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Report On Pel Pakistan
Report On Pel Pakistan
Group Members
This report is a result of combined effort put forward by the students of Lahore School of
Economics ( Pakistan), BBA-IV.
Group Members:
Bilal Mustafa
Muhammad Azeem
Rehan Alam Khan
Waleed Maqsood
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The following work is guaranteed to be free from any kind of plagiarism. Knowing the
consequences the report is based on our knowledge and the information we gathered while
interviewing the Employees of PEL.
This report is constructed after visiting the Pel Factory and after discussing different
matters required in the project with the Human Resource of PEL.There is no copying of data
from other sources. In case of copying the information i.e ( Company history, Organization
Structure Diagram etc) the source would be cited.
The economical, political, Company’s internal data, Financial data are taken from
authentic sources and are mentioned in the Reference page.
We hereby declare that the report would be simply constructed by applying the
knowledge we have gained while studying the strategic managemnet course and there would be
no plagiarism.
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ACKNOWLEDGEMENT
We would like to acknowledge and extend our heartfelt gratitude to our course instructor
Ms. Farah Zarak. It was due to her guidance and assistance at every step that we are able to
formulate and compile the report.
We are also thankful to the management of PEL who were very welcoming. Their
cooperation was really helpful. Our Special thanks to Azeem Talib ( Senior Engineer Power
Project) and M.Ismail(Engineer Sales and Marketing Appliance Division) as provided us the
required information.
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Executive Summary
This Strategic Management report is about Pak Elektron Limited. The report externally
and internally evaluates the company. The internal evaluation is based on the data gathered from
the Employees and through our observation while we visited PEL. Than we use different
evaluating techniques to come to a conclusion regarding the internal performance of the
company. The techniques include IFE, EFE, SPACE, BCG matrix etc and financial analysis.
These techniques are specified and shown through tables in the report. The external valuation is
based on the data gathered through different sources and it concerns the factors that are affecting
the company.
To narrow down our report we our just focusing on the Appliance Divison of PEL. The
reason for choosing this divison is that people reading and writing this report both have know
how about the product in this divison comparitve to the Power Divison.
Methodology:
The methodology used for gathering the data is both primary and secondary. The
financial reports, the company’s introduction, the Market situation currently in Pakistan is
gathered through internet and company’s financial report. The insight to PEL, that includes
management and performance of the company is gatherd through interview with the employees
of PEL and through our observation when we visited PEL factory situated in Lahore.
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Table of Contents
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PEL’s PROFILE
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INTRODUCTION
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 bought by the 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 home appliances and
by producing hundreds of engineers, skilled workers and technicians through its
apprenticeship schemes and training programmers.
Appliance Division
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.
Refrigerator 32%
Water dispenser 8%
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Pak Elektron was setup in 1956 as a Public Limited Company with the object of initially
producing transformers, switchgears, and electric motors. AEG experts and PEL personnel
carried out the designing and production of this equipment jointly. After the conclusion of joint
venture agreement with AEG Saigol Group acquired the PEL COMPANY in October 1978.The
company floated its shares to the general public and was listed on Karachi Stock Exchange
(KSE) and Lahore Stock Exchange (LSE).
In October 1978, the company was taken over by the SAIGOL GROUP, which is one of the
leading industrial groups in PAKISTAN, having diversified business activities in the fields of:
Textile, Engineering, Banking & Finance, Fuel &Energy, Trading, Automobiles.
In 1980, Appliances Division was established and in 1981 it started the production of
Window Type Air Conditioners with the technical collaboration of General Corporation of
Japan. These air conditioners were well received in the market for its quality. Subsequently in
1987 the production of Refrigerators and Deep Freezers was started.
In 1993 the company has started the assembly of Compressors for Refrigerators and Deep
Freezers under technical collaboration with Messrs NECCHICOMPRESSORI of Italy. It was in
early 70s that PEL became known in overseas markets due to its quality. The company started its
export to countries like Saudi Arabia, Abu Dhabi, Qatar etc. Later on PEL supplied electrical
equipments to various other countries in the Middle East, Far East and Africa with great success.
