Semester project strategic management (70415)

Strategic Business Plan

Semester ProjectStrategic Audit & Business Plan for

Ghandhara Nissan Limited


Conducted By

Name of Student: Muhammad Asif KhanStudent ID: MB-2-05-51271Semester: Fall-2015Campus: PAF-KIET (City Campus)


Current SituationPast Corporate Performance:• Ghandhara Nissan Was established as a private limited

company in August 1981 to import and market Nissan vehicles in Pakistan.

• It also has been marketing Nissan Diesel Trucks assembled in the country. It was converted into a public limited company in May 1992 to undertake production of Nissan Vehicles.

• The company has a very low market share and its products are not doing so well in Pakistan market from its beginning.


Current SituationPast Corporate Performance:• The reasons to which this state is attributed include

lack of financial resources, internal strife in the company, and restructuring efforts.

• To handle this situation the company is considering to have their loans converted into equity, or to sell the stakes to a new group so that outstanding loans could be paid or rescheduled. The problems of Nissan are further aggravated by stiff competition from the large car market covered mainly by Toyota and Honda.


Current SituationPresent Status:

To analyze the past performance of the Ghandhara Nissan Limited the following evaluation has been done from their last year financial report displayed for the stakeholders:Return on Investment (ROI)= Net Profit After Tax

Total Assets = 508,867,000

3,571,264,000 = 14.24%


Current SituationPresent Status:Return on Equity Net Profit after (ROE)= Net Profit after Taxes

Shareholder’s Equity = 508,567,000

1,274,111,000 = 39.90%


Current SituationPresent Status:Earnings per Share (EPS)= Net Profit after Taxes – Preferred Stock Dividend

Avg. number of Common Share= 508,867,000 – 90,005,00045,002,500= Rs.9.30

ORReturn on Share (ROS) = Net Income after Taxes Number of

Common Stock= 508,867,000 45,002,500= Rs.11.30


Current SituationTo analyze company’s long term investment ability:Leverage Ratios:

Debt to Asset Ratio = Total DebtTotal Assets

= 1,248,858,0003,571,264,000

= 0.3496


Current SituationTo analyze company’s long term investment ability:Leverage Ratios:Debt to Equity Ratio = Total Debt

Shareholder’s Equity= 1,248,858,000 1,274,111,000= 0.980

Long term Debt to Capital Structure = Long Term DebtShareholder’s Equity= 435,544,000 1,048,195,= 0.415


Ghandhara Nissan LimitedBalance Sheet:As on June 30, 2015

Assets: 2015Common

Size 2014Common

SizeDifference

(+ or -)Non Current Assets:

Property, Plant, and Equipment

1,749,285 0.49

1,764,038 0.51 (14,753)

Intangible Assets

88

0.00002

118 0.00003 (30)

Long term Investments

192,630 0.05

152,630 0.04 40,000

Long term Loans

6,477

0.0018

4,864 0.00 1,613

Long term deposits 16,633

0.0047

8,031 0.0023 8,602

Total

1,965,11

3 0.55

1,929,68

1 0.56 35,432

Current SituationCommon Size Statements and comparison with last year:


Current Assets:

Stores, Spares and Loose tools 50,174 0.014

44,055 0.05

6,119

Stock-in-Trade 623,847

0.17

692,474 0.66

(68,627)

Trade Debts 345,727

0.10

395,583 0.12

(49,856)

Loans and Advances 40,212

0.01

25,541 0.01

14,671

Deposits and Prepayments 39,094

0.01

15,721 0.00

23,373

Other receivables 30,749

0.01

49,102 0.01

(18,353)

Short term investment 30,092

0.01

38,109 0.01

(8,017)

Taxation-Net 117,341

0.03

96,070 0.03

21,271

Bank Balance 328,915

0.09

148,618 0.04

180,297

Total

1,606,151 0.45

1,505,273 0.44

100,878

Total Assets

3,571,264 1.00

3,434,954 1.00

136,310

Strategic Business Plan EQUITY AND LIBILITIES:

Share Capital And Reserves:

Share Capital

450,025 0.13 450,025 0.13 -

Share Premium 40,000 0.01

40,000 0.01 -

Unappropriate Profit

784,086 0.22 334,375 0.10 449,711

Total Equity

1,274,111 0.36

824,400 0.24 449,711

Surplus on Revolution of fixed Assets

1,048,295 0.29

1,054,188 0.31 (5,893)


Liabilities:

Non Current Liabilities:

Liabilities against assets subject to finance lease

45,635

0.01

13,006

0.0038

32,629

Long term deposits

9,611

0.01

10,611

0.0031

(1,000)

Deferred Liabilities

111,969

1.98

94,795

0.03

17,174

Deferred Taxation

268,329

1.59

158,039

0.05

110,290

Total

435,544

7.46

276,451

0.08

159,093


Current Liabilities:

Trade and other payable

642,881 0.74 767,840 0.22 (124,959)

Accrued Mark-up

7,985 0.09

5,178 0.0015 2,807

Short term finances 32,259 0.04

448,861 0.13 (416,602)

Running Finances under mark-up arrangements

118,802 0.43

54,380 0.02 64,422

Current portion of liabilities against assets subject to finance lease

11,387 0.02

3,656 0.00 7,731

Total

813,314 0.23

1,279,915 0.37 (466,601)

Total Liabilities

1,248,858 0.35

1,556,366 0.45 (307,508)

Total Equities and Liabilities

3,571,264 1.00

3,434,954 1.00 136,310

Strategic Business Plan Ghandhara Nissan LimitedProfit Loss Account (Income Statement)For the Year Ended June 30, 2015

Particulars 2015Common

Size 2014Common

SizeDifference

(+ or -)

Revenue (Sales) 5,445,392 1 2,619,910 1 2,825,482

Less: Cost of Sales 4,314,378 1 2,148,821 1 2,165,557

Gross Profit 1,131,014 0 471,089 0 659,925

Less: Distribution Cost 56,435 0 19,318 0 37,117

Administration Expenses 168,995 0 124,565 0 44,430

Other Expenses 58,348 0 19,988 0 38,360

Add: Other Income 26,335 0 12,695 0 13,640

Profit from Operations 873,571 0 319,913 0 553,658

Less: Finance Cost 86,294 0 50,218 0 36,076

Profit Before Taxation 787,277 0 269,695 0 517,582

Less: Taxation 278,410 0 95,765 0 182,645

Profit after Taxation 508,867

0 173,930

0

334,937


Z-Value (Altman’s S Bankruptcy Formula):Z-Value formula combines five ratios by weighting them according to their importance to a corporation’s financial strength. The Formula is: Z= 1.2X1+1.4x2+3.3x3+0.6x4+1.0x5

Z-Value = 3.4326Note:

• Score below 1.81 indicates sufficient credit problems• Score above 3.0 indicates a healthy firm• Score between 1.81 and 3.0 indicates question mark of

uncertainty


Index of Sustainable Growth: This is useful to learn if a company embarking on a growth strategy will need to take on debt to fund this growth, the index indicates how much of the growth rate of sales can be sustained by internally generated funds. If the planned growth rate calls for a growth rate higher than the g*, extended capital will be needed.The formula is:g*= [P (1-D) (1+L)][T-P (1-D) (1+L)][T-P (1-D) (1+L)]


Index of Sustainable Growth:

g* = 0.5597 or 55.97%

Note: If the planned growth rate is higher than the g*, extended capital is required.


Leverage Buy Out:

Operating Cash Flow:Net Income= 787,277,000Add: Depreciation= 75,575,000Depletion= --------Amortization= --------Interest Expense= --------Income Tax Expense= 162,374,000Operating Cash Flow= 1,025,226,000

Strategic Business Plan Leverage Buy Out:

Free Cash Flow: Net Income= 787,277,000Add: Depreciation= 75,575,000Depletion= ----------Amortization= ----------Total 862,852,000Less: Capital Expenditures= 17,517,000Dividends=90,005,000Free Cash Flow=755,330,000


STRATEGIC POSTURE Nissan Motors Corporation (Global)


Nissan Motors Corporation (Global)

VISION:Enriching People’s Lives MISSION:

• Nissan provides unique and innovative automotive products and services that deliver superior measurable values to all stakeholders*in alliance with Renault.

• Nissan will continue to offer innovative products and services today and in the future.


Mission:• What drives us and gives birth to new value is the

Nissan spirit, embodied in the phrase. • The power comes from inside.• Nissan builds high-quality cars that are safe and

have the bold design and innovative technology to satisfy our customers’ needs.

• As a responsible corporate citizen, Nissan is committed to contributing to the advancement of society and the preservation of our natural environment.

• Our corporate vision is enriching people’s lives.

Strategic Business Plan Nissan (Corporate):

• Established in Yokohama, Kanagawa in 1933, Nissan Motor Co., Ltd. currently manufactures vehicles in 20 countries around the world, including Japan and sells them over 170 countries.

• Global Nissan has a portfolio of three brands, Nissan, Infiniti and Datsun.

• Nissan vehicles are marketed in all major markets worldwide.• Infiniti was launched as a premium brand in North America in 1989.

The new global headquarters for Infiniti in Hong Kong was opened in 2012 with sales operations in over 50 countries.

• Global unit sales of Nissan Motor Co., Ltd. in fiscal 2013 totaled 518.8 million vehicles.

• In 2012, Nissan Motor Co., Ltd. announced the return of the Datsun brand. Datsun is for risers, optimistic, up-and-coming customers in high-growth markets.

