Tax, Entertainment Tax, Luxury Tax and Entry Tax etc. Resource mobilization through loans, Institutional Finance, Small Savings, Credit and Investment and public debt. Financial concurrence and advice. Compilation of Codes, Rules and procedures concerning financial transactions and having bearing on State finance and their implementation. Safety and investment of funds from consolidated funds, contingency fund and public account.
Contract, recovery and refund of revenue etc. Arrange monetary resources / funds at favorable prices and at proper time. Allocate resources / funds throughout the organization. Deal with banks, investment firms, modarabas, government departments of Appliance and power division calculate and keep employees salaries record. Carry out final auditing of financial records prepared by Accounts department of Appliances and power division.
INDUSTRIAL RELATION & ADMINSTRATION (IR & A)
Key responsibilities of this department are: Maintenance of Attendance Check the material in & out from the factory Maintenance of factory Provide assistance to all departments regarding material Security and fire fighting Gate supervision Telephone exchange Fair price shops Canteen supervision Dispensary and health care Time clerks etc.
PEL has state of the art methods of production and they also outsource the products and raw material not only from Pakistan but also from foreign countries. So for this purpose PEL has two different departments for procurement, which are:
Local Procurement Foreign Procurement
Local Procurement Local Procurement department is responsible for all the raw materials that are required for making various products in the factory. It includes from nails to large metal sheets. At the start of each financial year they receive a major plan from the management, which highlights all the raw material required for each product. Dates and maximum time limit for raw material requirement is also mention in this major plan. Now procurement team makes small benchmarks and milestones from the major raw material required plan in order to ease them for remembering the required time limit and also reminds finance department to arrange finance for such purchases.
Foreign Procurement Responsibilities and duties are same as Local procurement but they vary in the dimension that, they have to arrange the raw material from abroad. They also receive same plan as local procurement for the whole financial year and develop milestones to carry out the plan execution properly. The skill of this department is to purchase the raw material in the optimum cost that best satisfy the need of production department and also to finance department in quality as well as in monetary terms respectively.
IT department’s key responsibilities are as follows: Troubleshooting and problems facing in computers. Installing and deletion of soft wares. Right protection and issuance. Developed and maintain internal network. Developed and maintain domain of each person. Create and enhance internal software’s running currently. Hardware and all software issues.
Production department’s key responsibility is to develop and create products that are required for the specific department. They also receive a major plan for the whole financial year that indicates the number and models of each brand and the deadline time for each lot. PEL’s production department is comprised of different units according to the products.
The Accounts Department looks after the financial matters. Accounts department different functions described as below; This particular department has the responsibility to prepare and keep an up to date record of following: Financial keep of daily, including the income statement and balance sheet. Book keeping of daily monetary transactions. Production maintenance reports Cost data on labor, materials and overheads. Remittances and loans Expense reimbursement Tax statement Financial deals with the banks, leasing companies, modaraba companies, and other government agencies through Finance Center. The Accounts department maintains record of all its expenses through vouchers. Generally the following types of vouchers are used for this purpose. Cash payment vouchers for cash transactions recording. Purchase vouchers Bank payment vouchers Journal vouchers for general expenses.
MARKETING STRATEGY OF PEL
Target consumers are at the centre of the marketing strategy. The company identifies the total market, divides it into smaller segments, selects the most promising segments and focuses on serving them. To make success in today’s competitive marketplace, companies need to be customer centered. PEL understands the importance of customers and that is why it has a customer-driven marketing strategy. Market Segmentation PEL‘s Marketing Department is responsible for identifying the attractive segments and to target the best of them. As PEL does mass marketing so it is good for company. It designs a marketing mix using mechanisms under its control: product, price, place and promotion. The company engages in marketing analysis, planning, implementation and control to find the best marketing mix and to take action. The company uses these activities to enable it to watch and adapt to the marketing environment. PEL does segmentation of the market according geographic and demographic variables like rural and semi-urban areas and income level of the customer. Market Targeting Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. PEL’s target markets are customers from lower middle, middle and upper middle income level and PEL also targets rural and sub urban areas markets. PEL targets these markets because it has differential advantages of economical and durable products over its competitors; where it can generate the greatest customer value and sustain it over time. Market Positioning PEL positions itself as an electronic company offering durable products of best performance at economical rates. PEL plans positions durability and low prices that distinguish its products from competing brands like Mitsubishi, Sabro etc. and give it the greatest strategic advantage in its target markets.
Marketing mix consists on four P’s, which are;
Product Price Place Promotion
Product The products of PEL are durable, good quality, latest designs with after sales services. PEL offers several models of its refrigerator and air conditioners and dozens of optional features. The products of PEL come fully serviced and with a comprehensive warranty that is as much a part of the product.
