Dedications

TO Our Honorable Teachers Parents and

Friends who showered their wisdom and

knowledge enabling us to come to grips with

the worldly life and attain our Objectives.

Introduction PEL was founded in 1956 and has since been serving the Power utilities, industries, individual customers, housing and commercial projects by providing reliable, customized and cost effective solutions. Backed by the innovative genius of Saigol Group, PEL is now technology forerunner and market leader in providing new products and services to meet ever changing and technology intensive needs of its customers. Our EPC contracting division delivers custom designed and built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum solutions for power utilization to all kinds of industries and commercial customers. We aim to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global developments in technology and product design. Ever increasing local market share, growing export orders, numerous successful power projects and greater than ever base of satisfied customers are evidence to these aspirations.

In October 1978, PEL was taken over by SAIGOL GROUP OF COMPANIES, which is the largest and well-know industrial and commercial group in Pakistan. The Saigol Group belongs to the Saigol family that is an old business family and has contributed a lot towards Pakistan’s industrial and believes in continuous development and growth. The result is a global business activity monitored through the various offices worldwide. Meeting Saigol’s traditions, since its takeover by the group, PEL is also a Company on the go”. The high growth rate proves the complete success of the professional management and provides sufficient confidence to trust in its future development schemes.

Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both are equipped with latest technology, state of the art testing facilities and environment friendly production process. At the heart of our operations is our human resource. PEL invests heavily on professional development, skill improvement and well being of its human resource. Our employees are our most valuable asset and we keep them very dear.

History and background

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 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. NECCHI

COMPRESSORI 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.

PEL (Pak Elektron Limited) is the flag holder of the Saigol Group of Companies.

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 Saigol Group of Companies bought the company.

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.

In the year 1980 the company expanded into consumer products with the

introduction of Window Type Air Conditioners and today also manufactures Split

Air Conditioners, Refrigerators, Microwave ovens, Deep Freezers and

Compressors etc. PEL products right from the beginning have been of a high

standard and the name PEL is synonymous with QUALITY all over Pakistan.

Since its inception, the company has been acting as an institution working for the

advancement and development of engineering know how in Pakistan. The

company has produced hundreds of engineers, skilled workers and technicians

through its apprenticeship schemes and training programs.

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.

 

Vision Statement

To excel in providing engineering goods and services through continuous

improvement.

Mission Statements

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.

Analysis of mission statement

Core competency

Technology

Philosophy

These are the three things which are not mansion in the mission

statement of PEL.

Slogan

Change your Life

Home Appliances Division:

Home Appliance Division includes the products like WRAC (Window Room Air

Conditioner), Split Air Conditioner, Refrigerator, Fridge, and Microwave Oven.

Power Division:

Power Division includes the products like Transformers, Switchgear and Energy

Meters.

The present range of power products includes Transformers up to 33KV 5MVA

capacity, Switchgears up to 33KV, Cage Induction Motors up to 40HP, Single

Phase Energy Motors, Small Generators, Shunt Capacitor, Banks and Recloser etc.

PEL-LG Strategic

Partnership

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

PESTLE ANALYSIS

Political environment

Pakistan is facing the situation of great political instability and uncertainty since last couple of year. according to the economist com survey Pakistan is at the 11 th

number of top most vulnerable countries of the world. due to this problem business activates in Pakistan are severely affected. The foreign direct investment also decreased dramatically due to current insecurity.

The government decided to increase the minimum wage rate of workers from 4500Rs to 6000Rs which is increases the cost of production and inflation

There are few incentive to the manufacture of Pakistan by the government as compare to up coming giants of china. the cost of manufacturing is high due to electricity rate and overhead. So most of the time manufacture hesitate to do manufacturing in Pakistan and prefer to import finished goods are only assemble good in Pakistan

Economic environment

Due to global environment economic crises, Pakistan is also facing a lot of problem. Although Pakistan economy is not directly hit by the crises yet the economic situation in server in Pakistan

To resolve the power sector issue, removing subsidies and concurrent transfer of international oil price changes also likely to risk a further slow down in economic activities at least in the near future.

