PAK SUZUKI MOTORS

PRESENTED BY: FAHAD MUSARRAT MUHAMMAD JUNAID HAMMAD ABUBAKAR

Business Scope
Region Functions/Applications Fuel Economy Parts Availability Affordability Reliability CNG-Fitted Customers & End Users Business They are Not In

PAK SUZUKI MOTORS

EXTERNAL ANALYSIS

Market Structure Analysis

Luxury Oriented

Users of luxury oriented cars seek High Class, Prestige, Safety and Pleasure drive in their cars.

Executive people or the Elite Class people who belongs to the Upper-Upper class are the users of such cars.

Comfort Segment

Users in this segment wants comfort, pleasure drive and safety from their cars.
Upper class who belongs to the middle management of the organization or business man prefers such cars.

Market Structure Analysis

Economical

The cars in this segment tend to provide fuel efficiency, low cost of maintenance and reasonable prices.

Lower or Middle class families are the end users of these cars due to low cost of maintenance and high fuel efficiency

Imported Cars

Imported cars are highly efficient, durable, and highly comfortable and user can experience the real essence of Pleasure Drive.
Families relating to Upper Middle Class or Upper Class are the end users of imported cars.

Market Size Past 4 Years (Volume)

Market Size (Volume)
Segment 2005-06 Production Sales Production Sales Production Sales Production Sales 46,425 33,521 21,835 15,361 16,829 16,712 57,119 54,321 45,754 45,522 2006-07 13,464 14,339 52,412 54,157 52,356 52,791 2007-08 13,840 13,831 43,997 44,126 54,121 52,995 2008-09 14,125 14,113 45,234 44,326 53,813 53,714

Luxury Oriented Comfort Economical Imported Cars

The sales in each segment have declined a bit after 2006-07 due to economic crises. Sale of imported cars has been declined drastically due to levying of heave import duties. If we take year 2005-06 as base year and consider its sales as 100% than we can get the following results:

Sales for luxury segment in the year 2008-09 is decreased by 15.5 %. Sales for economical segment in the year 2008-09 is increased by 18%. Sales for comfort segment in the year 2008-09 is decreased by 18%. Sales for Imported segment in the year 2008-09 is decreased by 67%.

Market Size Past 4 Years (Value)

Market Size (Value)
Segment 2005-06 Price Assumed Sales Price Assumed Sales Price Assumed Sales Price Assumed Sales 1,300,000 21,725,600,000 850,000 46,172,850,000 350,000 15,932,700,000 1,100,000 51,067,500,000 2006-07 1,400,000 20,074,600,000 950,000 51,449,150,000 375,000 19,796,625,000 1,200,000 40,225,200,000 2007-08 1,600,000 22,129,600,000 1,000,000 44,126,000,000 400,000 21,198,000,000 1,400,000 30,569,000,000 2008-09 1,800,000 25,403,400,000 1,050,000 46,542,300,000 475,000 25,514,150,000 1,750,000 26,881,750,000

Luxury Oriented Comfort Economical Imported

Although the unit sales have been decreased in the last two years but the Sales in value have shown a hike. The prices of cars have increased much more as compared to the decline in the unit sales Unit sales as well as the Volume sales have been declined for Imported cars Unit demand have been declined drastically for imported cars

Market Size Future 4 Years

Segment 2010 2% 14,395 5% 46,542 6% 56,937 15% 17,665 2011 5% 15,115 6% 49,335 8% 61,492 18% 20,845 2012 7% 16,173 8% 53,282 10% 67,641 20% 25,014 2013 9% 17,629 9% 58,077 12% 75,758 22% 30,517

Luxury Oriented Comfort Economical Imported Cars

In the recent months some banks have resumed auto financing after seeing boom in demand. Slight improvement in law and order situation have boosted consumers confidence. Pak Suzuki Motor Company Limited is planning to roll out over 20,000 units in April-June this year as compared to 18,500 units in January to March period. imports of completely knocked down (CKD) kits for motor cars during July-March 2009-2010 has swelled to $315 million from $181 million in the corresponding period of last fiscal year. Federal Board of Revenue (FBR) has proposed 10 to 20 per cent reduction on import duty for completely knocked down (CKD) kits and five to 10 per cent duty cut on completely build-up units (CBU) in the budget

Distribution Structure
Company Pak Suzuki Indus Motors Honda Authorized Dealers 70 30 18

Indus Motors have a high Dealership network as compared to Honda As compared to Honda and Toyota, Pak Suzuki has one of the largest and finest

dealership networks across the country.

