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(MF) Tractors in Pakistan. An assembly plant was set up in 1967 to assemble tractors imported in semi- knocked down (SKD) condition. In 1972, the company was nationalized under Economic Reforms Orders and renamed as Millat Tractors Limited MTL started assembling and marketing tractors on behalf of Pakistan Tractor Corporation( PTC) which was formed by the Government for import of tractors in CKD condition. In 1980 and entrusted this task to PTC. In 1981, PTC transferred this role indigenization to MTL. This was the turning point in the companys history and it went about the task methodically and rapidly. The companys history and it went about the task methodically and rapidly. The company undertook this new role with enthusiasm and in the spirit of national development and proved its engineering capabilities by surpassing the deletion targets set by the Government. In 1982, MTL took a giant step towards self-reliance by setting u the first engine assembly plant in Pakistan. The company made strategic decision right in the beginning to bring those manufacturing facilities in house for which capabilities did no exist in the country and for parts which required high investment and precision. Therefore, in 1984, sophisticated manufacturing facilities for the machining of intricate components were set up. These were previously not available in Pakistan. Currently, critical components like engine block, hydraulic lift cover, front axle support and center housing are being machined successfully in house at MTL from local sourced castings. At MTL we firmly believe that producing of international quality standards is the key to our continued success and growth and the quality control department converts this belief into reality. In 1992,the company was privatized, and the employees joined hands and took over its management by winning an open bid.
To maintain its leadership role in tractor manufacturing in the country, MTL continues to look towards future, to identify and exploit new opportunities and t consolidate the existing ones. The new tractor Assembly Plant is part of this philosophy. This plant started its production in 1992. The establishment of this modern plant not only increased production capacity to 16000 tractors per year on a single shift basic, but also provided a quantum jump to the quality of the assembled tractors and pushed MTL into ranks of the major tractor manufacturing companies of the world. In 1993, MTL acquired the management control of Bolan Castings Limited (a public limited company specializing in intricate automotive casting), in partnership with employees of the company. The Company looks to the future with optimism and plans to broaden its customer base. Consequently the opportunities are being explored in multiplication of engines and tractors in areas other than the farming sector. Mass production of generation sets was started in 1994, while a 3 ton forklift Truck branded as Millat, based on TCM technology, was launched in the year 2002. Both of these products are mad by using Perkins engines and have been well accepted by the market. In 2002, MTL established a wholly owned company named Millat Industrial Products (Pvt) Limited to manufacture quality automotive batteries. There is a constant endeavor at all levels of the organization to better the companys performance by offering upgraded ranger of its products and services. Our technological collaboration with AGCO Limited UK, Perkins Engines Limited UK, and M/s Anhui Heli Co. Ltd. China, has been of great help in updating technology levels and introducing new models. The company has been the regular recipient of the Corporate Excellence Award of Management Association of Pakistan and the top Companies Award o Karachi Stock Exchange since early eighties. MTLs Annual report has been acknowledged as the Best Annual Report by the institute of Chartered Secretaries and Admin Association of Pakistan for several years.
The employees of the company, continue to work with full zeal and motivation to further improve performance standards. We are confident that the company will keep marching forward in service of the nation and the valued customers.
This achievement has been made possible only through the companys commitment to quality, after sale service and its human remorse development.
At MTL, there is centralized decision making process. Documentation procedure is formal e.g. in case of providing after sale service (warranty / replacement) for defective parts the procedure is as follows: Customer goes to dealer and tells the problem. Dealers replace the parts from his inventory and afterwards fills the claims form and takes the collective defective parts to the Millat Tractors Limited. MTL inspects the part and then either replaces part to the dealer or credits the balance to dealers accounts. For the extra ordinary problem or defect the claim procedure is different and as follows: Customers go to dealer and tells the problem. Dealer sends a notice to the Millat Tractors Limited and then a team from MTL visits the tractor and then decides whether to improve the claim or not. If the claim is accepted then the part is sent to the dealer for replenishment.