In Pakistan there is a strong black economy due to the circulation of black money illegal business like smuggling

Economist are expected better condition for Pakistan economy due to the loan of IMF.

The consumer in Pakistan is spending most of their income of food and basic needs of life.

Social Environment

Now a day’s people are becoming more price conscious due to inflation and crises of Pakistan. Their primary focus on food and daily use good and thus people have lessened their interest in electronic good.

Now consumer prefers the split air conditioner over window air conditioner because split ACs are considered as energy severs. That is why window ACs are almost obsolete because of high consumption and split ACs are becoming more popular because of low electricity.

In countries like Pakistan the usage of air conditioner is great because of extended summer season of nearly 8 month. In Pakistan air conditioner are used for middle and upper class.

The company are becoming more socially responsible these days as they have introduce CFC free refrigerant, anti bacterial and dust filter.

These people in Pakistan have started considering spilt air conditioner as a status symbol and feel disgraced if split unit is installed in every room in their house. That is why people purchase home appliances on installment from the dealers.

Technological environment

With the introduction of spilt air conditioner, it made the air conditioner more affordable and easy to install and maintain.

The efficiency of air conditioner depends upon its outer unit. The bigger is the outer unit the more efficient will its inner unit. so companies are more big unit to get more efficient.

In split air conditioner the rotator compressor are used which are soundless and do not heat up in extreme situation.

Companies are introducing refrigerator with cool bank which remain working for 5 hours even after switch off.

The multinational national companies are using information technology to coordinate and communicate with in companies as well as extreme parties. The electronic management system are used to reduce the cost of handling the inventory order.

Legal

Legal factors include description law employment law, and earth and safety. These factors can affect how a company operates, its costs, and the demand for its products

Environmental analysis

Environmental factors include ecological and environmental aspects such as weather, climate, , which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

Five force model

Bargaining power of supplier

The bargaining power of supplier is low because of availability of a number of chine’s brand in the market.

Bargaining power of buyer

The bargaining power of the buyer is high because,

1 They have choice of different in the market

2 they have choice of models and features

3 they have choice of product in different prices

Threats of substitute

Threats of substitutes high because

1the gas generators and ups are the substitute of Pel’s diesel and petrol generator

2 the major substitute of air conditioners are

Room air cooler

The room air coolers are available at are low price starting from 6000

Electric fans are also very cost effective and its major company GFC fans ,Younas fans ,Royal fans .

Threats of new Entrants

PEL has low level of threats of new entrants in the industry as the electronics industry has different barrier to entry

1 requires huge capital to get entry in the industry.

2 High manufacturing costs.

3 high advertisement cost.

4 high cost of raw material.

Rivalry among competitor

There is intense competition with in the industry to capture the market in term of share of market. 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.

Value Chain Analysis

Inbound logistics

When the company purchase the raw material.it used ship and transportation because it purchase raw material from china and germany.

Operation

PEL production operation done in the domestic level wheather in abroad that’s why its also opportunity for company.

Outbound Logistics

When the company have prepare the products like ACs,air coolers etc and to take them into market through the transportation.

Marketing

I. ProductCompany produces different types of products which sells in the market

II. PriceCompany used different pricing strategies to increase their sale

III. PlacePEL targets all the markets to sell their products in all over the countries.

IV. PromotionCompany promote their products through the seminars, sponsorship, coupon rates and through the print media and electronic media.

Services

Company provide different types of services through having all over the countries repairing workshops and through the replacement of products and also give their customers guarantee and warrantee.

Procurement

Procurement department have the rght to purchase all the machinery or rew materual for the production department.

Technology

Technology is more important in these days for every kind of production and in all the departments.PEL also used advance technology for production for reduce the cost and time.

Human resource management

HR department suppose to hire well experienced and qualified staff and labor for maximum productivity. PEL also have qualified human resources.