Price Price is only element in the marketing mix which generates revenues for the company. PEL calculates suggested retail prices that its dealers charge from the consumers. The prices of PEL’s products are reasonable and attract middle class consumers in the market. PEL is adopting pricing approaches to bring it into line with changing economic conditions and consumer price perception. PEL has adopted good-value pricing strategy—offering just the right combination of quality and good service at a fair price.
Place Place includes company activities that make the product available to target customers. PEL has a strong network of dealers throughout the country. PEL has indirect marketing channel in customer market and contain one intermediary level of retailers. In the business market it has a direct marketing channel which includes no intermediary, because PEL’s Corporate Sales department directly sells products to business customers. PEL partners with a large number of dealers who sell the PEL’s different products. PEL selects its dealers carefully and supports them strongly. The dealers keep an inventory of PEL products, demonstrate them to potential buyers, negotiate prices, close sales and service the products after the sale. Promotion
Promotion means activities that communicate the merits of the product and persuade target customers to buy it. PEL has lack of advertising through print media due to the financial restrictions. PEL involved in a “Push Strategy” which involves pushing the product through marketing channel to final consumer. It was directing its marketing activities toward channel members to induce them to carry the products and to promote them to final consumers. But now PEL is practicing both Pull and Push promotion mix strategies but still Push Strategy is more focused.
PEL’S LIFE CYCLE
Sta rt Grow th
Indus try Sta rt Grow th Declin e
5. PEL & Industry Life Cycle
The analysis of PEL shows that the company is in its growth stage, as company is expanding its production capacity and making strategic alliances with other companies. The industry of electrical products is in decline stage as industry is showing negative growth.
PEL Orientation Toward Marketplace
PEL has Production as well as Product orientation towards marketplace, as it is focusing on procedures to achieve high production efficiency, low costs, and mass distribution. On the other hand company also focusing on making superior products and improving them over time. Company’s perception is that customers will prefer the products with most quality performance, or innovative features and which are widely available and with a fair price.
• • The competitive strategy of PEL is that it has a wide range of products and at relative low prices. PEL focuses on cost leadership strategy in its power division appliances. The prices of its power division appliances are high but they are of very high quality. PEL has a competitive advantage of its brand name. • PEL has high quality products both in appliances and power division because most of the raw materials are imported from different countries and these raw materials are of very high quality. • The strategic alliance with LG will also decrease its competition
6. Market Share of Air
PORTER’S FIVE FORCES MODEL
The Porter’s five forces model of PEL can be exhibit as below;
Low Threat of new entrants
High Bargaining Power of Buyers
High Rivalry Amongst Industry Rivals
Low Bargaining Power of Suppliers
Low Threat of Substitutes
7. Porter’s five forces model of PEL
Bargaining Power of Suppliers Bargaining power of the suppliers is low because of availability of a number of Chinese brands in the market
Bargaining Power of Buyers The Bargaining Power of Suppliers is high because; They have choice of different brands in the market They have choice of different models and features They have choice of products in different prices Threats of Substitutes
The Gas generators and UPS are the substitute of PEL’s Diesel and Petrol
generators. The major substitutes of air conditioners are o Room air coolers o Electric Fans Room air coolers can be divided into branded and non-branded air coolers. In the branded air coolers, major players are National, Super Asia and Atlas.
The room air coolers are available at low prices starting from Rs. 5000 The room air coolers cause increase in humidity which cause rusting The room air coolers create noise when they switch on.
The size room air coolers are big which is not preferred by the customers. Although room air cooler is cost effective but due to increase in
temperature people prefer to install split units. Electric Fans also very cost effective and its major companies are GFC Fans, Younas fans, Royal Fans, Parwaz Fans, Pak Fans. The features are as follow; Economical to use Remote control feature Affordable Warranted Although the features are very attractive but still fans are not the perfect substitute of air conditioners in the extreme hot summer season in Pakistan. From above analysis it is clear that air conditioners are facing a weak threat of substitute. Threat of New Entrants PEL has low level of threat of new entrants in the industry as he electronic industry has different barriers to entry. For example Requires huge capital to get entry in the industry High manufacturing cost High advertisement cost Establishment of dealership network High cost of raw materials Rivalry among Competitors
There is intense competition within the industry to capture the market in terms of share of market (SOM). The companies are introducing products with new and advance technology to attract and capture the customers. They are using advertisement and technology as a weapon to increase market share in the related markets.
PEL divides its Strategic Business Units (SBUs) into the following divisions; Appliances Division Power Division Telecommunication Division
8. BCG Matrix of PEL
The appliances division is considered as the “Star” as its market share as well as growth rate is high.
The power division is considered as the “Cash Cow” for the company as its growth rate is relative low but it has a great market share.
The telecommunication division is considered as “Dog” because company seemed it as not profitable and hence now company is not investing in this division.
PEL has no “Question Mark” in its BCG Matrix.