Strategic Business Plan Nissan in Pakistan


Nissan in Pakistan

Nissan is represented by Ghandhara Nissan Limited in Pakistan and operates under the leadership of CEO Mr. Ahmad Kuli Khan Khattak. Ghandhara Nissan Limited is committed to serve the market efficiently, through satisfying internal and external customers and be accountable to stakeholders and the community as responsible corporate citizens. They are determined to reciprocate their trust reposed in Nissan by delivering on promises to customers, providing quality product, economically priced vehicles complete with after sales service.


• Passenger Cars:

o Sunny (discontinued)


• Passenger Cars:

o TIDA (discontinued)


• Passenger Cars:

o TEANA (discontinued)


• Jeep 4X4:

o X-Trail


• Jeep 4X4:

o Patrol


• Light Commercial Vehicle:

o Patrol



o Pick Up



•Urvan

o Urvan


• Bus:

o Civilian


• Ghandhara Nissan Limited (GNL) is a part of Group of Companies of Bibojee Services (Pvt.) Limited. The Company was incorporated in 1981 as Private Limited Company having the sale Licensee for the distribution of Nissan vehicles in CBU condition in Pakistan; it was converted in to a Public Company listed in Karachi Stock Exchange.

• GNL has Technical Assistance Agreement with Nissan Motor Co. Japan and joint Venture Agreement with Nissan Diesel Co. Japan for the progressive Assembly of Passenger Cars, Light Commercial Vehicles and Heavy Duty Vehicles.

• GNL’s Car and Truck are located at port Qasim adjacent to each other.


• It is the only Automobile Company in the country assembling complete range of product i.e. passenger cars, light commercial vehicles and heavy-duty trucks and buses.

• The company is committed to achieve high quality products, customer’s satisfaction, market leadership, contribution in the economic growth of Pakistan and comply with all regulatory and other requirements for making the environment user friendly.


Nissan’s Vision: To maximize market share by producing and marketing highest quality vehicles in Pakistan.

Nissan’s Mission: • As a customer oriented Company, Provide

highest level of customer satisfaction.• To accelerate performance in all operating areas,

ensuring growth of the Company and increasing return to the stakeholders.


Nissan’s Mission: • To create a conducive working environment

leading to enhanced productivity, job satisfaction and personal development of the employees.

• To contribute to social welfare by adopting environment friendly practices and processes for the well being of society.


Current Objectives:

• Maximize its market share in automotive sales in Pakistan Market.

• Create new joint ventures to achieve its ultimate goal.

• Focusing on its product line of LCVs, Trucks and Buses and maximize its profit.


Current Strategies:

• Presently Ghandhara Nissan Limited has been focusing on horizontal growth strategy through creating a joint venture with dongfeng and has formed its subsidiary as Ghandhara Nissan Dongfeng Limited.

• They also opted retrenchment strategy for its product line and discontinued the passenger cars production.


Current Policies:

• GNL is emphasizing to carry out its business in an ethical manner that it will become beneficial for all of its stakeholders.

• Unnecessary competition must be avoided.• Focusing on business expansion.

Strategic Business Plan SWOT ANALYSIS BEGINS

Corporate Governance:Board of Directors Responsibilities:

• Board of Directors is responsible to evaluate

quarterly, half yearly and annual performance of the GNL.

• Review and approve policies proposed by the top management for the GNL & for its subsidiaries and wherever necessary recommend suggestions.


Board of Directors Continuum:

• Board directors actively participate in policy formulation, approval and implementation. It is possible due to the most of the top management of the Ghandhara Nissan Limited are the part of the top management team of the company. They are not only part of the policy making team but also the part of policy implementation.


Inside Directors:

• Mr. Raza Kuli Khan Khatak• Lt. Gen. (Retd.) AliKuli Khan Khattak• Mr. Ahmed Kuli Khan Khatak• Mr. Mushtaq Ahmed Khan (FCA)• Ch. Sher Muhammad• Mr. Jamil A. Shah


Top Management:

The top management of GNL is consist on the following: • Mr. Raza Kuli Khan Khatak Chairman

• Lt. Gen. (Retd.) AliKuli Khan Khattak President• Mr. Ahmed Kuli Khan Khatak Chief Executive Officer

• Mr. Aqiel Amjad Ghani Company Secretary

• Mr. Muhammad Saleem Baig Chief Financial Officer


Responsibilities of the Top Management:

The top management of the company has responsible for the following:

• Top management is responsible to develop and implement

strategies that will help the GNL to maximize its profits and achieve its vision.

• They responsible to carry out the company’s operations in a manner that it will be meeting or exceed company’s define ethical standards of running business.

• They are responsible to make sure that the Ghandhara Nissan Limited strategies are developed in accordance with the company’s mission in order to achieve its vision.