Company infrastructure

Company has a large infrastructure which is as follows

Organizational Structure

Chairman

Appliances Division

Managing Director

Director Operations

Power Division

Marketing

Sales

Customer

Services

Quality Control &

Assurance

Product Develop

ment

Manufacturing

Human Resources

Finance & Accounts

Industrial Relations

Internal Audit

IT

The objectives and mission for which the company is established are as following:

To carry on the business or businesses of manufacturing, selling, installing,

maintaining designing and dealing in all kinds of electrical equipment.

To carry on any business whether manufacturing or otherwise which maybe

found convenient to undertake in connection with or in addition to any of these

objectives mentioned above?

To do all such things that is incidental for the attainment of the above

objectives or any of them.

To produce high quality and standard products.

To produce equipment to be used in numerous projects of national importance.

To secure a high share / quota of WAPDA’s demand for power products.

To produce skilled workers and technicians through its apprenticeship schemes

and training programs for engineers and technician

Non financial goal

To add a new product to its range in every third year for increasing the sales volume

To set on image as the best quality of local home appliances

To set an image the best quality of local power division product

Financial goal

To obtain a real (inflation and adjusted) growth in earning per share 10%per year over time.

To increase the market share of split unit to at least 20%-25%by the end of 2009.

Competitor Analysis

DIRECT COMPETITORS

The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is market leader in the refrigerator and PEL is still on second number. But in window room air conditioner (WRAC) the PEL is market leader

REFRIGERATORS.

Total market sale of refrigerator in 2009 was 756300 units. Last year sale was

656900 units. These figures show 30% market growth. But the average growth

was 13% to 17%. And the PEL sale growth is 70%, which is a great achievement.

Dawlance is a market leader in refrigerator with 46% share.

PEL has 32% market share.

Waves has 11% market share.

11% shares are others.

WINDOW AC.

PEL is a market leader with a market share of about 60% in local manufacturing

industry. And overall has 35% market shares for this product.

LG has about 32% market share and stands on number two.

And rest of the manufacturers have 23% marker share.

Indirect Competitors:The indirect competitors for PEL in this industry are Samsung, Orient,

Mitsubishi, Sabro, Nobel and others Chinese brands available in the market.

The PEL has no big threat from all these companies. But the Sabro pioneer for

introducing the split air conditioner in Pakistan. Now days the sabro has lost

its market share to other companies for the business of Split AC.

SWOT Analysis of PEL

The rapid changes in governments will become threats for the companies because

every government adopts its own policies for the industries. So it increases the

uncertainty for the investors who want to invest heavy amount in their new

projects. That’s become the major threat for the companies and decreases the

profitability. Due to fear of politically instability companies will also SWOT

Analysis is a strategic planning method used to evaluate the Weaknesses,

Opportunities, and Threats involved in a project or in a business venture. It

involves specifying the objective of the business venture or project and identifying

the internal and external factors that are favorable and unfavorable to achieving

that objective.

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:

Strong brand image

Strong dealer network

Good product quality and service

Number 2 in refrigerators in Pakistan

Firm grip in home appliances

Strong Management

Distribution of Authority

Free customer service

Strong Brand Image

PEL has created the strong brand image in the mind of the customers through

higher quality and low price. The customers of the PEL always prefer to buy the

PEL home appliances like WRAC split AC and refrigerators whenever they

wanted to buy.

Strong Dealer Network

It is also the plus point for the PEL that it has also developed the strong dealer

network in the market. The dealers are always trying to sell the PEL appliance to

the customers because they know there are high margin in the PEL products.

Strong Quality, Sale and Service

PEL is also in a strong position that it provides the superior quality to your

customers. It makes sense in the mind of the customers that PEL products are

better in quality than the other companies’ products. PEL also provides the after

sale service to their customers which delight the customers satisfaction.

Number 2 in Refrigerators In Pakistan

After the Dawlance refrigerators PEL has a second position in refrigerators market.

PEL always continuously strives to pursue the strategies adopted by the

competitors.