BUSINESS PROCESS ANALYSIS
As Pak Elektron Limited is a manufacturing organization so the business process of the company starts from purchasing of raw material. The Procurement Department is responsible for the purchase of the raw material. The company purchases raw material from local as well as from foreign markets. The company analyzes the material requirement and selects the market which gives the company high quality material in a favorable credit terms and price. Before purchasing the manager of procurement department gets permission from Finance department, which allocate the budget for procurement according to the needs and forecast of production. The forecast of Production is decided by the Marketing as well as Production department. Marketing Department forecasts the market demand by analyzing the economic, political, social and technological indicators of the target market. This forecast is very critical for the company as a wrong forecast can lead to shortage or surplus of the product. As for the year 2007-08, the company forecasted a low demand for home appliances due to economic meltdown but during the year shortage of products happened in the market. The raw material is stored in the raw material stores where from the concerned departments demand the material when needed. The Production Manager issues a material requisition voucher to the store and also feeds its entries in the web system of the company. After receiving this voucher the store issues the material to the department and also does the entries in the network system which also maintains the inventory of material.
9. Business Process
The raw material is processed in the production departments of different products and controlled by their divisions. This raw material is put into the process where the quality control inspection is occurred at every stage of production, and defected units are separated from the good units. The quality checked products are packed and then sent to the finished goods stores in the factory. The finished goods store departments maintain the inventory of the finished goods and issue a units receiving note to production department as a proof. On the other hand units received are entered in the system of network of the company. The Sales department receives orders from the customers and confirmed the orders if stock are available in the factory. The units from finished goods store are sent to the customers by the dispatch department after receiving request from the Sales department.
DIVISION OF LABOUR
In Pak Elektron Limited (PEL), two types of employees hired
1. 2. Permanent Workers Temporary Workers
Temporary workers are employed for about 6 months, and when the season concludes the temporary workers are laid off. Temporary workers are employed as helpers and assigned those jobs where skills are not required.
Pakistan is facing the situation of great political instability and uncertainty since
last couple of years. According to the Economist.com survey Pakistan is at the 11th number of top most vulnerable countries of the world. Due to this problem business activities in Pakistan are severely affected. The Foreign Direct Investment also decreased dramatically due to current insecurity.
There are very few incentives to the manufacturers in Pakistan by the government as compare to upcoming giants like China. The cost of manufacturing is very high due to the electricity rates and other overheads. So most of the time manufacturer hesitates to do manufacturing in Pakistan and prefer to import finished goods or only assemble goods in Pakistan. The government decided to increase the minimum wage rate of workers from Rs.4500 to Rs. 6000 which increase the cost of production and inflation. It is heard that it will be increased more in future.
Due to the global economic crises, Pakistan’s economy is also facing a lot of
problems. Although Pakistan’s economy is not directly hit by the crises yet the economic situation is severe in Pakistan.
To resolve the power sector issues, removing subsidies and concurrent transfer
of international oil price changes is also likely to risk a further slowdown in economic activities, at least in the near future. In Pakistan there is a strong black economy due to the circulation of black money from illegal businesses like smuggling. Unemployment rate has been increased from 5.6% to 7.4% in Pakistan Inflation Rate is above 20% in Pakistan Economists are expecting a better condition for Pakistan economy due to the loan from IMF.
In the financial year 2008-09 the GDP growth rate was 2.0 percent in 2008-09 as
against 4.1 percent last year and growth target of 4.5 percent.
Overall manufacturing posted a negative growth of 3.3 percent during the current
fiscal year against the target of 6.1 percent and 4.8 percent of last year. Largescale manufacturing witnessed a across the board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year. The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009.
Deep freezer and refrigerator manufacturing showed a negative growth of 17.7 %
and 12.2 % Per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent Private sector investment was decelerating steadily since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09 Public sector investment to GDP ratio which has been depicting a consistent increase from 4.0 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09.
The consumers in Pakistan are spending most of their income on food and basic
needs of life.
Now a days people are becoming more price conscious due to inflation and
crises in Pakistan. Their primary focus is on food and daily use goods and thus people have lessened their interest in electronic goods. Now consumers prefer the Split Air Conditioners over Window Air Conditioners because Split ACs are considered as energy savers. That is why Window ACs are almost obsolete because of high energy consumption and Split ACs are becoming more popular because of low electricity bills. In countries like Pakistan the usage of Air Conditioners is great because of extended summer season of nearly 8 months. In Pakistan Air Conditioners are used by upper and middle class. The companies are becoming more socially responsible these days as they have introduced CFC free refrigerants, anti bacterial and anti dust filters. The people in Pakistan have started considering Split Air Conditioners as a status symbol and feel disgraced if split units are not installed in every room of their houses. That is why people purchase home appliances on installments from the dealers.