Responsibilities of the Top Management:• They responsible to produce the vehicles that will be

environment friendly and will provide value to the customers through exceeding their expectations.

• They are responsible to increase stakeholder’s wealth through increasing company’s profit.

• They are responsible to maintain a safe and healthy workplace through ensuring that the company’s define ethical standards no discrimination on the basis of sex, color, religion disability or nay other impermissible factors.


Executive Leadership:

Executive leadership of the company is based on the following:

• Mr. Raza Kuli Khan Khatak Chairman• Lt. Gen. (Retd.) AliKuli Khan KhattakPresident• Mr. Ahmed Kuli Khan Khatak Chief Executive Officer

They are responsible to provide the strategic direction to the company and motivate all the relevant participants to achieve their predefined goals. CEO is responsible to lead the entire organization and motivate them for them attainment of the goals collectively and individually.


Social Responsibility:

• The GNL is committed to operate its business in an ethical and responsible manner that it will become mutually beneficial for the organization and as well as for its stakeholders including stock holders, customers and the for the society where we are operating our business.

• They are also committed to provide environmental

friendly vehicles and completely adhere with the laws pertaining for the same. To achieve zero emission is our strategy for the long term.


SWOT ANALYSIS BEGINSCompetency of Top Management:

• The top management is competent enough to manage the affairs of

the Ghandhara Nissan Limited in accordance to its vision and mission.

• Most of the top management representatives are foreign qualified and running the affairs of the more than one business at one time. The Chief Executive Officer of the company is the grandson of the Chairman and Son of the President and belongs to the third generation of the Bibojee Group.

• The experience of all the top management is multifaceted and they are part of the different other company’s boards. These companies are belongs to the different sector of the industries which are tyre manufacturing, textile and insurance.


Global Scenario of Auto Industry:

• Global auto industry is faced with two following challenges which need to be addressed in order to remain competitive;

• The carbon and climate protection• Make availability of vehicles at low cost with

new climate friendly energies.


SWOT ANALYSIS BEGINS Market Structure:

• The market structure of the automobile industry in Pakistan is concentrated. In economic term, we could say it’s an oligopoly, which is characterized by imperfect competition in which the industry is dominated by a small number of suppliers. This is because the auto industry is highly capital-intensive requiring high investments and the products are expensive. Hence the barriers to entry are high resulting in the presence of limited number of suppliers.


SWOT ANALYSIS BEGINS Market Structure:

• Moreover, the market can also be categorized as price-oriented. As care are luxury items, especially in developing countries (Pakistan being one of them), the demand for them is elastic. Any prices change affects the sales of the company to a great extent.


Economic Position of the Market:

• Pakistan’s GDP rate is around 3.0 and it will strong probability that it will increase in the years to come.

• Pakistan's total share is up to 0.40% of the world market, and the Global Trade of the Automobiles is over $ 1 trillion dollar.


SWOT ANALYSIS BEGINSProgress of Pakistan’s automotive industries: Sales summary of automotive products manufactured and sold in Pakistan:

Automotive Products

Sales in units

2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08

Passenger Cars 151134 118102 118830 157325 127944 12957 82844 164,650

Truck 4111 2663 1948 2394 2942 3620 3136 5,350

BUS 569 577 510 609 515 657 685 1,195

Jeeps (4X4) 1163 1151 1438 342 807 1201 1066 1,448

Pick-Ups 27656 17635 15042 21472 17746 16496 15397 21,321

Total Sale 184,633 140,128 137,768 182,142 149,954 34,931 103,128 193,964


SWOT ANALYSIS BEGINSProgress of Pakistan’s automotive industries:


SWOT ANALYSIS BEGINS

Task Environment:

• Threat of new entrant• Bargaining Power of the Buyers• Bargaining power of the supplier• Rivalry among the competing firms• Relative Power of unions, governments, special interest

groups


SWOT ANALYSIS BEGINSSummary of External Environment (EFAS):

Factors Weight Rating Weight ScoreOpportunities: Large Market segment with potential

purchasing ability Sustainable growth of economy Consistency of political government Strict import policy of the government Stability of the region Cost effective and fuel efficient vehicle is

required by the customer

.20

.05

.05

.05

.05

.10

433414

.80

.15

.15

.20

.05

.40

Threats: Unavailability of Highly Skilled manpower Expensive Raw Material New entrant in same industry. Strong competitors existing in the market

with global image which can counterfeit the strategies

.10

.15

.10

.15

4424

.40

.60

.20

.60

Total 1.00 3.55


SWOT ANALYSIS BEGINSCompetitive Profile Matrix: (For Passenger Cars / LCV)The following competitive profile method provides is for passenger car:

Critical Success Factors

WeightNissan

Rating Score

Toyota Rating Score

Honda Rating Score

SuzukiRating

ScoreComments

Relevant Market Share .20 1 .20 4 .80 3 .60 4 .80

Inventory System .10 3 .30 4 .40 3 .30 3 .30Financial Position .10 4 .40 3 .30 4 .40 3 .30Product Quality .10 2 .20 4 .40 4 .40 2 .20Consumer Loyalty .10 2 .20 4 .40 4 .40 3 .30Sales Distribution .05 3 .15 3 .15 2 .10 4 .20Organization Structure .10 4 .40 4 .40 3 .15 3 .30

Production Capacity .10 4 .40 3 .30 2 .20 4 .40

E-Commerce .05 2 .10 3 .15 2 .10 2 .10Price Competitive .10 2 .20 2 .20 2 .20 3 .30

Total 1.00 2.55 3.5 2.85 3.2


SWOT ANALYSIS BEGINSCompetitive Profile Matrix: (For Buses , Trucks & HCV)

Critical Success Factors

WeightNissanRating Score

HinoRating

Score

MasterRating Score

Hyundai Rating Score

Comments

Relevant Market Share .20 4 .80 4 .80 2 .40 3 .60

Inventory System .10 3 .30 4 .40 3 .30 3 .30Financial Position .10 4 .40 3 .30 3 .30 3 .30

Product Quality .10 3 .30 4 .40 3 .30 3 .30Consumer Loyalty .10 3 .30 4 .40 3 .30 3 .30

Sales Distribution .05 3 .15 3 .15 3 .15 3 .15Organization Structure .10 4 .40 4 .40 3 .30 3 .30

Production Capacity .10 4 .40 3 .30 2 .20 2 .20

E-Commerce .05 2 .10 2 .10 2 .10 2 .10Price Competitive .10 3 .30 3 .30 2 .20 2 .20

Total 1.00 3.45 3.55 2.55 2.75


Internal Environment (IFAS):

Corporate Structure:



SWOT ANALYSIS BEGINSCorporate Culture:

• The GNL possess a cooperative culture where the every individual who has an association with the company has right to express their views and put suggestions for the improvement irrespective of his / her designation. This culture has helped them when they developed new venture with the dongfeng.

• In contrast to the bureaucratic style of working their executive has adopted the culture of autocratic where everyone can be a part of decision making and freely put their views regarding product improvement and for the enhancement of organizational efficiency.


SWOT ANALYSIS BEGINSCorporate Resources:

Marketing: • Presently GHNL has not been carrying out any rigorous

marketing camping for its products but their marketing department responsible to closely work with the sales team and help them out to achieve their defined targets and closely get the feedback from the customers to improve its customer service after sales and will get response from them for the future improvement of the product / vehicles.


SWOT ANALYSIS BEGINSMarketing:

Present Performance of Ghandhara Nissan Limited:

Product Sales in Units

2014-15

2013-14

2012-13

2011-12 2010-11 2009-10 2008-09 2007-8

Nissan Bus 0 6 0 6 0 30 0 54

Nissan Truck 852 378 226 224 487 519 551 1,166

Dongfeng Bus 0 0 0 0 0 2 8 18

Dongfeng Truck 0 0 0 0 0 0 4 -

Total Sales 852 384 226 230 487 551 563 1238


SWOT ANALYSIS BEGINSMarketing:

Present Performance of Ghandhara Nissan Limited:


Marketing: Present Performance of Ghandhara Nissan Limited:


SWOT ANALYSIS BEGINSCorporate Resources:Finance:

• Presently GNL is not in very sound financial position but fair enough to accelerate for the attainment of its higher goals. They already paid dividends to the shareholders at the end of last fiscal year. Cash flows are positive and relevant financial ratios reflect sound financial status of the company and will allow them to expand it vertically.


SWOT ANALYSIS BEGINSCorporate Resources: Research & Development:

• Currently GNL has not allocated heavy budget for its R&D activities, they are receiving technical assistance form Nissan Global. And the new products and the amendments in the present products are made in coordination of the Nissan Global.


SWOT ANALYSIS BEGINSCorporate Resources:Operations & Logistics:

• Company has well versed infrastructure for its automotive products but unable to capitalize in term of production. From past decade they are working under capacity.


Corporate Resources:

Human Resource Management: • Currently human Resource has been considered as casual

resource for the organization instead of developing them as competitive advantage.

Information System:

• Information system plays very vital role for the organization success and GNL is in process to optimize the efficiency and accuracy of its information system through synchronizing its subsidiary.

Strategic Business Plan Summary of Internal Factors:

Factors Weight Rating Weight ScoreStrengths: Competent top management with diversified

experience of industries. Ability to integrate vertically in the market

through utilizing existing infrastructure. Sound financial position of the company. Successfully expanded through new joint

venture. Ability to grow in diversified auto products

range.