DEPARTMENT AT MTL
In order to have maximum efficiency, Millat Tractors Limited functions are very structured. The division of work and labor is done in a very designed manner and all the work requirements have been distributed properly among the various departments. Every department fulfill its own requirements and done its own work. There are following department on Millat Tractor Limited. Human resource development and training department (HRD) Marketing department Administration department Finance department Auditing department EDP (electric data processing) department A hierarchy exists in each department and the functions of the department flow in that particular cadre, whether they are flowing from top to bottom or from bottom to top. Some departments have further sub-departments as well, like marketing is the biggest department of MTL, so it has 7-sub departments. Similarly, sub departments exist in administration department.
implement the TQM system. At MTL annual functions and parties are arranged and employees are given annual and weakly leaves (2- leaves in a weak) in order to reduce their boredom and frustration level. free lunch is provided to them., Free of cost medical facility is also given to them.
PRODUCTION PLANT
There is only one production plant located in Lahore. Its working capacity 70-120 tractors per day. PRODUCT LINES MF 240 (50 hp) Tractor MF 260 Turbo (60 hp) Tractor MF 375E (75 hp) Tractor MF 385 (85 hp) Tractor MF 385 4WD (85 hp) Tractor Generating Sets (15-42 KVA) Prime Movers Forklift Trucks (3-Ton Capacity) A range of agriculture implements.
STRATEGIC BUSINESS UNIT Among the above mention product generating sets forklifters and prime movers are generating high profits. These products have less market share but have the more opportunity for market growth. So on the basis of these qualities we can categories as the problem child. Local manufacture of agricultural implements erodes its profitability in agricultural implement. These products have the low growth market and low market share so we consider these products as dogs. Tractors are consider to be as the stars on the basis of high market share and high market growth.
GOALS AND OBJECTIVES Goals Establish dealers network all over Pakistan to ensure the availability of their products. To completely satisfy the customers Manufactures farm equipment and other engineering goods that conform to the specified standards to enhance farm mechanization for achieving selfsufficiency in against agricultural products, saving of foreign exchange and developing technical and engineering capabilities in the country. Ensure customer satisfaction by providing quality products at competitive prices with the warranty coverage and ensuring after sale service. Constantly endeavor to be market leader in terms of market share and technology pace-setters in area of operations and to continuously improve efficiency and competitive strength.
Objectives
By continuously improving performance, aim to generate earnings sufficient to ensure a secure future for the company and to produce and increase shareholders return. To enhance creativity and job satisfaction, provide employees opportunity for personal development. A company went to exercise a 50%-55% sale in coming fiscal year.
Production Bounces
Production standards are set, i.e. 28000 tractors / annum. On meeting and exceeding these targets they are given production bonuses. In order to meet the sales targets, MTL also give the incentives to dealers but considering these tractors that factors are That past performance(Low, medium and high performers). Financial cost of incentives scheme What was the result/output of the last incentive scheme. After that MTL do the cost benefit analysis. If the targets are not achieved then they held the brain storming session. In this session front line field officer (regional officers) give the monthly reports, share the problems with the market executives.
o Unsatisfied delivery procedure. o Lack of proper survey (Market research). Delay in tractor delivery. No team work. Totally centralized decision making. Time consuming producedure . No customer dealing department in real meaning. PRODUCT DEVELOPMENT (OPERATIONAL LEVEL PROBLEM) On the basis of 58% - 60% market share, Millat Tractors Limited consider itself as a market leader but in order to retain and improve its market share by prevailing in overall Pakistan. Tractors market instead of its current market (upper Punjab and upper Sindh) through changing phrase We better know what customer requires. As What actually customer wants.
Its true that Millat Tractors Limited is producing new products (generating sets, fork lift trucks and prime movers) and modifying its available products (Tractors) but t should modify tractors by introducing those features which customer requires and create a sustainable competitive advantage. Now the question arise, why people in lower Punjab prefer 480 model (Fiat Tractors) rather than models introduce by Millat Tractors?
The answer of this question is that the farmers of these areas mostly use rota-wheater which do not work well with the 240hP Model of MTL. it efficiently work with the 480 hP of Al-Ghazi Tractors. So in order to capture this market MTL should introduce those models of tractor which efficiently work with the rota-wheater. DEMAND MANAGEMENT Weak In Aggressive Marketing Marketing personnel have a view in their minds that when any customer comes to the market to buy tractors knowing already what they have to buy either Fiat or MF, so
there is no need of marketing. They do not realize that changing the minds of the customers is essential in order to survive in a market. Due to poor marketing, lack of interaction with the customers and incompetent marketing personnel, Millat Tractors Limited could not penetrate in Bahawalpur and other markets of lower Punjab as well. Millat tractor limited is enjoying as a market leader but it should be noted that FIAT has been gaining a lot of market share for some years. So there should be change in the marketing strategies and efforts should be invested in marketing. UNSATISFIED DELIVERY PROCEDURE Millat tractors limited is more relationship oriented than customer oriented. It shows the biasness and discriminatory behavior with their customers. Company is following the policy to deliver the product to those customers who are higher in status e.g. if customer has placed and order month ago and when MPA places an order now then MPAs order is given priority and the tractor is soled to him ignoring the customer who is already waiting for delivery. This should be noticed by top management and amendments should be make in policy.