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.
The product has been well received in the market. This encourages the company to
multiply its production in the coming year.
In 2009 PEL formed a Strategic Partnership with L.G. PEL has been appointed the official
distributor for LG Air Conditioners, Refrigerators, Microwave ovens, washing machines and
vacuum cleaners from June 2009. The addition of LG for Pak Elektron will now mean Pak
Elektron will have two leading brands, PEL and LG, in both the categories of home appliances
and Air conditioners. The recent addition to PEL product line is the Water Dispenser.
Today, PEL has become a household name. Its products are not only in great demand in the
local market but the Company has started exporting its appliances division products.
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Pel sensed the change in the Market situation and adjusted according to it. PEL started
with Power Division, but when it saw that there is demand for different products which were
required by consumers so they started a second division that is the Appliance division. The
introduction of different product line is mentioned in the History section.
Another strategy that PEL is using is joint venture . Pak Elektron Limited, held a press
conference (April 21, 2009) to announce the strategic alliance between Pak Elektron Limited &
LG Electronics. An agreement in this regards was signed at the ceremony by Mr. Murad Saigol,
Director Operations, Pak Elektron Limited & Mr. E. D. Choi, General Manager, LG electronics,
Pakistan Liaison Office. Mr. Saigol announced this to be the biggest partnership in the history of
home appliances and air conditioners in Pakistan and this strategic alliance will expand in the
times to come. PEL has been appointed the official distributor for LG Air Conditioners,
Refrigerators, Microwave ovens, washing machines and vacuum cleaners from June 2009. The
addition of LG for Pak Elektron will now mean Pak Elektron will have two leading brands, PEL
and LG, in both the categories of home appliances and Air conditioners.
This synergy of brands will bring technologically better products to the customer at
competitive prices. PEL will be offering innovative products made from cutting edge technology
of LG. LG Electronics has 30 R&D centers globally and spends hundreds of millions of dollars
on R&D making it one of the leading brands in the world. This will be possible as LG has a
wealth of global expertise in terms of designing the right product for the consumer. LG will also
enhance the production capabilities of Pak Elektron through technology transfer which will
translate into more smart and sophisticated designs, with competitive cost of production.
As the facility is upgraded it will be fully capable for export of LG products thus
improving the foreign exchange earnings for Pakistan. Pak Elektron will benefit from economies
of scale as a result maximizing return to all stakeholders.
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Vision Statement
“To excel in providing engineering goods and services through continuous improvement.”
Mission Statement
To provide quality products & 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 employees to meet future challenges
To promote good governance, corporate values and a safe working environment with a strong
sense of social responsibility.
1. Customers
Although PEL shows its commitment in providing quality products and services to the complete
satisfaction of its customers, it does not clearly mention who its customers are.
PEL does not include in its mission statement what are the company’s products or the services that it
is providing.
3. Markets
4. Technology
There is no indication in the mission statement of how tenchnologically sound PEL is.
This component has been included in PEL’s mission statement. The company states that it aims at
maximizing returns for all stakeholders through optimal use of resources.
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6. Philosophy
This component of the mission is present in the company’s mission statement as PEL aims at
promoting good governance, corporate values and a safe working environment.
7. Self-concept
PEL’s distinctive competence or major competitive advantage has not been stated.
PEL states in its mission statement that it has a strong sense of social responibilty.
PEL does show concern for its employees by providing them with opportunities of personal
development.
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Economic Forces:
Pakistan Economy is a dependent economy. The global crisis are adversely affecting
it. The rising Dollar, the oil crisis all has adverse impact on Pakistan.
The consumers in Pakistan are spending most of their income on food and basic needs
of life.
Inflation Rate has decreased to 11.5 % which was 15 months back more than 20%.
But still the purchasing power of people is declining.
Pakistan’s nominal per capita income rose 16.9 percent to $1,254 in 2010-11 from
$1,073 in 2009-2010.