.10

.10

.10

.10

.10

44434

.40

.40

.40

.30

.40

Weaknesses: Past introduced vehicles are unable to

capture the market. Unable to achieve economies of scale Unable to clearly define long term goals

mostly focusing on short term objectives. Lack of ownership among the employees. Unable to apply economy of scope to

minimize cost. Lack of Research & development

.10

.10

.10

.05

.10

.05

111221

.10

.10

.10

.10

.20

.05

Total 1.00 2.65


Analysis Strategic Factors (SFAS)

Key Internal and External Strategic Factors (SWOT):

TOWS Analysis:

Strategic Business Plan Internal Factors

External Factors

Strengths1. Competent top management with

diversified experience of industries.2. Ability to integrate vertically in the

market through utilizing existing infrastructure.

3. Sound financial position of the company.

4. Successfully expanded through new joint venture.

5. Ability to grow in diversified auto products range.

Weaknesses1. Past introduced vehicles are unable

to capture the market.2. Unable to achieve economies of scale3. Unable to clearly define long term

goals mostly focusing on short term objectives.

4. Lack of ownership among the employees.

5. Unable to apply economy of scope to minimize cost.

6. Lack of Research & development

Opportunities1. Large Market segment with potential

purchasing ability2. Sustainable growth of economy3. Consistency of political government 4. Strict import policy of the

government5. Stability of the region6. Cost effective and fuel efficient

vehicle is required by the customers.

SO Strategies The management of GNL must utilize

its diversified experience to expand Nissan products through effectively utilizing the favorable conditions for the auto industry. (S1, O1, O2, O3, O4,O5)

Through clever planning GNL can produce fuel efficient vehicles for the customers. (S5, O6)

WO strategies Through offering new products with

distinctive features can help the GNL to capture mega market share. (W1, O1)

Existing economic conditions will help the GNL to achieve economies of scale. (W2, O2,)

The consistency of political governments and their policies will help the GNL to develop and achieve their long term goals. (W3, O3, O4)

The GNL must invest more on R& D to produce cost effective and fuel efficient vehicles for the customers. (W6, O6)

Strategic Business Plan Internal Factors

External Factors

Strengths1. Competent top management with

diversified experience of industries.2. Ability to integrate vertically in the

market through utilizing existing infrastructure.

3. Sound financial position of the company.

4. Successfully expanded through new joint venture.

5. Ability to grow in diversified auto products range.

Weaknesses1. Past introduced vehicles are unable

to capture the market.2. Unable to achieve economies of scale3. Unable to clearly define long term

goals mostly focusing on short term objectives.

4. Lack of ownership among the employees.

5. Unable to apply economy of scope to minimize cost.

6. Lack of Research & developmentThreats1. Unavailability of Highly Skilled

manpower2. Expensive Raw Material3. New entrant in same industry.4. Strong competitors existing in the

market with global image which can counterfeit the strategies

ST Strategies The raw material can be minimized

through achieving vertical integration. (S2, T2)

GNL sound financial allows them to invest on Human Resource Development to avoid scarcity of Skilled Human in future. (S3, T1)

Through creating more joint ventures the threats of new entrant can be eliminate or minimized. (S4,T3)

GNL can cope with the existing competitors through producing diversified auto products for the market. (S5, T4)

WT Strategies Investment on Human Resource

Development will help the organization to get over the skill redundancy and will enable them to produce quality vehicles according to the customer requirements. (W1, T1)

Through achieving economies of scale they can minimize overall production cost of vehicles. (W2, T2)

GNL must focus on Long term plan which will help them to minimize new entrants’ threat in the industry. (W3, T3)

GNL can create a synergy among the employees, production and Research & Development to minimized competitor’s influence on the market. (W4, W5, W6, T4)

Strategic Business Plan SPACE (Strategic Position and Action Evaluation) Matrix: Financial Position Rating

Return on investment 5

Leverage 5

Liquidity 4

Working Capital 5

Cash Flow 5

Inventory Turnover 5

Earnings Per Share 4

Price Earnings Ratio 5

Total 38

Strategic Business Plan SPACE (Strategic Position and Action Evaluation) Matrix: Industry Position Rating

Market Share 3

Product Quality 4

Product Life Cycle 3

Customer Loyalty 3

Capacity Utilization 3

Technological Know -how 5

Control Over Suppliers & Distributors 5

Total 29.0

Strategic Business Plan SPACE (Strategic Position and Action Evaluation) Matrix: Competitive Position Rating

Growth potential -1

Profit Potential -2

Financial Stability -2

Extent Leveraged -3

Resource Utilization -6

Ease of Entry into market -1

Productivity, Capacity utilization -2

Total -17

Strategic Business Plan SPACE (Strategic Position and Action Evaluation) Matrix:

Stability Position Rating

Technological Changes -2

Rate of Inflation -2

Demand variability -4

Price Range of Competing products -5

Barriers to entry into market -5

Competitive Pressure -1

Price Elasticity of Demand -2

Risk involved in Business -3

Total -24

Strategic Business Plan SPACE (Strategic Position and Action Evaluation) Matrix:

Conclusion:• The GHNL must pursue the following Aggressive

Strategies:• Backward, Forward, Horizontal integration• Market Penetration• Market Development• Product Development• Diversification• Retrenchment


Conservative

·Market Penetration·Market Development·Product Development·Related diversification

Aggressive

·Backward Forward horizontal integration

·Market Penetration·Product development·Diversification (Related and unrelated)

Defensive

·Retrenchment·Divestiture·Liquidation

Competitive

·Backward, Forward, horizontal Integration

·Market Penetration·Market Development·Product Development

According to space matrix score the GHNL must adopt the aggressive strategy to achieve its

vision.

SPACE (Strategic Position and Action Evaluation) Matrix


II

Stars

III

Cash Cows

I

Question Marks

IV

Dogs

Nissan’s Buses presently existing in this Category

Nissan’s Trucks presently existing in this category

BCG Matrix:

Strategic Business Plan Internal External (IE) Matrix:

Conclusion:

IE matrix suggests Grow and Build Strategy comprises on following:

• Backward, Forward, or Horizontal Integration• Market Penetration• Market Development• Product Development

Strategic Business Plan Internal External (IE) Matrix:

I II

IV

VII

V

VIII

III

VI

IX

According to IE Matrix Score GNL

possess this Category

Strategic Business Plan Grand Strategy:

Quadrant II1Market Development2Market Penetration3Product Development4Horizontal Integration5Divesture 6Liquidation

Quadrant I1Market Development2Market Penetration3Product Development4Forward Integration5Backward Integration6Horizontal Integration7Related Diversification

Quadrant III1Retrenchment2Related Diversification3Unrelated Diversification4Divesture5Liquidation

Quadrant IV

1Related Diversification2Unrelated Diversification3Joint Ventures

GNL’s own growth and market progress

bring it in this quadrant

Strategic Business Plan Strategic Alternatives and Recommended Strategy:

Strategic Alternatives:

GHNL can choose one of the following strategies to increase its market share and to penetrate in to the market fully.


1) Reintroduce its Passenger Cars:

GHNL must have to come back with a differentiated auto product in the passenger car market to become a leader in automotive product manufacturing in Pakistan.


2) Acquisition of Existing Brand to Increase its Market Share in HCV & LCV:

GNL can also increase its market share in HCV and LCV through acquiring the existing brand in the Market. It will help them increase its market with minimum time frame.


3) Export of LCV & HCV:

Beside serving and operating in the current market GNL can choose to increase its products sale through exporting their existing products to other markets.

Strategic Business Plan Quantitative Strategic Planning Matrix:

Reintroducing Passenger

Cars

Acquisition of existing Brand

to increase market share

in LCV and HCV

Export of LCV , HCV

Key Factors Weight AS TAS AS TAS AS TASOpportunities: Large Market segment with potential purchasing

ability Sustainable growth of economy Consistency of political government Strict import policy of the government Stability of the region Cost effective and fuel efficient vehicle is required

by the customerThreats: Unavailability of Highly Skilled manpower Expensive Raw Material New entrant in same industry. Strong competitors existing in the market with

global image which can counterfeit the strategies

.20

.05

.05

.05

.05

.10

.10

.15

.10

.15

4

33434

3324

.80

.15

.15

.20

.15

.40

.30

.45

.20

.60

2

43332

2343

.40

.20

.15

.15

.15

.20

.20

.45

.40

.45

1

33434

342-

.20

.15

.15

.20

.15

.40

.30

.60

.20-

Sub Total 1.00 3.4 2.6 2.35


Reintroducing Passenger Cars

Acquisition of existing Brand to increase market share in LCV and HCV

Export of LCV , HCV

Key Factors Weight AS TAS AS TAS AS TASStrengths: Competent top management with diversified

experience of industries. Ability to integrate vertically in the market

through utilizing existing infrastructure. Sound financial position of the company. Successfully expanded through new joint venture. Ability to grow in diversified auto products range.Weaknesses: Past introduced vehicles are unable to capture the

market. Unable to achieve economies of scale Unable to clearly define long term goals mostly

focusing on short term objectives. Lack of ownership among the employees. Unable to apply economy of scope to minimize

cost. Lack of Research & development

.10

.10

.10

.10

.10

.10

.10

.10

.05

.10

.05

3

4

4--

4

33

21

4

.30

.40

.40--

.40

.30

.30

.10

.10

.20

3

2

442

4

33

34

2

.30

.20

.40

.40

.20

4

3

424

.40

.30

.40

.20

.40

.40

.30

.30

.15

.40

.10

2

32

33

2

.20

.30

.20

.15

.30

.10Sub Total 1.00 2.5 3.15 2.95

Total 5.9 5.75 5.30


Recommended Strategy:• The score of the QSPM model reveals that the GNHL

must develop strategy to reintroduce the passenger cars to increase its market share.