LACK OF PROPER SURVEY There is no proper procedure being followed by MTL to find out following types of problems: What type of problems organization is facing? What problems are being faced by clients. Whether clients needs are changing or not? What are the reasons, Millat tractors is not capturing the market share in lower Punjab, lower Sindh and other areas. Even they are providing a better package of after sales service? What MTL competitors are doing? So market research is a better solution for all these problems.
DELAY TRACTOR DELIVERY Proper Delivery There is another problem regarding long delivery period and availability of tractors to be sold to the clients. Clients always face difficulty in getting the tractors on time. No Team Work At Millat Tractors Limited people do not work in a team. Every one is working for their on self interest. The top management should create an atmosphere in order to change the attitude of the employees so that better result can be obtained.
Centralized Decision Making Basically all the decisions are made by higher authority regarding all the procedures in the office e.g. purchase, sales, production etc. all the decisions regarding employees are taken by the top management and they are not allowed to participate in any decision. Most of the time first line employees know better than middle and top level management. Time Consuming Procedure Every procedure takes a lot of time to be completed if anything required in office e.g. even smallest purchase have been made it takes a hell of time to complete the purchasing process. Another example is that if the company requires smallest equipment for office it takes a lot of time to get an approval from head office e.g. if a printer is required in office. NO CUSTOMER DEALING DEPARTMENT IN REAL MEANING There is no customer dealing department to deal with the customers face by face. Every client or a new customer to comes to the office for obtaining the information or for purchase of any MTL products has to meet the marketing personnel. The marketing personnel only focus on the job they are assigned.
Through the proper market research they could launch this model at appropriate time so, Millat Tractor is thinking to launch this model with some modification.
Diversification
Millat Tractors Limited involve in diversified business that have already been listed.
Forms Of Diversification
MTL using following three forms of diversification 1) Vertical diversification 2) Horizontal (related) diversification 3) Global diversification
Vertical Diversification
MTL is involve in backward integration by producing gear boxes and rex barren batteries. It not only consumes these parts itself but also sell these to other customers as well.
Horizontal Diversification
MTL has expanded its business by horizontal diversification through producing agriculture implements generating sets, fork lift trucks, prime movers and automobiles (Army Jeeps) as well. Their intention is to invest in that business when the risk is low in the sense of less competitive business and also acquire those business which the Govt. has disinvested.
Global Diversification
At global level, Millat Tractors Limited exports its products in form of CkD (Completely knock down) components which its foreign customer requires so that import cost can be reduced. MTL imports its products to Malaysia, Bangladesh, Srilanka, Afghanistan, Keynia, (200 Tractors), Middle East, Sudan, and Nigeria. But Al-Ghazi is not in this position to export their products.
Means Of Diversification
There are two sources which are used by MTL to diversify its business. Internal development Acquisition
Internal Development
Through internal development, Millat Tractors Limited has started producing the other products such as gear boxes, agricultural implements, generating sets, fork lift trucks, prime movers and automobiles(army jeeps).
Acquisition
Rex Barren batteries Millat tractors limited, the producer of Massey Ferguson brand of tractors have acquired the assets of rex barren batteries limited for Rs. 13.55m, by making the highest bid at the auctioneers. The assets of rex barren, located in Kasur included land measuring 16 kanals 18 marlas with the covered area of 22,750 sq.ft and machinery / equipment capable of producing 60,000 batteries of different sizes.
Bolan Castings
In 1993, the company in collaboration with the employees of Bolan Castings Limited acquired the management control of Bolan Castings Limited by purchasing 51% of the company shares offered by the Govt. as a part of process of privatization. The management control of BCL was taken over after successfully submitting the highest bid of Rs. 24.55 per share in open bidding. BCL provides major castings for automobile industry and also 50% of the company requirement are met from it. Since acquisition of control by MTL, BCL has also performed very well and has been a growth pattern.