Unemployment rate has increased from 14.4% in 2009 to 15.4% in 2010
GDP growth rate has increased from 3.4 % in 2009 to 4.8% in 2010.
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. Large-scale
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.
Pakistan Investment to GDP ratio declined by 2.9% in the year 2010.
Pakistan exchange rate depreciated 1.27% against the U.S Dollar in 2011. This has
lead to increase in the imported raw material.
1
The data for Economic Forces has been taken from Index Mundi. The GDP chart for the recent year was
unavailable this is just taken just to show that Manufacturing contributes a lot towards GDP growth.
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FIG.1.
People in Pakistan have become more price conscious due to the high rate of
inflation.
Their primary focus is on food and daily use goods and thus people have
lessened their interest in electronic goods.
To have ease in their life people are now purchasing electrical goods.
Split Air- Conditioners are preferred over Window Air-Conditioner. The
reason been that the Split are considered Energy Savers. This has made
Window Air- Conditioner Obsolete, as they had high energy consumption
resulting in higher bills.
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Technological Forces:
The efficiency of air-conditioners depends upon their outer units. The bigger the outer
unit is the more efficient would be the inner unit. So Pel is introducing bigger outer units
to be more efficient.
In Split Air-Conditioners the rotator compressor are used which are soundless and do not
heat up in extreme hot conditions.
The CFC gases used in Air-Conditioner are harmful for the environment. So it was
decided that no CFC gases product would be bought and sold in International market. So
all Pakistan companies are required to use Non- CFC gases.
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Like other companies PEL has also introduced the Cool Bank in refrigerator which
remains working for 5 hours 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. Pel
is lagging in this technological advancement.
Low threat
of new
Entrants
Lower
Threat of
Substitutes.
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The direct competitor of PEL is Dawlance, Waves, Haier etc. Dawlance is the main competitor
of PEL according to the PEL Managements. As it is giving them tough competition in various
product line comparative to other firms operating in the electrical appliance division. Dawlance
is market leader in refrigerator and PEL is still on 2nd Number. In Window Room Air Condition
PEL is the market leader.. PEL also faces Indirect Competition from companies such as
Samsung, Orient, Mitsubishi, Sabro, Nobel and other Chinese Brands available in the market.
PEL has no big threat from these indirect companies the fierce competition it faces is from
Dawlance. Sabro the pioneer of split air-conditioner in Pakistan has lost its shares in the
manufacturing of Split Air-Cond itioners.
32%
FIG.3
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32%
FIG.4
Threats of Substitutes:
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There is intense competition with in the industry to capture the market in term of share.
The companies are introducing product 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
related market.
Opportunities:
Expansion:
Production:
Advertisement:
Threats:
Competition:
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Political:
Economical Forces:
If PEL realize these 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 using the
opportunities that are adopted by them. Following are the opportunities for the PEL.
Expansion Opportunities:
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. Pel
Company has also the opportunity to export their products in other countries like UAE,
Saudi Arabia and other countries. It certainly has 2 year contracts with Nigers It will not
only reduce the dependence on one market but also increase the market shares and profits.
Production Opportunities:
It is the main opportunity for the PEL that it can increase its product range that will be amore
profitable for the company. PEL has got the opportunity to increase its product range. Time
to time it has launched new appliances but still there are certain products it can launch in
the product. It should re launch its T.V. Company can also increase its production capacity
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at the maximum level that will increase the efficiency of the employees and also will
reduce the total cost. The company can also expand into newer market and gain the highest
market share in Home Appliance market. Secondly it can become the market leader in
Refrigerator surpassing Dawlance.
Advertisement:
PEL is spending a very low portion of its sales on profit. That is around 7-9% on its Sales.
So to make more awareness among the consumer it should spend more towards the
promotion of the products that are not performing well.
Threats:
Following are major threats faced by PEL and it should use its strength and avail the
opportunities present to overcome this.