Firm Grip in Home Appliance

So PEL is one of the companies, which is having a strong grip in the home

appliance i.e. WRAC, Refrigerators, micro wave Oven etc that is a strong point for

the company.

Strong Management

It is another plus point that PEL has a strong management. Its employees are more

competent and fully skill and knowledge. They always co-operate the top

management in achieving the goals that are assigned to them.

Distribution of Authority

Top management of PEL delegates the power to the subordinates for achieving the

marketing objectives in a specified time period. So every manager has an authority

that use in achieving the Goals.

Free Customer Service

PEL provides free customer service for one year to its customers. So the customers

always buy the PEL products due to its free service and it becomes loyal customer

for the PEL. PEL always provides help to their customers for repairing the WRAC,

Refrigerators and other items. PEL always make efforts to satisfy the customers.

Public Limited Company

Although PEL is owned by the SAIGOL GROUP but its shares can be purchased

and sold in stock exchange market. So every one who is interested in purchasing

the shares of PEL he can purchase. It is also called public limited company.

Weaknesses

Like other companies PEL has some weaknesses in operating the business. If PEL

overcome on these weaknesses then it can become a market leader in the home

appliance. PEL loose some competitive edge in the following points:

Financial Problems

Lack of advertisement

System variations

Lack of Product range

Less Utilization of capacity

Financial Problems

Sometimes PEL faces the financial problems because its stocks are so much piled

up in the stores that create the problem of cash flow because when the stocks are

not sold and the production is in process for 24 hours a day than the company faces

such problems.

Lack of Advertisement

It is a second major weakness of PEL that it never makes advertising on TV. That

creates hurdle in selling the products and customers cannot know the changes,

which are made in products by the company time to time.

System Variations

It is also the main weakness of PEL that there are rapidly a change in polices of

selling the products. That’s creates problems for the selling team how to sell the

products to the dealers because the top management requires the urgent amount of

money.

Lack of Product Range

PEL has introduced more products of consumer items but there are more needs to

develop new consumer items like PEL washing Machines, Vacuum cleaner and

other items.

Less Utilization of Capacity

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

Opportunities

For the PEL there are more opportunities for expansion the business. If PEL realize

that opportunities then it will be more fruitful and profitable for the company. Even

if company does not take advantage of these opportunities then it will loose its

competitive position and high profit. Its `competitors will give PEL tough time to

pursuing the opportunities that are adopted by them. Following are the

opportunities for the PEL.

Exploration of market in Pakistan

Increase in product range

Export opportunity

Exploration of Market in Pakistan

PEL has the opportunity to explore the market in all over the Pakistan. Even

though PEL introduce its products in all cities of Pakistan but there are so many

places that have the capacity to absorb the PEL’s products. These places are tribal

areas in NWFP and northern areas of Punjab and NWFP, central area of SIND. If

company introduces their products in these areas then it can get a large amount of

profit and increase its market shares.

Increase in Product Range

It is the main opportunity for the PEL that it can increase its product range that will

be a more profitable for the company. There are more needs to develop new

consumer items like PEL washing Machines, Vacuum cleaner and other items. Due

to lack of product Range, Company cannot earn more profit because consumers

have high demand of these products. If PEL does not take this opportunity then it

will loose high margin of profit and market share. It will reduce the fixed cost and

increase the efficiency of the employees.

Export Opportunity

PEL Company has also the opportunity to export their products in other

international countries like UAE, SAUDI ARABIA, and other Arabic and African

countries. It will not only reduce the dependence on one market but also increase

the market shares and profits. It will also help the company to spread the fixed cost

on all of its production that will reduce the total cost and company will enjoy the

high profit.

Threats

PEL Company in such a competitive era has many threats as well. These threats

are for the present situations and future. Company should make its policies and

strategies according to these threats. So following are the main threats for the PEL:

PEL facing tough competition.