Millat tractors limited consider itself as a market leader on the basis of its 58%60% market share and quality products. Millat tractors main competitor is AlGhazi tractors limited. There is intense competition among them.
Differentiation
Being a market leader, MTL differentiate its products by offering a best after sales service & warranty maintenance package. The warranty package is as follows. Under 1- year warranty or 1200 H of running whichever comes first, parts are replaced free of cost. It renders free services and provides free filter on tractors with the 30h/ traveling. Other facilities provided by MTL but not by its competitors are as follows If the farmers have purchased tractors from Lahore it can be repaired from any work shop which are present allover Pakistan MTL dealers do not require identity card when customer came here to sell the product. For MTL initiates after sale service programmes such as free work shops, free repair and maintenance programme and doorstep programmes. MTL has training school for dealers, technical colleges and general people. Here main source of promotion and marketing of their products is distinctive package of after sale service.
Recommended Strategies
Company should acquire other related business as well in order to offset the risk. It should acquire those business where the competition in order to achieve the major portion of profitability and which has the potential for sale and growth. MTL should also acquire the Govt. or Private agencies for consultancy to remove weaknesses and solve the problems. Another way to reduce the problems and weakness is that it should do the strategic alliance with Al-Ghazi Tractors.
Competitive Environment
Among the 5-forces of competitive environment, it gives more importance to rivalry among existing firms. There is intense competition among MTL and Al-Ghazi Tractors i.e. the thing which they want to avoid. On number 2nd, new entrant is also creating a threat for them. MTL mostly uses a blend of offensive and defensive tactics. it uses proactive approach when it is going to launch a new model or after sale service. It uses a reactive Tactic when Al-Ghazi Tractors Limited take initiator of price was then in this situation, it also has to reduce little bit price and little bit consider the competitors pricing straregy.its competitors (AGTL) prices are lower because of 2-reason. First is , it is located in tax free zone and next it has been switched over from Italic technology to Turkish technology which has reduced per unit cost. But Alghazi has also make the delivery procedure more prompt.
SWOT ANALYSIS
The swot analysis consist of analyzing the organizational strength and weaknesses, and its opportunities and threats which are related to external environment. it helps to identify a strategic niche that the organization might exploit. Here is a swot analysis of Millat Tractors Limited.
Strength
Millat tractors limited is strong organization as for as its competitor is concerned. Basically the activities the firm does well or the resources it has or it controls are referred to as its strength. Following are the strengths of MTL.
Market Share
A market share of 58%-60% proves to be a demanding strength of the Millat Tractors Limited.
Repair Facility
MF tractors can be repair from any workshop located in any area of Pakistan. There is no specification, regarding repair maintenance of tractors such as if the customer has purchased tractor from Lahore, he can repair it from D.G. Khan or Mailsi workshop as well.
Availability Of Parts
Millat tractors parts are readily available all over Pakistan that is another strength.
Diversification
Millat tractors limited has diversified its business by producing agricultural implements, generating sets, fork lifters, rex barren batteries and now working on the automobiles business as well.
Experience
Another strength of MTL is that it has been established since 1964 so it has experience labor force.
WEAKNESSES
Weakness are the activities the firm does not do well or the resources it does not fully utilized or the resources it needs but does not have. Though Millat Tractors Limited in a successful organization but it has following weaknesses.
Job Staticness
There is lack of job rotation in MTL which has created the staticness and reduce the productivity and efficiency of the employees.
Indispensability
High market share another strength has mad Millat Tractors to think that they are leaders so they do not put its efforts to those areas which are weak and need its attention.
Diversion Of Concentration
Due to diversified work at MTL, it might not able to fully concentrate on its primary operations.
Opportunities
Opportunities are positive external environmental factors. They have following opportunities for Millat Tractors Limited. Expansion In Automobiles, Implements, Fork Lifts Trucks And Generating Sets, REX barren batteries & Bolan casting. Due to changing needs of country, MTL has the opportunity to make power machine along with manufacturing tractors and diversifying its business.
E-Commerce
MTL can established B2B e-commerce application with its dealers, spare parts and workshops. This will help them to make true MANAGEMENT INFORMATION SYSTEM
THREATS
Threats are negative external environmental factors. The external factors, which can be prove negative for Millat Tractors are as following:
Political Instability
The major threats which is faced by MTL is the instable political environment. A policy being carried out by one government is changed by next coming up government. Such as Awami Tractor Scheme and Green Tractors Loaning Scheme. Every government shows biasness and make policies by considering their favorites.