• But it is not necessary that the GNL must choose one strategy at one time. They can choose to drive one or more strategy to achieve its vision.

• It all depends upon the management commitment and the availability of financial resources and the consistency of the political and economical stability of the economy of the market.


Recommended Strategy:• It is better for the GNL to focus on different strategies

for its different products for passenger car they can opt reintroduce their products with a distinction or differentiation from the existing competitors’ products.

• They have to produce the passenger cars with unique features and characteristics which cannot be easily available in others. If it is not possible to offer the passenger cars below the competitors’ price then it must not be more than their products. They must focus to produce the passenger cars in all the categories from 600 cc to more than 1300 cc.


Recommended Strategy:• For their LCV and HCV products they can choose one of

the strategy or the both strategy to increase their revenues as their LCV and HCV are the cash cows for the GNL so they can earn more revenue through exporting them and they can increase their market influence through acquiring the existing brand.


Recommended Strategy:

Long Term Plan:Capture 25% auto market share in Pakistan in all four wheel categories. Medium Term Plan:Rejuvenate Nissan as the first choice in auto solution. Short Term Plan:Revamp operational process to achieve economies of scale


ImplementationPrograms:To drive their strategies in right direction they must develop following programs: Research & Development: GNL must increase its Research & development budgets to produce new kind of automotive products to meet the market requirements. They must create a “concept future car” for the customers. It can be done through continuously seeking responses from the customers and the potential customers.


ImplementationPrograms:

Total Quality Management: Without quality products it is impossible to create a positive image of the GNL products in car markets. To achieve this GNL management must develop a quality conscious culture within the organization. They must implement the concept that:

“Quality is everyone’s responsibility”



Total Quality Management: Within the organization the concept must be enforce in a way that everyone will become quality conscious. It is not only up to the quality department to make sure the quality policy will be implemented; all the departments and their respective employees must be fully adhere with quality concept and make sure that it must be implemented.



Marketing: The marketing Strategy must be focus to develop the brand image of the GNL products that Nissan will become the first and the foremost choice of every customer in auto products. Whenever they think to buy the auto products, they compel to think about the Nissan, first.



Marketing: The Marketing strategies will be device separately for passenger cars and for LCV & HCV auto products (Trucks & Buses). Market can be segmented in three broader categories: •Individuals and Families•Industrial and Business Entities•Government Markets



Finance:Strong financial controls will be implemented to improve the efficiency and reduce the cost of products. It can be done through allocating budgets to each department with a great care, and evaluate their performance in accordance with the allocated budgets. To achieve the desired results the dividends must be hold for 3 to 5 years to reinvest in the future activities and ask the shareholders to enjoy the increasing market price of the GHNL shares.



Information System: Information is one of the key resources for any organization. The uninterrupted and accurate flow of information will allow them to the management to make effective decisions at all level. To develop and effective information system within the organization GNL must adopt ERP system to integrate its all departments and resources.



Human Resource Management: Human Resource is one of the vital resources for the organizations to achieve their vision or to translate their vision in to reality. GNL must nurture the following concept for its human resources: “We produce perfect vehicles because our employees are perfect”



Human Resource Management: To implement this concept the all Human Resource related policies and procedures must be revaluated and if necessary must revise. The concept of HR business partner can also be adopted to effectively utilize this resource. For this the management must introduce the employee stock option for the employees.



Budgets: The Research and Development budgets must be increase up to 100%.

Market budgets must be increase up to 50%, with a view to increase the company operated showrooms all over the market, and effectively manage the after sale service of the products.



Procedures: For the effective implementation of GNL strategies, the SOP for the each process and work will be developed for every department. The standards and parameters for each process must be define and it will make sure that no work will be carry out in contradict of GNL’s define standards and procedures.


Evaluation and Control:• To achieve the desired goals and to rejuvenate the

Nissan passenger cars products in to the market following landmarks must be achieve by the GNL and compromise on desired results:

• 10% growth must be achieved by GNL in term of sales of

auto products.

• The manufacturing cost must be reduced by 10% and it must be make sure that no unnecessary penny will be spent or wasted.

Implementation


Evaluation and Control: • Number of complaints regarding the products must be reduced

10% and struggling to bring it up to 0. • Operational output must be increased by 10% until and unless

the economies of scale and economies of scope will be achieved.

• Continuous improvement policy must be adopted to fully penetrate into the passenger car market.

Implementation


Questions &

Answers

Date post:	12-Apr-2017
Category:	Automotive
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