Mostly companies Give High Credit in market and get current market

High Credit market is big fever for the company

Slow growth rate in Pakistan

Instability of government

Tax department

PEL Facing Tough Competition

There is very strong competition for the home appliance in the market. So every

company tries to come in the number 1 position for achieving the maximum shares

in the market. Every company adopts different strategies for selling of the

products.

Mostly Companies Give High Credit in Market and Get Current

Market

As there is stiff competition in the home appliance market, it will cause the price

war. So every company reduces the prices of its products to increase the sales.

Slow Growth Rate in Pakistan

There is also slow growth rate of home appliance in Pakistan that will increase the

stocks of the company. It becomes the burden for the company that how to sell

these stocks. Its main reason is that purchasing power of the buyer is very low and

it has no income to buy the expensive the home appliance. It is also becoming a

main threat for all the companies.

Instability of Government (political conditions)

Due to the unstable government people low invest in the industry.

Tax Department

Tax department is another major threat for the companies that will restrain the

business expansion. There is more complicated tax procedure for the companies,

which are interested to increase the investment in their businesses.

Corporate governance

corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.

Corporate governance is a multi-faceted subject.[1] An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact

of a corporate governance system in economic efficiency, with a strong emphasis on shareholders' welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confide

We talk a good talk when it comes to corporate governance. We research and draw conclusions on the principles of governance, but how do we, as internal auditors, relate to those principles? And what is our role in governance — especially in regard to the unprecedented financial crisis that not only has crippled the U.S. economy, but has the potential of devastating the global economy?

Before we can analyze these questions, we must first step back and define what corporate governance. The Insitute of Internal Auditors (IIA) defines governance as “the combination of processes and structures implemented by the board in order to inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives.” Corporate governance then implies relationships among an organization’s management, the board, the stakeholders, and other bodies that have indirect involvement with the company. It also provides a generalized structure from which the organization’s objectives emerge. The publication, Internal Auditing: Assurance & Consulting, identifies the key components of governance oversight as the board of directors, stakeholders, risk management (senior management and risk owners) and assurance (internal and external auditors). Regulatory agencies also serve as an indirect/influencing stakeholder. Effective corporate governance program depends upon a clear understanding of the respective roles of each of these components and their relationships with others in the corporate structure.

Opportunities weights rates Weighted average score

Exploration of market 0.25 3 0.75

Increase product range 0.15 2 0.3

Export opportunity 0.17 2 0.36

ThreatsTough competition 0.12 4 0.48

Slow growth rate 0.13 2 0.26

Instable government 0.08 2 0.16

High tax rate 0.10 3 0.3

Total 1 2.61

CRITICAL SUCCESS FACTOR

Weights

Rates Weighted average score

Rate Weighted average score

Rate Weighted average score

Strong brand name

0.25 4 1 3 0.75 3 0.75

Strong dealers network

0.2 2 0.4 2 0.4 4 0.8

Product quality 0.12 3 0.36 3 0.36 2 0.24

Customer services

0.14 4 0.56 3 0.42 3 0.42

Strong management

0.09 2 0.18 3 0.27 2 0.18

Strong home appliances

0.2 4 0.8 2 0.4 3 0.6

total 1 3.3 2.6 2.99

SPACE MATRIX

description PEL HAIER DAWLANCE

Internal factor evaluation

strength weight rate Average weight score

image Strong brand 0.15 4 0.6

Strong dealer network

0.12 3 0.36

Good product quality

0.14 4 0.56

Firm grip home appliances

0.10 4 0.4

Strong management

0.11 3 0.33

Distribution of authority

0.07 3 0.21

Free customer services

0.09 3 0.27

weakness

Financial problem 0.03 1 0.03

Lock of advertisement

0.09 1 0.09

System variation 0.07 2 0.14

Lock of product range

0.02 1 0.02

Less utilization of capacity

0.01 1 0.01

Total 1 3.02

BCG MATRIX (BOSTAN CONSULTING MATRIX)

BCG stands for Boston consulting group. It is a portfolio planning method

that evaluates the company’s strategic business unit .Using this model an

organization classifies each of its separate business units (SBU) according to two

factors:

Market share relative to competition and growth rate of the industry in

which SBU operates

When these factors are divided into high and low categories, a 2 x 2 grid is

created as displayed in following figure:

STAR:

Star is a business unit that has large market share in fast growing industry. Such

unit requires more investment to generate more cash. If due to more investment it

will become successful and become cash cow and it will reach at maturity stage.