Pest Analysis POLITICAL In 1979, Zia government imply the ordinance for the automobile industry. According to this ordinance the formers are indicated to produced all the imported items at local level. MTL acted upon this ordinance in 1981. Uptill now all the government policies are in favour of farmers. Banazeer Government had introduced Awami Tractor scheme and Nawaz Shareef Government had introduced Green Tractor Scheme. According to this schemes prices of the tractors declined. MTL also gave the sacrifice by reducing the profit margins and on the other hand government reduced the taxes but this reduction was not so much supportive.
[Safety and Environmental Protection] The Company has a separate Horticulture Department to make the environment pleasant, green and full of flowers. The Company has been participating since many years in the Horticultural and flower competitions arranged by Government and other institutions. The Company again won best performance awards in different competitions. To promote healthy environment within the Company and its surroundings, a major Tree Plantation Campaign was undertaken and over 2500 trees were planted. However, the Company remains fully committed towards the requirements for safety and environmental protection. All the operations are continuously monitored to meet the requisite standards in these areas. The Company's operations continued under safe operating conditions and the past excellent record in this respect was
maintained during the year. The safety committee closely monitors all activities to create awareness and education for the adoption of best safety practices. Social Responsibility and Community work Compliance with the spirit of laws, timely payment of all govt. Taxes and dues. Obligations, the Company continued to promote various welfare schemes, organizations and charitable institutions. The Company provides financial assistance for promoting education, health and social activities to schools, Hospitals and charitable trusts as and where requested by them. The Company has been sponsoring Golf Tournaments at the national level and musical activities etc. Technology The Company produced 14,652 tractors as against 15,370 units of last year reflecting a decrease of 5 %. The production was in line with the requirements of the Marketing Department. As part of the Company's policy of providing appropriate products to meet customers' requirements, two new models i.e. MF-260 Turbo (60 HP) and low cost option of higher HP MF-375E (75 HP) have been introduced in addition to the existing models MF-240 (50 HP), MF-385 (85 HP) and MF-385 4 Wheels Drive. We are now well placed in the market by offering a wide range of products meeting all pocket needs. This also places us in a comfortable position to meet future WTO conditionalties. We are confident that our current products quality will place us in a good position to compete globally. Encouraged by this acceptability we plan to continue with the concept of offering products suited to the market needs to further enhance our existing tractor range.
Future Outlook Pakistan' agricultural sector will remain stagnant unless we optimize our farm power level through extensive use of agriculture, machinery and tractors. The Company feels that the tractor market would remain at the same level in 20022003 as in the current year. MTL will strive to maintain its market share and play a positive role aimed at boosting the agricultural sector. The Company expects that the tractor industry will grow further due to restructuring of ADBP recently being taking place, formation of politic Government in October, 2002 and Afghan potential i.e. participation of Pakistan in the rehabilitation of Afghanistan.
Habib Bank Ltd. and The Bank of Punjab are already extending tractor loans and improving their share in the tractor industry which shall reduce dependence on ADBP Suggestions We gave following suggestions for Millat Tractor Ltd. By acting upon these MTlL will not only profitable itself but also play an important role in the development of the economy. 1. Marketing is called s back bone of an organization. a poor marketing of a good product can disaster results while good marketing of bad product can make me rich other rights. There is a lot of room of improvement present in the marketing development regarding marketing research to identify where the problem (what is the reason of sales decline) & which section of an organization is weak dealing with the customer in this regard special improvement in booking section is required. The best way at booking section. The problem is due to the job of persons at booking section. To show the problem course covering the topic how to deal with the different people should be
organized. 2. They should change their thinking that they will always remain leader of tractor industry but they should understand that every business has to face the decline stage as well in order to remain at maturity, it is necessary they should capture those markets in which they still did not penetrate & The competitor analysis thoroughly. 3. Another area which demand attention is that of job rotation. Employees are not so much productive, motivated and efficient because of their routine job. 4. They also are allowed the operational level employee in decision making process especially when the decision are taken about the labour force because most of the time they better know about what is beneficial and suits to them.
5. The delivery time period at MTL is 21-days arrangement should be made to decrease
the delivery time so that service level can be improved.