Strong Competition:
There is a very strong competition in home appliance division. PEL is facing high level of
competition from different home appliance manufacturers. Apart from the local and foreign
competition, China’s products are another threat for the Pakistani companies because these
products are cheaper than the Pakistani products.
Political Threats:
Firstly there is instability of government in Pakistan. The rapid changes in government
become a threat as every new government implement new policies for the industry. So it
increases the uncertainty for the investors and also for the company. The increase in wage
rate by 6,000-7,000 has increased the cost of the company. In recent times the increased
energy crisis has lead to certain problem in manufacturing of the company. It leads to delays
in production, layoffs of workers and delays in meeting customers order. In Pakistan there is
high corporate tax rate of 35% that pile up a high cost on the company.
Economical Threats:
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Pakistan growth rate is slow in case of GDP. That is 2.39% calculated of 2011.In Pakistan
we can see negative Economic Condition for any company they are facing high rate of
inflation leading to low purchasing Power that causes less consumption toward appliances.
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Analysis
The above EFE Matrix score of 2.91 shows that PEL is doing pretty well as it is taking
advantage of its opportunity and is avoiding threat. Its response to threat its facing like of
growing competition and high tax rate, Inflation is good. It response to exchange rate is
poor as it is importing lot of material and not taking advantage of our depreciated currency
by exporting it. PEL is quickly adapting to the changes being brought up in Refrigerator by
other firms and it is every now and then launching different models. So by this response we
can say that its response to being market leader is superior and thus we have given it rating
of 4.
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Table:2
4=Major Strength
3= Minor Strength
2=Minor Weakness
1=Major Weakness
The CPM scores shows that Dawlance is performing the best among the all and thus it is the
strongest of all. Its major strength are Dealer Nwetwork and Price. And its minor strengths are
many comparitive to other.
Internal Audit
Planning
Refrigerator:
Planning is very much important function of the management.PEL company makes the
planning regarding refrigerator by observing the market. How much a company can sales in a
particular segment’s there any chance of growth is also in the planning of the company
refrigerator.
Split Unit:
The company planning regarding split unit firstly is the observation of the market. Then
after observation how much to import the split units. Finance and trading department also give
suggestion for planning regarding split unit .Then set their plans according to the requirement.
Organizing
Refrigerator:
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Unit:
While organizing the company takes into account the last year sales and how much to
sale in a particular area. Mainly quality control, finance department and trading department are
involved in organizing for how much to import, when to import, where to import etc.
Leading
Refrigerator:
Head office mainly leads all departments regarding refrigerator .All the sub ordinate
department officers lead the related department and employees and loyal to the head office for
their working. There is check and balance situation for every department.
Split Unit:
Head office mainly leads all the related department of the split units. Trading department
is mainly the leader in split unit case for importing it and direct reliable to the head office. For
leading it also give its requirement to its head office for finance and for the quality control of the
product.
Controlling
Refrigerator:
Controlling is the main functions after making the pervious steps. Managers of the each
department control its own department working and are liable to the managing director. There is
check and balance situation. In controlling, monthly and annual basis analysis are made. How
much sale is made and for the betterment of the product research and development department
then do its job.
Split Unit:
In controlling of the split units, trading department mainly control the import of the splits
units. it checks the quantity of the units and quality control department checks the quality of the
split units before launching it in the market.
Motivation
PEL is also motivating its employees in the organization as it gives delegation to its employees.
This is not a financial way to motivate but by giving authority to employees motivates them as
they feel part of the company. Another way that PEL motivates its employees is by giving
rewards to its employees in form of bonus.
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Financial Ratios
Financial Ratio is a percentage that expresses a relationship between two pieces of financial
information, or financial ratios are formed from two or more numbers taken from the financial
statements of businesses
2,855,646 2,690,322
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Basic
4.14 5.50
Balance Sheet
As at June 2010
2010 2009
(Rupees in Thousands)
3,677,391 3,241,274
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CURRENT LIABILITIES
6,605,430 5,178,779
16,394,779 11,546,779
2010 2009
ASSETS
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NON-CURRENT ASSETS
6,906,322 4,628,083
CURRENT ASSETS
9,401,294 6,870,890
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16,394,779 11,546,779
LIQUIDITY RATIOS
It is the company’s ability to pay its short-term obligations by using its assets. It must be greater than 1
for the company to minimize its credit risks.
Current Ratio
1.42 : 1
Interpretation:
It means that how efficiently the current assets are being used in order to meet short term loans. In the
current year 1.42 is a satisfactory figure for the company. It is because the current assets have been
increased as compared to the previous year because of increase in credit sales.
Quick Ratio
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0.87 : 1
Interpretation:
It shows that how much a company is able to make the payments as cash in order to meet its obligations.
In this year the company has increased its cash purchases and on the other hand sales are all credit except
exports. So 0.87 is less which is risk for the company.
Activity Ratios
Turnover ratio shows that how quickly the accounts are converted into cash or sales. It is used to
interpret the liquidity of various current accounts. It includes the ratio of inventory, account receivables
and fixed assets.
Inventory Turnover
3.23 times
Interpretation:
It shows the no. of times the inventory completes the circle of consumption in a year. Company’s
inventory turnover is quite satisfactory. It shows that the inventory is consumed 3.23 times in a year.
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113 days
Interpretation:
It shows that after how much time the inventory is re purchased in a year. Current age of inventory is
113 days. It means company is repurchasing the inventory after every 113 days in each year. It is quite
satisfactory figure for the company.
53 days
Interpretation:
Average Payment Period shows that after how much time the creditors are being paid by the company.
Company’s position in this respect is just below the average. It means as much the payment period is
high, it is better for the company.
122 days
Interpretation:
It means that in how much time the company receives the cash against its all credit sales. So in the
current year the figures of collection period is high its taking too much time to collect the credit
payments.
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Operating Cycle
0.77 times
Interpretation:
This ratio indicate that how the assets are being used to generate the sales. Turnover in respect of
assets is not up to the mark in the current year for the company.
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1.81 times
Interpretation:
It means that how efficiently the assets are used to generate the sales. In aspect of net fixed assets,
company’s position is quite satisfactory. It means that 1.81 times the sales are being generated by using
its fixed assets.
Leverage Ratio
Debt Ratio
66 %
Interpretation:
It indicates that whether the company is in the position to pay its short-term liabilities by using its assets
or not. So, company’s debt ratio 66% in very low it must be less then 50% of the total assets.
Debt to Equity
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2.93 times
Interpretation:
It indicates the portion of external debts of the company against those of internal debts. At the time,
company’s external debts are almost 3 times more then its internal debts, which not credible for the
company.
1.66 times
Interpretation:
It indicates the ability of the company that whether it is earning the sufficient amount to pay the
interest on its debts. It must be between 3 to 5 times but the ratio of 1.66 is very low.
PROFITIBILITY RATIOS
These ratios indicate the company’s profits at different stages that are generated against the sales.
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22.43 %
Interpretation:
Gross profit margin indicates the percentage of profit included in the net revenue, before all the indirect
expenses. In current year, 22.43 % is a minor portion of the net sales.
12.49 %
Interpretation:
It indicates the portion of the profit over net sales after incurring all the indirect expenses to run all the
operations of the business. However current year’s operating profit ratio is very low.
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3. 58 %
Interpretation:
It represents the percentage of profit after excluding all the expenses and including all the other
incomes. Company’s net profit margin in the current is just 3.58% which is very low.
Return on Equity
12. 3 %
Interpretation:
It shows that how much a company is gaining against the investments of the ordinary share holders.
Company’s return on equity in is 12.3 % which is showing a very little rate of return.
Return on Assets
2.76 %
Interpretation:
Return on assets ratio represents the profit earned by the utilization of company’s all the assets. In 2009
it is only 2.76 % which represents a very low margin.
SWOT ANALYSIS
The Strengths. Weaknesses are discussed below:
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Strengths:
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:
Marketing/ Reputational:
Products:
Technological:
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development of the company. There is also Training programmes held to upgrade the technical
skills of the staff and making them more knowledgeable.
Marketing/Reputational:
Pel has created a strong brand image in the mind of consumers
through higher quality at affordable prices. Consumers mostly prefer the appliances of PEL when
a need for them is initiated. PEL is the pioneer manufacturer of Electrical goods in Pakistan so
this competitive advantage makes it them well known in Pakistan. Due its strong brand image
PEL has also developed and maintained better relationship with it’s customers. From generation
to generation Pel is satisfying the needs of the customers. So as PEL is satisfying the needs of
customers with economic and durable products, the loyalty of the customers is ever increasing.
The customer’s loyalty is not only being strengthening through the quality products but also
through better services. . It has Country- wide Customer Care Centers in 21 major cities of
Pakistan which enable customers to access PEL customer care centre easily. The customers are
offered free after sales service for 1 year. The PEL has also been awarded for Best Sale Service.
The biggest strength of its services department is that is handles a complaint within 24hours in
any part of the country, that helps in increasing the satisfaction of the consumer.
It has 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. 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 other competitor products.
Product:
PEL is one of the companies, which is having a strong grip in the home appliance i.e.
WRAC, Refrigerators, micro wave Oven etc that is a strong point for the company. It has the 2nd
position in the market after Dawlance in the Appliance Market. Pel’s overall share in the Appliance Market is 33%.
The major products in the Home Appliance Division that have contributed the most to PEL are its Refrigerator and
Window Air Conditioner.
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Weakness:
Following are the weaknesses of PEL and they need to focus on them so that they can
turn weakness into strengths.
Marketing:
Lack of advertisement
Management:
Production:
Product:
Technological:
No ERP system
Financial:
Marketing:
It is a second major weakness of PEL that it is not a vigorous advertiser. Only recently PEL has
invested a considerable amount in advertisement, but when we look at its competitors, PEL still
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has to do a lot in this sector. Price setting is also a main problem for PEL because it sets its prices
on the bases of competition and this strategy reduces its profit margin.
Management:
The yearly increment in the salary is very low as compared to the inflation .as compared to their
competitors; PEL does not increase the salary of its employees so much because they are facing
profit margin problem and this will lead an increase to the labor cost.
Production:
They are more dependent on the imported material rather than domestic but it causes problem for
the company as there are times when there is a slow supply or shortage of material from abroad.
The company has to sit back and wait for the delivery of the raw materials. 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. As the production
capacity and actual production of different products is given below
Technology:
The employees working in PEL are not highly skilled or are not competent to the change in
technology. When a new and advance machinery is installed at PEL the labor is not skilled
enough to adopt to that change so PEL has to hire some other person who know the machinery
well and then they use skill of that person to train other employees which takes too much. Sales
representatives have to face many problems regarding tracking system, they still work on fox pro
which causes problems with dealers. Many large firms are currently using erp system which is
more efficient then fox pro.
Finance:
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Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores
that creates problem of cash flow because when the stocks are not sold and the production is in
process for 24 hours a day then the company faces such problems.
Weakness
Pricing strategy ( based on 0.089 2 0.178
competitors)
lack of advertisement.(7-9% 0.056 2 0.112
spended of sales)
low increments ( inflation affect) 0.025 2 0.05
Not working at full capacity 0.13 1 0.13
(production capacity 3500000
actual capacity2924905)
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The IFE matrix does the internal assessment of the organization and it a tool that organizes a
firm's strengths and weaknesses and evaluates the relationships among these strengths and
weaknesses. In an IFE matrix ratings are assigned to the strengths and weakness where 3 and 4
are only given to strengths and 1 and 2 are applied to weakness. 4 represent major strength, 3
represent minor strength, 2 represent minor weakness and 1 represent major weakness. Weights
are assigned according to the importance of that strength and weakness. Then they are multiplied
and weighted scores are calculated. The average score is 2.5, and for PEL it is 2.67 which shows
it is above average and internal position is strong as it strengths are greater than its weaknesses.
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