Distribution Structure
Company Pak Suzuki Indus Motors Honda Authorized Dealers (%) 100% 85% 90% Unauthorized Dealers (%) 0% 15% 10%

Honda is selling 10% cars through unauthorized dealer network whereas Indus

motors are selling 15% of cars through unauthorized dealers.

Unauthorized dealers are one of the main influencers in the market and capture

handsome percentage in the overall market.

Considering the dealership network of Pak Suzuki motors, it is selling 100% of

the cars through authorized dealers

Key External Trends

EXTERNAL TRENDS POTENTIAL IMPACTS PAK SUZUKI MOTORS HONDA MOTORS INDUS MOTORS

Increased Consumer Demand for Higher Quality and Value Added Services

Consumer demand for high quality and more services in same prices will result in low profit margins

Increased Fuel Cost

This results in shifting demand of consumers to fuel efficient vehicles Prices of imported cars reached competitive level thereby shifting customer demand from local cars to imported cars Since leasing and financing have started again, it will increase the demand for automobiles High taxation and ever increasing interest rates will lower the demand for automobiles

Foreign Investment in Automobile Industry

Car Financing / Leasing

Monetary & Fiscal Policies

Market Share

during the year 2009 Pak Suzuki has well maintained its market share even in

the period of high recession .

The main reason for this is the low cost maintenance and fuel efficiency that

gives customer the power to afford a vehicle even during recession.

Since Honda has maintained its high prices for almost all the products during

such period of declining sales, the market share have been low as compared to other competitors.

PAK SUZUKI MOTORS

INTERNAL ANALYSIS

SWOT Analysis
Strengths

Highest market share in the industry. High resale value Highly innovative and deep product line Easy and cheap availability of the spare parts Strong Research & Development

Weaknesses

No penetration in the large car market (greater than 1300cc) Very limited Distribution Channel in the sub urban areas

SWOT Analysis
Opportunities

Ever increasing prices of fuel and rising inflation resulting in high cost of maintenance have increased the demand of low cost and fuel efficient cars. opportunity to enter into the luxury segment and comfort segment. Foreign investment in the automobile industry Sales of imported used cars boost up Smuggling of Auto Parts is another threat to the local manufacturers The double digit inflation rate in 2009 is expected to further dampen the purchasing power of the customer

Threats

CONFRONTATION MATRIX
Strength Opportunities

Pak Suzuki Motors can use its strong brand image to build strategic alliances with local as well as foreign vendors. By using its strong R&D, Pak Suzuki Motors can enter into newer segments. Since Suzuki does not entertain customers that seek Luxury and Comfort in their products other than being economical, Suzuki may lose customers who are brand loyal with Suzuki but are now searching for Luxury Cars.

Weakness Opportunities

CONFRONTATION MATRIX
Strength Threats

Due to Suzukis low priced automobiles, fuel efficiency and low cost of maintenance, it have an edge over imported cars in the local market

Weakness - Threats

Since Suzuki does not entertain customers in this segment, foreign car manufacturers have an edge over the Pak Suzuki Motors in this area.

CUSTOMER BUYING CRITERIA

Factor Number Rating
After-Sales Brand Name CNG Fitted Comfort Design Fuel Efficiency/ Mileage Low Maintenance Cost Luxury Maintain Status Price/Affordability Quality Reliability/ Durability Resale Value Safety Smooth Drive Spares Cost Absolutely Critical Very Important Quite Important Nice to have Not Significant Dont Want it

RATING AGAINST CUSTOMER BUYING CRITERIA

QUALITY & PRICE Non-Price attributes effecting customer choice PRODUCT RELATED 1. Fuel Efficiency 2. Reliability/Durability 3. CNG Fitted 4. Safety 5. Affordability 6. Resale Value 7. Luxury 8. Design 9. Smooth Drive 10. Maintain Status 11. Brand name 12. Quality 13. Spares Cost % WEIGHTAGE 80% 10 6 7 4 9 9 4 4 3 2 5 6 8 10 5 7 2 8 8 2 3 2 0 3 4 8 4 6 0 4 5 6 4 4 4 2 5 5 3 5 6 0 3 5 5 3 4 3 2 4 4 4 SUZUKI HONDA TOYOTA

SERVICE RELATED
1. After Sales service 2. Maintenance Cost

20%
10 10 8 10 7 4 7 6

TOTAL

100%

80%

63%

61%

CUSTOMER BUYING CRITERIA MATRIX

VISION STATEMENT
VISION STATEMENT

Excellence in all Respects

PRPOSED VISION STATEMENT

To become a leader in producing customer friendly, innovative and over all low cost automobiles so as to gain customer loyalty by satisfying customer at the highest level

MISSION STATEMENT
To provide automobile of international quality at

competitive prices to the customers

To improve skills of valued employees by imparting

training & inculcating in them a sense of participation

To achieve maximum indigenization and promote

Pakistans automobile vending industry

To make valuable contribution to social development of

Pakistan through development of industry in general and automobile industry in particular

BUSINESS OBJECTIVES
Increase market share to 55% during the next 5 years Increase capacity utilization to around 85% during the

next 5 years
Increase dealership network to 100 across Pakistan

during the next 5 years

Introduction of low cost automobiles in other segments of

the business thereby extending the existing product line during the next 5 years
Reduce the cost of sales by 2% during the next 5 years

KEY ISSUES
Economic Downturn Limited investment in high technology equipment

and machinery
Lack of diversified products Increase in manufacturing cost

IMPACT OF ISSUES ON STRATEGIC PROFILE

Issue Number Issue 1
Economic Downturn

Issue 2
Limited investment in high technology equipment

Issue 3
Lack of diversified products

Issue 4
Increase in manufacturing cost

Issue Name

Customers Regions Market segments Needs/wants/applications Products (prices)/services Product Creation Process Sales Acquisition Process Operations

++

++ ++ + ++ ++ + ++ + ++

+++ ++ ++

+ +++ + ++ ++

++

Technology

+++

Plant & Equipment

++

GENERIC STRATEGY MODEL

GENERIC STRATEGY MODEL

The main focus of Suzuki Motors is the Overall Low Cost Provider

Strategy where they provide low cost automobiles along with fuel efficiency and low cost of maintenance
Suzuki also differentiates its product in particular segment to capture

and gain market share by using differentiation strategy

Introduction of Suzuki Liana and Suzuki Swift is a clear sign that

Suzuki Motors are moving towards extending their product portfolio

BUSINESS BALANCED SCORE CARD

ISSUES REFERNCE PAGE NO. STRATEGIC ACTION

Availability of the products Increased Fuel Cost

Distribution
Structure Key External Trends Key External Trends

Page Increasing the outlets by 30% across the

No. 11 Pakistan in the next 5 years Page Be more innovative in creating high fuel No. 13 efficient cars so as to capture the entire Economical segment of the industry Page Suzuki will play on its strengths like Fuel No. 13 Efficiency, low cost of maintenance and affordable prices so as to have an edge over

Foreign Investment in Automobile Industry No penetration in large car market

imported cars.
SWOT Page Enter into other segments of the business by

Analysis

No. 22 launching cars like Liana and Swift

BUSINESS BALANCED SCORE CARD

ISSUES REFERNCE PAGE NO. STRATEGIC ACTION

Increased demand of fuel efficient cars due to increased Fuel prices Lack of research and development Improving Band Name

SWOT Analysis

Page

Increase production capacity to 85% in the demand of the customers

No. 22 next five years so as to curtail the increasing

SWOT

Page

Allocation of funds and proper research

Analysis
Customer Buying Criteria

No. 22 before the launch of products

Page Well spend and well plan promotional

No. 27 strategies

Failure to manage cost of operations

Cost Analysis

Page

Managing operational cost by using

No. 28 collocation facilities.

BUSINESS BALANCED SCORE CARD

ISSUES REFERNCE PAGE NO. STRATEGIC ACTION

Limited investment in high technology equipment and machinery

Key Issues

Page

Good amount of investment in technological

No. 32 equipment so as to reduce the cost of the

product and bring innovation in the vale

chain