With the introduction of Split Air Conditioners, it made the air conditioning more
affordable and easy to install and maintain. The efficiency of air conditioner depends upon its outer unit. The bigger is the outer units the more efficient will its inner unit. So companies are introducing big outer units to get more efficiency. In split Air Conditioners the rotator compressors are used which are soundless and do not heat up in extreme hot situation. In the international market, the non CFC (Chloro-floro Carbons) are shifting in air conditioning industry and all major companies are using non CFC gases in their products. CFC gases are harmful for the environment and cause depletion of ozone layer, due to which the danger of global warming is happening. From 2005, no CFC gases product can be sold or bought in the international market. So to remain in the international market it is necessary for the Pakistani companies to adopt new technology of non-CFC gases. Companies are introducing refrigerators with cool bank which remain working for 5 hours even after switch off
The multinational companies are using information technology to coordinate and
communicate within companies as well as with external parties. The electronic inventory management systems are used to reduce the cost of handling the inventory and orders.
The strengths, weaknesses, opportunities and threats of PEL are discussed below:
PEL has the following strengths and is in more competitive position in these areas than its competitors. Following are the main strong points of PEL;
Strong Brand Image PEL has created the strong brand image in the mind of the customers through higher quality and low price. The customers of the PEL always prefer to buy the PEL home appliances like WRAC split AC and refrigerators whenever they wanted to buy. PEL is a popular company in Pakistan and every one knows about the PEL products and its brand. That’s why PEL selling of WRAC are very high in the market than the competitors selling. Strong Dealer Network It is also the plus point for the PEL that it has also developed the strong dealer network in the market. PEL has its dealers in 22 major cities of Pakistan like Karachi Lahore, Quetta, Peshawar, Rawalpindi, Hyderabad, Multan, Gujrat etc. The dealers are always trying to sell the PEL appliance to the customers because they know there are high margin in the PEL products. They can get more money after selling the PEL products. The PEL also provides more incentives to their dealers than their competitors. Dealers are very conscious about the PEL products and always guide the customer in buying the PEL appliances and tell them the more qualities of PEL products than others products. Strong Quality, Sales and Services PEL has Country-wide Customer Care Centers in 21 major cities of Pakistan which enable customers to access PEL customer care centers easily. PEL is also in a strong position that it provides the superior quality to its customers. It makes sense in the mind of the customers that PEL products are better in quality than the other companies’ products. PEL also provides the after sale service to their customers which delight the customers satisfaction. It is another way to advertise the products because when customer is highly satisfied then he tells the other ten persons that they should buy the PEL products. It is very good publicity of PEL products that PEL Company gains. ISO Certified Company
PEL was 16th company in Pakistan which got ISO 9002 Certification in 1997. The international standard practices in PEL have been upgraded as per the revised ISO 9001 standards and its scope of application is expanding ever since and top management is committed to make PEL a total quality management (TQM) company.
Market leader in WRAC (Window Room Air Conditioner) It is another strong point that PEL is a market leader in WRAC. The window room air conditioner is more demanded by the customers than its competitor’s air conditioners because it has more durability in operating systems and cools the room in few minutes. PEL always strives to provide the innovative features in WRAC. PEL air conditioner is cheaper and has a higher quality than others WRAC. That’s why customers always purchase the PEL window air conditioner. Monopoly in Power market PEL has the largest market share in power market in Pakistan and has a monopoly in market. PEL is one of the major electrical equipment suppliers to Water and Power Development Authority (WAPDA) and Karachi Electric Supply Corporation (KESC), which are the largest power utilities in Pakistan. Backed by the innovative genius of Saigol Group, PEL is now technology forerunner and market leader in providing new products and services to meet ever changing and technology intensive needs of its customers. PEL aims to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global developments in technology and product design. Number 2 in Appliances Market in Pakistan Pak Elektron Limited has a second position in appliances market in Pakistan after Dawlance. PEL always continuously strives to pursue the strategies adopted by the competitors. PEL is also making efforts for the technological improvements and
better customer services to become market leader in appliances market in Pakistan. Strategic Alliance with LG The strategic alliance with LG has increased the strength of PEL. As LG is a major player in international appliances market, it will give PEL the advantage of technology and increase market share. Contract with Government of Punjab PEL has the contract with Government of Punjab for providing and installation of air conditioners in the premises of Service and General Administration Department of Punjab. This remains PEL busy in operations even in the current crises of low demand in market.
Customer Loyalty As PEL is a pioneer of electronic manufacturer in Pakistan and in the market since last 5 to 6 decades. So it has a strong customer loyalty and people are using PEL’s products generation to generation. As PEL is satisfying the needs of customers with economic and durable products, the loyalty of its customers is ever increasing. Strong Grip in Home Appliance So PEL is one of the companies, which is having a strong grip in the home appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point for the company. PEL is penetrating the market by introducing the new home appliance like Split Air conditioners and Water Dispensers and always trying to get the maximum shares in the home appliance market. Strong Research and Development Department PEL has a strong research and development department that is continuously trying to develop new features for the products. R&D department spends huge amount of money for the development of product. R&D makes research for introducing the
new product and asks the customers what they want extra in our products. For this purpose they hire the highly qualified employees in R&D department. That is another strong position of PEL. Free Customer Service PEL provides free customer service for one year to its customers. So the customers always buy the PEL products due to its free service and it becomes loyal customer for the PEL. PEL always provides help to their customers for repairing the WRAC, Refrigerators and other items. PEL always make efforts to satisfy the customers. Public Limited Company Although PEL is owned by the SAIGOL GROUP but its shares can be purchased and sold in stock exchange market. So every one who is interested in purchasing the shares of PEL he can purchase. It is also called public limited company. So people are more interested in buying the PEL products.
Like other companies PEL has some weaknesses in operating the business. If PEL overcome on these weaknesses then it can become a market leader in the home appliance. PEL loose some competitive edge in the following points: Financial Problems Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that create the problem of cash flow because when the stocks are not sold and the production is in process for 24 hours a day than the company faces such problems. So company aggressively researches the sources of cash and stresses the dealers to sell the PEL’s products to the end consumers. Company sometimes sells their products on advance bases to the dealers and gives them high margin of profit. That’s why a company is facing the financial problems and company never pays attention on the alternative resources that will
help in reducing the stocks. That is a customer demand and due to this it is the main weakness of company. Low Satisfaction Level of Employees The most useful and important assets for any company are its employees; if they are satisfied they will give their best performance and which will be fruitful for both employees as well as for the company. It is very big weakness of PEL that its employees are not satisfied and thus not giving their best performance. Middle and lower level of employees have not any sense of involvement in decision making for the company, as PEL has not given them empowerment to take their decisions for the company. Lack of Advertisement It is a second major weakness of PEL that it has lack of advertisement on TV and other media. That creates hurdle in selling the products and customers cannot know the changes, which are made in products by the company time to time. Company is not in a position that it made advertising of all their products on a wide range because of its high cash requirement towards the production side. Due to this problem company always make efforts to develop strong relationships with dealers. System Variations It is also the main weakness of PEL that there are rapidly a change in polices of selling the products. That’s creates problems for the selling team how to sell the products to the dealers because the top management requires the urgent amount of money. So selling team sells the products sometimes on hard cash that will reduce the prices of products that gives the benefits to the dealers and creates problems for the management. Lack of Product Range PEL has introduced more products of consumer items but there are more needs to develop new consumer items like PEL Television, Vacuum cleaner and other items.
Due to lack of product Range, Company cannot earn more profit because consumers have high demand of these products and they say that if company is investing in these products then we can keep all PEL items and we never need to keep other’s company products. Inappropriate Working of HR Department In this modern and highly competitive era, Human Resource Management has an immense importance for the company. The companies making progress in the world have excellent human resource management departments. In PEL, the Human Resource department is not performing their all duties properly. HR department was started before 3 years and it looks like a formality that company has HR department. HR department is not functioning properly and it is weakness of company which can cause company’s repute in the market and will loose attractiveness for the employees. Less Utilization of Resources Due to lack of finance a company cannot utilize all its resources on its full capacity. It increases the cost of products per unit that decreases the profit margin of each consumer item. Sometimes company cannot allocate the resources according to the requirements of production department that’s becomes the problem for the complete utilization of resources. For the company it is also the main point of weakness.
For the PEL there are more opportunities for expansion the business. If PEL realize that opportunities then it will be more fruitful and profitable for the company. Even if company does not take advantage of these opportunities then it will loose its competitive position and high profit. Its competitors will give PEL tough time to pursuing the opportunities that are adopted by them. Following are the opportunities for the PEL.
Exploration of Market in Pakistan PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL introduce its products in all cities of Pakistan but there are so many places that have the capacity to absorb the PEL’s products. These places are tribal areas in NWFP and northern areas of Punjab and NWFP, central area of SIND. If company introduces their products in these areas then it can get a large amount of profit and increase its market shares.
Rising population Although rise in population is a problem for the country but where there is problem, there is an opportunity. So due to increase in population the demand will also increase in the market. So PEL can have more customers in future. Increase in Product Range It is the main opportunity for the PEL that it can increase its product range that will be a more profitable for the company. PEL can improve its product range in the power segment with the establishment of a new factory and can explore further growth opportunities in the Middle East and Eastern Europe, going forward. If PEL does not take this opportunity then it will loose high margin of profit and market share. It will reduce the fixed cost and increase the efficiency of the employees. Export Opportunity PEL Company has also the opportunity to export their products in other countries like UAE, SAUDI ARABIA, and other Arabic and African countries. It will not only reduce the dependence on one market but also increase the market shares and profits. It will also help the company to spread the fixed cost on all of its production that will reduce the total cost and company will enjoy the high profit. Increase in Production Capacity Company can also increase its production capacity at the maximum level that will increase the efficiency of the employees and also will reduce the total cost.
Sometimes company cannot allocate the resources according to the requirements of production department that’s becomes the problem for the complete utilization of resources. Company should look the market conditions then it will produce their products. Increasing Investment in Power Sector Due to current power and energy crises in Pakistan, the government is increasing investment in power sector. So this is a great opportunity for PEL to focus on power division and take the steps to capture high demand of power products in the future.
PEL Company in such a competitive era has many threats as well. These threats are for the present situations and future. Company should make its policies and strategies according to these threats. So following are the main threats for the PEL: Strong Competition There is very strong competition for the home appliance in the market. So every company tries to come in the number 1 position for achieving the maximum shares in the market. Every company adopts different strategies for selling of the products. It reduces the profit margin of each company and increase the bargaining power of the buyers who will demand higher quality of products and lower cost. That is the main threat for the PEL Company. Chinese Products China’s products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. An even china product not well in quality but it is comparatively in low prices than the consumer’s home appliance that are manufactured by the indigenous company. China products stress the indigenous companies to lower the quality and prices that will not be profitable in the long run.
Decrease in Pakistani Rupee Value The economy of Pakistan is not strong and that is why value of Pakistani Rupee is decreasing. This decrease in value of Rupee can severely affect the company as it will result into increase in the cost of raw material purchased from outside Pakistan. This will increase the cost of production and company has to rise in prices of its product which can disturb its economic products position in the customer’s minds. Price war As there is a stiff competition in the home appliance market that will cause the price war. So every company reduces the prices of its products to increase the sales. It will not only reduce the profit margin of the company but also reduce the quality of products. So price war is the main threats for all the companies, which are operating in these products. Decreasing Growth Rate in Pakistan There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the company. It becomes the burden for the company that how to sell these stocks. Its main reason is that purchasing power of the buyer is very low and it has no income to buy the expensive home appliance. It is also becoming a main threat for all the companies. Instability of Government The rapid changes in governments will become threats for the companies because every government adopts its own policies for the industries. So it increases the uncertainty for the investors who want to invest heavy amount in their new projects. That’s become the major threat for the companies and decreases the profitability. Due to fear of politically instability companies will also not invest the heavy amounts. Tax Department Tax department is another major threat for the companies that will restrain the business expansion. There is more complicated tax procedure for the companies,
which are interested to increase the investment in their businesses. Due to fear of heavy taxes companies would not like to invest the heavy amount. World Trade Organization World Trade organization gave the permission in 2005 to each company of home appliance to export their products after paying fewer duties or duty free products. That will increase the pressures for the indigenous companies to reduce the prices and increase the quality. It will increase the competition among the foreign companies and indigenous companies. But our companies also run under uncertainty conditions. This will decrease the morale of indigenous companies.
Rapid Technological Changes World is watching fast technological changes and there is a rapid change in designs and technologies in products. So it is very important to move with latest technologies which increase the cost of production. Black Economy in Pakistan Due to the black economy in Pakistan the marketers cannot make proper estimation of market demand. The marketers acquire data from State Bank Economic Surveys which do not reflect the fair picture of the economy. It is a threat for company as it will not properly forecast and meet the market demand of Pakistan, which can cause customers to switch from PEL products to other companies products.
First Superbrand of Pakistan in Home Appliances PEL Awarded Health & Environment National Excellence Award-2008 PEL Wins Best Environmental Reporting Award PEL Awarded 6th Annual Environment Excellence Award-2009
PEL’S PACRA RATINGS 2
The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and the short-term entity ratings of PEL at ‘A’ (Single A) and ‘A1’ (A One), respectively. Meanwhile, the ratings of the privately placed secured Sukuk issues of PKR 1,200mln and first two tranches (amounting to PKR 1,100mln) of PKR 2,000mln are maintained at “A+” (single A plus). These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payments of financial commitments. The ratings reflect the company’s relatively low business risk emanating from diversified revenue sources, supplemented by its established position in the domestic power and appliance segments. In the appliance segment, the company’s market positioning is expected to benefit from its recent alliance with LG, a global leading player. The ratings takes into account the management’s well-conceived business strategy of product development and technological up gradation amidst intensifying competition. Meanwhile, ratings are constrained due to highly leveraged capital structure of the company and significant maturity mismatch in debt structure, putting pressure on PEL’s financial profile. Effective and timely execution of the company’s overall strategy – particularly the success of initiatives in power division and strategic partnership with LG – is critical for ratings. Managing its financial risk at an acceptable level would remain crucial for the ratings. Meanwhile, any adverse changes in the quantum of business and/or credit terms, resulting in stressed cash flows, could have negative implications for the ratings.
STRATEGIC PARTNERSHIP WITH LG
Pak Elektron Limited launched the new range of LG Electronics Home Appliances & Airconditioners in Pakistan at an impressive ceremony at Royal Palm Country Club, Lahore on 8th July, 2009. After a strategic partnership agreement in April this year, Pak Elektron Limited is the exclusive distributor of LG Home Appliances & Air-conditioners throughout Pakistan & AJK. The alliance is expected to be completed with internationally renowned LG, in following three phrases:
(i) Sale and marketing of LG products (air conditioners, refrigerators, microwave ovens, washing machines and vacuum cleaners) through PEL’s distribution network, which has started beginning June-09, (ii) technical collaboration between PEL and LG whereby PEL’s manufacturing facilities would be upgraded for producing LG products, and finally, (iii) PEL and LG will form an independent entity focusing on full range of appliances business. These initiatives are expected to augment PEL’s market penetration and overall share, while improving its product range.
Addressing the event, Pak Elektron Limited’s Director Operations, Mian Murad Saigol said that Pak Elektron Limited has been a leading local company in electrical appliances for over five decades, they, together with LG Electronics, which is a global leader in consumer electronics, will bring a new range of technologically advanced & health care conscious products for the Pakistani consumers. LG Electronics Pakistan General Manager Mr. E. D. Choi was also present at the occasion. Mr. Choi emphasized the health care factor of the LG products. He mentioned that the new health care product collection enables customers to lead a healthier & better life and together with Pak Elektron Limited both companies are working towards improving the lifestyle of their customers.
LEARNING AS A STUDENT INTERN
I have performed the following duties during my internship program in PEL Corporate Sales Department. All doings and activities are checked by Mr.Rana Sameeullah (Sr. BDE) and Mr. Yousaf (Sales Coordinator)
• I prepared “Aging Report” which contains information about the period of cash or credit received or receivable. A specific schedule is made for 30days, 60days,
90days, and 180 days. On the basis of which company estimate its credit standing in near future • I prepared “Consignee Status Reports” in Microsoft Excel with the help of different formulas. It contains the name and code of the party and sales manager, city name and its code and also the opening and closing debit and credit balances of the consignees. Consignee status contains the information about how many payments are received and how many are still receivable from company’s consignees. The following table illustrates it;
O. Balance (Dr.) 49999135 49999324 49999122 48765 87687 67776 Multan Lahore Faisalaba d Karachi 76,000 65,739 8,57,64 0 5,62,00 0 O. Balance (Cr.) 87,437 34,556 4,566 C.Balan ce (Dr.) 68,456 54,656 45,466 C. Balance (Cr.) 76,886 5,566 4,556
Sales Manager Code #
Consignee Code #
Opening Balance (Dr.) – Closing Balance (Dr.) = Debit Opening Balance (Cr.) – Closing Balance (Cr.) = Credit Debit – Credit = Amount Receivable Amount Receivabl e 3,007 17,907 8,12,164 5,08,853
Sales Officer Code # 49999135 49999324 49999122 49999045
Consignee Code # 48765 87687 67776 67688
City Multan Lahore Faisalaba d Karachi
• • •
I did Filing of documents into the concerned consignee files like purchase orders, cheques received, payment information, invoices, order form etc. I entered the data of the units dispatched and entered all information related to indoor and outdoor units. I prepared the bills of Installation charges. These installer’s bills include the information about installation work (Installer services charges, and cost of extra material used) on project sites. Firstly company receives bills from installers then verifies and enters the bills in the company’s record and after preparation these bills are signed by concern Sales Officer, Business Sales Manager, Corporate Services Manager, and Finance Controller and forward to Finance Department. Finance Department use to issue cheques in favor of installers, which are received by installer parties from Corporate Sales Department.
I prepared “Quotations” for the company and mail or fax them to the customer parties. This document contains the per unit rates of the required products by the customer.
MODEL Split AC
Sales Tax @ 16% 4,212
Extra Sales Tax @ 0.75% 197
Excise Duty @ 1% 263
Ex-Factory price 31,000
I prepared the Payment Information Slips which are prepared after the collection of cheques from the party. It includes organization name, date and amount of payment then checking of the collection edit list and verifying that each and every entry should be matched with the payment information forms. Then it is handed over to Distribution and Credit Control Department.
I did recording of different bills of employees like fuel, mobile, medical bills etc in the Corporate Sales Department records and handed over to concern departments like IR Department and Accounts Department.
I coordinated between Corporate Sales and different departments like Dispatch, Distribution and Credit Control, IR & A, Accounts and Finance. I Received calls of the customers or the other people who wants some information or queries. Randomly calling the sales coordinators in different cities in different areas of Pakistan and asking them how many payments are received and left also the status of sales.
As such I didn’t face any type of problem during my internship. The only thing I found a bit problematic was that it was a bit harder for me to take time from employees to teach me new things and the working of corporate sales because of their extreme busy schedule. Initially I had difficult time in mixing with organization members and felt uncomfortable in that new place with new people. However, after some time, I became a part of it just like everyone else and felt completely comfortable. The real problem I faced in the PEL was the difference between what I had learnt from the books and what was being practiced. Practical application of the theories learnt during academic sessions was a great challenge, which I overcame by the cooperation of the staff.
NEW KNOWLEDGE ACQUIRED
Some new things, which I learned here, were How to work individually as well as in groups under relaxed and stressful environment. Patience is very important in dealings, as anger can lose your customer. To increase your sales and stay in competition with top brands it is necessary to keep your dealers happy by giving them incentives. How to coordinate with the other sales areas of PEL via email, telephone and fax.
How to deal with your customer’s complaints in a satisfactory way
Working of production plant of PEL products (Air Conditioners, Refrigerators) by visiting the production site.
HOW EXPERIENCE IMPACTS MY CAREER
My internship experience has given me a realistic preview of practical life. Now I feel that I am better prepared to enter the world of professional work. I have come to know and been appreciated by a number of professionals who are lending their services to the PEL for more than a decade. I feel honored that I have worked with such experienced professionals. I must admit that such interaction in this respectable professional community will help me in seeking out good job opportunities in the near future. My knowledge of Microsoft Office especially MS Excel came in handy while working here in PEL, as daily reports were made in Excel .My knowledge of Sales Force Management and Marketing helped me while working with Mr. Qasir Mehmood (Sales Coordinator) whatever I asked from him, he was so kind to guide me in detail. So, my urge for learning in field of Sales Force Management and Marketing helped me a lot. I learnt in Business Communication how to interact with clients/peer groups/customers with good communication skills, which came in handy, here in PEL. I realize the importance of research work for any organization by seeing its application. Each task I performed was a different experience in itself. By the end of it, I must say I realize my potentials, I have realized that practical life is not so easy after all; it takes a lot of hard work and devotion, and not to forget time. And I now know that if I want I can make things possible, and I also know how good it feels to having accomplished something and being appreciated for it. I definitely have learnt things, which will impact my career and my character.
The overall experience of my internship was very good; I have learnt the sense of responsibility in its literal meaning. I am now capable of dealing with different sort of clients, and how to be patient while doing so. Besides this I also gained knowledge about documents which I previously lacked and many more products being offered by the PEL. So in a nutshell, this internship gave me the experience, which would no doubt boost my confidence to work in future.
On the basis of my knowledge and perception I can recommend the company that;
Pak Elektron Limited should adopt a true decentralized organization setup which
gives all employees to take part in decision making for the company. It will boost their motivation and loyalty for the company. The company should have a strong marketing information system to make proper forecasts about market situation.
The company should use information technology efficiently to communicate
between departments in fast and proper way to save time and other resources.
The company should announce two holidays (Saturday & Sunday) in a week; it
will not only help the company in cost cutting but also increase efficiency of its employees.
The company should add more features to their products. People are attracted
towards products with unique features and something that would make the customers feel that they have got their moneys worth.
The company should give Incentives and other benefits to its employees to
motivate them and to increase their performance.
The company should take steps to make sure proper functioning of Human
Resource Department. There should be fair performance of employees and reward them according to their performance. As economy is facing recession, PEL should give more allocation of budget to its marketing department. Because in such economic conditions Marketing is considered the key department which creates more value in the minds of the customers.
To gain more competitive advantage over its co-market players, PEL should give
more focus on the Pull strategy in its promotion mix especially for appliances. PEL should develop its image as an employee oriented company rather to an employer oriented company.
The company must give more incentives to the dealers and sales officers so that
they remain loyal to the company and promote the company’s products effectively.
The company should take steps to shorten its cash conversion cycle to
accelerate time of collection from the customers.
The company should speed up its delivery process by establishing expand its
stores in areas of high demand throughout Pakistan. The company should also focus on direct selling of its products to its customers, although Consumer Marketing Department is doing so but at a very meager level.
The company should introduce seasonal schemes for its customers which will
help in moving up the sales.
The company should advertise throughout the year so people should remember
them and will be more brand loyal and new customers will be attracted. They should use all the medium of advertising to be more successful in attracting customers. The company should develop systems for identifying opportunities, ranking them and choose the best ones.
The company should constantly add technology in its products and systems
according to changes in the international development that will give it a competitive advantage in the marketplace.
To conclude I can say that I had a wonderful and learning experience in Pak Elektron Limited which make possible me to write this report. In Pakistan the brand image of Pak Elektron Limited is excellent in the minds of its customers. The company has good strengths and so it can make a rapid progress in local as well as foreign markets. In my views the management philosophy is the main hurdle in progress of the company. Now
the company’s focus is only profit and employer’s oriented which cause employees’ low motivation. No doubt PEL is making excellent products, but unfortunately PEL is not realizing creative advertising is also important part of their Marketing success. The current strategic alliance of PEL with LG will helpful for the company to expand its technical and production capacity and will also expand the target market. I see the future of PEL very bright as it is finding new opportunities and the company has the potential to compete with any challenge in the market as it is in the market since an era of above 50 years.