For star product the strategy is called harvest

Refrigerator of PEL is the product having high market share and high annual growth

rate.

Cash Cow:

It is the business unit sometimes known as problem child. It has a large market

share and low annual growth. Each cash cow requires little investment and it

generates more cash that can be used for investment purpose in other business

units. For cash cow the strategy is called HOLD, you must preserve market

Split air conditioners is the product of PEL having high market share and low annual

growth rate.

Question Mark:

It is the business unit that has a low market share and high annual growth. These

business unit requires resources to grow market share but if they succeeded that

will become STAR. For question mark the strategy is called BUILD, you try to

make up the market share.

Washing machine and microwave oven are the products of PEL having low market

share but high annual growth

Question Mark

Star

.

Dog:

Dog is the business unit that has small market share as well as low annual market

growth rate. A company normally would be unwise to invest substantial funds in

SBUs in this category. Marketing strategies for dogs are intended to maximize any

potential profits by minimizing expenditures or to promote a differential advantage

to build market shareAnd the company can diverts or liquidate the dog product

Deep freezer is the product of PEL having low market share plus low annual growth

share.

Cash Cow

Dog

Deep freezer of PEL has low market share in low market growth rate. So it regarded as a dog. So company should drop this product.

Space matrix

Financial stability

Return on investment +4

High working capital +5

Profitability +4/3

. 4.25

Industry stability

Growth rate +5

Increase in demand +5/2

. 5

Competitor advantage

Quality product -4

Market share 30% -3/2

. -3.5

Environment stability

Unemployment -2

Advance technology -5/2

. -3.5

IS+CA

5+(-3.5)=1.5

FS+CS

4.25+(-3.5)=0.75

Internal external matrix

Y-AXIS

4

EFE 3

2

1 4 3 2 1 X-AXIS

IFEIFE=3.6EFE=3.2The strategy for PEL to growth and build

If lie in 1,2,4,QUARDANT

Then the company will use GROWTH AND BUILD Strategy

If lie in 3,5,7,QUARDANT

Then the company will use HOLD AND MAINTAINED Strategy

If lie in 6,8,9,QUARDANT

Then the company will use HARVEST AND DIVEST Strategy

1 2 3

4 5 6

7 8 9

QUANTITATIVE STRATEGIC POSITION MATRIX

strengths weights Attractive score

Total attractive

score

Attractive score

Total attractive

scoreProduct quality 0.15 4 0.6 2 0.3Strong brand name

0.13 3 0.39 2 0.26

Strong brand image

0.19 2 0.38 3 0.57

weaknessesFinancial problem 0.06 2 0.12 3 0.18Lack of advertisement

0.04 1 0.04 1 0.04

Less utilize of capacity

0.05 2 0.10 2 0.1

opportunitiesExplore market 0.18 3 0.54 3 0.54Increase product range

0.15 4 0.6 3 0.45

threatsTough competition

0.02 2 0.04 1 0.02

Slow growth 0.03 2 0.06 2 0.061 2.87 2.52

Marketing Development Marketing penetration

1=Not attractive

2= Some attractive

3= Attractive

4=Very attractive

Strategy evaluation(frame work)

Revised IFE Revised EFE

Significance difference

Measure organization performance

Significance difference

Continue

Stage 1

Stage 2

Stage 3

PEL in the internal and external analysis is strong.

There is no change in previous and revised EFE and IFE

There is no change in the performance of the organization

Strategy of the PEL is successful, sale is increasing so there is no change in strategy.

If there is significance difference when we go for Take corrective action, if there is no change then we have to measure organization performance

If there is no change there we will continue the same strategy

Take corrective

action

References: