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PRINCIPLES OF MANAGMENT

SUBMITTED TO: Prof. Dr. Khawaja Amjed Saeed SUBMITTED BY: SHERAZ LIAQUAT ROLL NO: E10MBA096 SECTION : (B) PROGRAM : Banking & Finance

HAILEY COLLEGE OF BANKING & FINANCE PUNJAB UNIVERSITY, LAHORE

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ACKNOWLEDGMENT
In the name of Allah, Most Gracious, Most Merciful Praise be to Allah, the Cherisher and Sustainer of the worlds; Most Gracious, Most Merciful; Master of the Day of Judgment. Thee do we worship, and Thine aid we seek. The way of those on whom Thou hast bestowed Thy Grace, those whose (portion) is not wrath, and who go not astray. Ameen

I am heartily thankful to my Principles of Management teacher, Prof. Dr. Khawja Amjad Saeed, whose encouragement, guidance and support from initial to the final level enabled us to develop this report. With his dedicated lectures we were able to practically understand and apply what we have learned in the classes.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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PREFACE

The field of Automobile sector has always been a source of inspiration for me. God gave me an excellent opportunity to complete my project at Pak Suzuki Company Limited, one of the leading telecom companies in Pakistan.

I had a general idea about the Automobile Industry, but once I practically started the Project in Telecom sector I observed much about Automobile, I realized the importance and significance of Automobile for the development of economy. To adjust such a large commercial organization was not an easy task. However, by the grace of Almighty Allah, I finished my project in a suitable manner and I learned a lot about the Management system of Pak Suzuki Company Limited.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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EXECUTIVE SUMMARY
This project is about the organization structure of Pak Suzuki Motor Company. During the project, Ive done the detailed study of Pak Suzuki Motor Company Limited like their company profile, mission, vision and corporate values. With the help of Internal and External analysis, Ive sorted out the environment factors of the organization and how Pak Suzuki is meeting the challenges through its strengths and opportunities. An economy is the system of human activities related to the production, distribution, exchange, and consumption of goods and services of a country or other area. The composition of a given economy is inseparable from technological evolution. At the closing of each month, the directors conducts meeting of the staff to discuss about the functioning of the head office. However, casual meetings can also be conducted in case of emergency. There is information and complaint desk available in the head office.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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CONTENTS
ACKNOWLEDGMENT............................................................................................................ 2 PREFACE .................................................................................................................................. 3 Executive Summary ................................................................................................................... 4 Introduction ................................................................................................................................ 7 Our Vision .............................................................................................................................. 7 Our Mission ........................................................................................................................... 7 System .................................................................................................................................... 8 Statement of Ethics and Business Practices ........................................................................... 8 Corporate Strategy ................................................................................................................. 8 Products...................................................................................................................................... 9 Components of Organization Structure: ................................................................................ 9 External & Internal Environmental Analysis .......................................................................... 10 Internal Factors: ................................................................................................................... 10 External Factors: .................................................................................................................. 11 General Environment: .......................................................................................................... 11 Political Environment ...................................................................................................... 11 Legal Environment........................................................................................................... 11 Economic Environment ................................................................................................... 12 Socio-Culture Environment ............................................................................................. 12 Technological Environment ............................................................................................. 12 Dimensions of Organizational Structure:............................................................................. 12 Complexity....................................................................................................................... 12 Formalization ................................................................................................................... 13 Centralization: .......................................................................................................................... 13 Strategy and Structure: ............................................................................................................. 13 Goals and Objectives: .............................................................................................................. 13 Strategies: ................................................................................................................................. 13 SWIFT (1300cc) .................................................................................................................. 14 LIANA (1300 & 1600 cc) .................................................................................................... 14 CULTUS (1000cc) ............................................................................................................... 14 ALTO (1000cc) .................................................................................................................... 15

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P age |6 MEHRAN (800cc) ............................................................................................................... 15 APV (1500cc) ...................................................................................................................... 16 JIMNY (1300cc) .................................................................................................................. 16 Corporate Planning: ................................................................................................................. 17 CONTEMPORARY STRATEGY STRUCTURE: ............................................................. 18 Technology: ......................................................................................................................... 19 Organic Vs Mechanistic Structure: ...................................................................................... 19 Routine tasks Vs Non routine tasks: .................................................................................... 19 Strategic Recommendations..................................................................................................... 20 REFERENCES ........................................................................................................................ 21 Conclusion ............................................................................................................................... 23

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P age |7

INTRODUCTION
Pak Suzuki Motor Company Limited was formed as a joint venture between Pakistan Automobile Corporation and Suzuki Motor Corporation (SMC) - Japan. The Company was incorporated as a public limited company in August 1983 and started commercial operations in January 1984. The initial share holding of SMC was 12.5% which was gradually increased to 73.09%. Pak Suzuki is pioneer in Automobile Business having the most modern and the largest manufacturing facilities in Pakistan with an Annual production capacity of 150,000 vehicles. The vehicles produced include cars, small vans, Pickups, Cargo vans and Motorcycle. Pak Suzuki holds more than 50% Market Share. Following the aggressive policy of Indigenization, Suzuki vehicles have a healthy local content up to 72%. This was made possible by strong support of our vendors. Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts) facilities across Pakistan. Caring for the Environment Pak Suzuki was pioneer in introduction of Factory fitted CNG vehicles. Pak Suzuki always endeavors to go aggressively for the sound development of the society by increasing motorization, industrialization and creating job opportunities thus improving the peoples living standards with the combined efforts of all the dealers, vendors and Pak Suzuki employees. Pak Suzuki is also exporting Suzuki Ravi pickup, Liana and components to Bangladesh and Europe thus earning precious foreign exchange for the country.

Our Vision

To be Excellent All Around

Our Mission

To provide automobile of international quality at competitive price

Mission and Vision Statement of Pak Suzuki, and they always try to improve skills of employees by imparting training and inculcating in them a sense of participation.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P age |8 To achieve maximum indigenization and promote the automobile vending industry. To contribute to Pakistani society through development of industry in general and automobile industry in particular.

System

Input Raw materials Human resource Capital Information and knowledge

Transformation Process Plant and Machinery Human Skills

Output Finished Goods Services Salaries Dividends Value to shareholders

Statement of Ethics and Business Practices Here are the code of ethics and Business Practice of Pak Suzuki Motors Company, 1. Pak Suzuki insists on integrity and honesty of its employees in doing business. Any unfair or corrupt practices to solicit business is fundamentally inconsistent with business codes of company 2. Pak Suzuki believes in compliance to regulatory obligation 3. Pak Suzuki believes in free and fair business practices and open competitive markets. Developing any association with competitors to distort the pricing and supply of products is contradictory to companys business code of conduct. 4. Pak Suzuki believes in transparency in business transaction and they are to be recorded accurately and fairly in books of accounts in accordance with standard procedure. 5. Pak Suzuki believes in individuals respects and growth. Its employment policies do not discriminate on basis of race, religion, gender or any other factor. 6. Pak Suzuki does not believe in political affiliation.

Corporate Strategy Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P age |9 Pak Suzuki is built on the idea of a responsible corporate citizenship thereby managing environmental, safety & occupational health matters as an integral part of our business. In fulfilling this responsibility Pak Suzuki adheres to the following principles:

1) We are committed to provide top quality products to the satisfaction and requirement
of our customers.

2) We conduct our operations in compliance with applicable environmental,


occupational health & safety laws and regulations.

3) We recognize the interrelationship between energy and the environment, and we


promote the efficient use of energy throughout our system.

4) We ensure safe disposal of waste generated from our facility 5) We minimize the discharge of waste materials into the environment by utilizing
responsible pollution control practices.

6) We will continuously seek opportunities to improve our adherence to these principles.

As it is clearly mentioned in their Vision Statement that to be excellent all around, and they always operate in Environment friendly. And their Product will always be the environment friendly. With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark a companys financial indicators on a worldwide basis. World stock markets have recently witnessed a return to fundamental financial analysis. Sound management as opposed to hype will in the long run generate shareholder value.

PRODUCTS
Following are some varieties of Cars: Swift 1300cc, Mehran 800cc, Bolan 800cc, Cultus 1000cc, Alto 1000cc, Liana 1300cc and APV 1500cc

Components of Organization Structure:

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 10 The distribution is headed by chief executive officer (CEO).the authority is distributed into three departments named Sales, Services and Parts (SSS). The manager sales manager services and manager parts report directly to the CEO. There are ten sales executives under the sales manager. They include individual, government and bank sales divisions. There are three service advisors under the manager services. There are two assistant parts under the manger parts.

EXTERNAL & INTERNAL ENVIRONMENTAL ANALYSIS


Internal Factors: Strengths: Highest Market Share Low Price Vehicles Resale of Local Assembled Cars Large Distribution Channels Rising per capita income with changing demographic distribution Highly Innovative and deep product line Highly maintained supply chain Well Managed and highly competitive staff Well defined and bureaucratic organizational structure Complete understanding between Distributors Easy availability of spare parts Weakness: Scarcity of raw material Lack of coordination and linkage with Government/semi government supporting bodies Less focus on Looks and Design

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 11 Less Technical Training Institutes Less distribution channels in sub urban areas External Factors: Opportunities: Increasing Demand for Cars Efficient EFI engines Large Market size to operate Global spare part market Space saving Small size CNG cylinders Threats: Tough Competitors like Toyota and Honda Foreign Investment and setup production facilities Smuggling of Auto Parts Inflation rate Heavy Taxes Competition from cheaper imported cars Increase in Fuel Prices General Environment: Uncontrollable environment are those external factors which can create hurdles between us and our business. It is also called pest analysis, which is as follow: Political Environment Pakistan has to face lots of political ups and downs since its independence. So many governments have been overtaken by military personnel and most of the time martial law was imposed on Pakistan. In this scenario no entrepreneur was willing to invest in Pakistan except few. Due to such conditions, market environment wasnt helpful in Pakistan. The Pakistani government has never been trustworthy for any investor. The new political setup has also made polices which dont favor the investors. Legal Environment As all countries, Pakistan also has some legislation about each sector. But like developing countries it is hardly being imposed by authorities. The corruption, smuggling and black marketing have been supported by Government related officials. The undue favor is given to

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 12 those business men who have been politically affiliated and hardly any legal suite is carried on against them. Such unethical activities destroy all law and legislation Economic Environment Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and external ongoing conflict with India. However, IMF approved the government policies, encourages by different foreign assistance and renewed access to global market. By following these policies government succeed to reverse the situation of economy during last five years however the law and order situation is still not up to the mark causing major hindrance in economic development. Socio-Culture Environment Pakistan has strong culture background and it has been follow in some particular region of Pakistan strictly. But with the passage of time it is going to change. Thoughts of people, choices, taste and style has been totally changed. If we talk about the transportation source in Pakistan, People use buses, pickups etc for journey. They also have their own bicycle and bikes and lots of people are pedestrian. But now the people who havent any source of transportation they also want something for their convenience because they wants to save their time as much as they can. People want to use such vehicle which looks beautiful and also affordable. Technological Environment Technological factor also very important and we havent control on it. Technology is grooming with the passage of time. People also want that the product that they have is full of technology. We never control on technology for example you launched the product last year and your sale volume on that time is very high but after sometime due to latest invention a lots of substitute exist in market which affect on your business so you cant hold on it. Dimensions of Organizational Structure: There are three dimensions of organizational structure complexity, centralization and formulization. Complexity The organization has both horizontal and vertical differentiation. The vertical differentiation means the number of hierarchical levels in the organization. There is a wide span of control which is evident from the position of manager sales which has ten sales executive working under him. Functional departmentalization exists at functional level were mechanics are functionally trained according to their job requirements. For example electrical mechanic, tuning mechanic, wheel alignment and balancing, body shop and painting. The departmentalization includes sales service and spare parts.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 13 Formalization The formulization includes rules procedures and policies. The rules are defined by the Pak Suzuki head office Karachi and communicated to the regional offices. The procedures are made and implemented by the dealerships top management. Even the hiring of employees is carried out by the dealership itself.

CENTRALIZATION:
The Pak Suzuki has centralized structure. The locus of decision making is in hand of the top management.

STRATEGY AND STRUCTURE:


The strategies are made on the basis of short term and long term objectives of the organization.

GOALS AND OBJECTIVES:


Pak Suzuki has following goals. To provide vehicles of international quality at competitive price. To improve skills of employees by imparting training and inculcating in them sense of participation. To achieve maximum indigenization and promote the automobile vending industry. To contribute to Pakistani society through development of industry in general and automobile industry in particular.

STRATEGIES:
There are three levels of strategies corporate, business and functional. Functional Level Strategies: Low Cost Strategy: The main focus of Suzuki is to keep its cost as low as possible to make there product affordable for common man. It is evident from there mission A Car for All. There Suzuki mehran is the cheapest car in Pakistan and it is mass produced for higher profits. Its sales went to 1.5lac in year 2009. Alto and Cultus is focused on the middle class and its cost is also lower as compare to its competitor Cuore and Centro. There is Sedan Liana is also very cheap in its 1300 category,

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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Differentiated Product: The products offered by Suzuki are well differentiated. The details are given below
SWIFT (1300cc)

The European inspired exterior gives Swift a distinctive look. It is differentiated on the basis of color and specification. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Specification:

Swift 1.3 DLX Swift 1.3 DX

Rs. 1,156,000/Rs. 1,056,000/-

LIANA (1300 & 1600 cc) The Suzuki Liana available in 1300 cc manual transmission and 1600cc automatic transmission takes you out of ordinary and into the realm. Liana is entirely different car, its style, dimension and comfort will inspire you to see every day as an open door to a new age. It can be differentiated into colors and specification. Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Specification:

Liana 1.3L RXI MT Rs. 1,282,000/Liana 1.3L RXI MT CNG Rs. 1,351,000/-

CULTUS (1000cc)

CULTUS is the blend of space and craft. Its trim body Conceals ample space & flexibility for both passenger and storage. CULTUS ensures everyone, exceptional Value and quality. It can be differentiated into following: Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Specification:

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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Cultus VXRi Rs. 925,000/Cultus VXRi CNG Rs. 990,000/-

ALTO (1000cc) Alto has a bright, roomy and comfortable cabin which keeps body relax and strong and lighter body shell resulting in smooth drive due to reduction of unpleasant noise harshness and vibration. Its small turning radius and compact body make parking a breeze. It can be differentiated in to following: Colors: Olive Green, Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Specification:

Alto VXR Rs. 727,000/Alto VXR CNG Rs. 796,000/-

MEHRAN (800cc)

Unrivalled in its class, MEHRAN is Pakistans largest selling car. More smart features like head turning lamp, matching front grill and a two spoke steering wheel gives it the tidy look. Functional economy, peak performance or unmatched fuel efficiency, MEHRAN VXR is the leader. Colors: Pearl Red, Graphite Grey, Solid white, Silky Silver, Eminent Blue Specifications

Mehran VX Mehran VX CNG Mehran VXR Mehran VXR CNG

Rs. 510,000/Rs. 576,000/Rs. 562,000/Rs. 625,000/-

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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APV (1500cc) APV 1500 cc (Imported) The New APV gives you everything you ever wanted in your vehicle. Spacious interior for comfort, tough engine to carry large loads and plenty of room for passengers to enjoy a comfortable day long ride. It can be differentiated into following categories Colors: Pearl Red, Graphite Grey, Solid white, Indigo, Silky Silver, Aqua Blue, Eminent Blue Specification:

APV 1.5L Rs. 1,999,000/APV 1.5L CNG Rs. 2,074,000/-

JIMNY (1300cc) JIMNY 4X4 JEEP 1300cc (Imported) Steady, sturdy and smart, Suzuki JIMNY with new wide tread brings you the ultimate pleasure of a real 4-wheel drive. It has got all the sporting spirit to go along for adventurous free souls. It can be differentiated into following categories Colors: Solid white, Silky Silver Specification:

Jimny JLSX M/T Jimny JLDX M/T

Rs. 1,974,000/Rs. 2,123,000/-

Business Level Strategies:


Business-level strategy: an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets The Central Role of Customers In selecting a business-level strategy, the firm determines 1. Who it will serve 2. What needs those target customers have that it will satisfy 3. How those needs will be satisfied. The business level strategies of Suzuki consists of three factors 1) Sales 2) Service

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 17 3) Spare parts The sales managers ensure the sale of the product in three sectors: Individuals Government Banks

The service sector consists of a team of mechanics headed by service advisors. They ensure timely tuning and services of the cars. The have the following 5R method to meet those requirements. i. ii. iii. iv. v. Respect Responsibility Responsiveness Rise Rejoice

The spare parts department is headed by manger parts. He keeps the inventory which includes all the body parts and the critical engine parts. They are readily available.

CORPORATE PLANNING:
The missions, visions goals and targets are defined at the corporate level. The areas are defined at the region wise i.e. east, west, north and south and dealerships can be provided to anyone meeting the requirements of the organization. The guidelines are passed on the business level frequently to improve the processes. The decision about the launching or discontinuation of a product is also taken at the corporate level. Currently Pak Suzuki has made two corporate level strategies: To equip Swift with the automatic transmission. The discontinuation of failed product Liana has been taken out of account and strategies are made to re launch the car with better quality and performance.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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BCG MATRIX
High Star JIMNY BOLAN Market Growth Cash Cows CULTUS MEHRAN ALTO RAVI Low High Market Share Low APV Dogs LIANA SWIFT Question Mark

CONTEMPORARY STRATEGY STRUCTURE:

The strategic structure is basically based on the rate at which they change their product and market. Pak Suzuki motors contemporary strategy structure falls in the type of analyzers where the basic aim of the organization is to respond according to the lead of key prospectors. They try to minimize the risk through analyzing. Pak Suzuki maintain its operating efficiency in their stable products like swift, Alto, Bolan , Mehran and Cultus. It is also observed that the Pak Suzuki motors seeks stability in market by producing a limited set of cars but at the large segment of the potential market. Pak Suzuki also adopts the strategy according to the economic actions like competitive pricing especially in small size cars and also produces high quality products. They properly scan the environment factors. Pak Suzuki motors try to capitalize on the other strategic types. They used to maximize the available opportunity to make profit. They step into the market after making critical analysis of the prospectors including Honda and Toyota, that what they are trying to manufacture and in which fashion. They are making trends relevant and outside their domain.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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Technology:

Pak Suzuki is using the large batch technology. They have increased control over processes by using modern technology in Service department. Standardization has increased by that. On the other hand that has also increased the complexity because of large volumes of product at the assembly line. Work activities are standardized according to the tasks of the workers like there are separate mechanics for each type of job. The non Efi products are normally handled by the manual processes like tuning and problem solving where as the Efi cars are handled by the specialized machines with specific software. The wheel balancing, alignment and debugging are also performed on specified hydraulic devices.
Organic Vs Mechanistic Structure:

The organization has both organic structure as well as the mechanistic structure. Certain aspects are closer to the organic structure and certain other structure are closer to the mechanistic one. Structural Characteristics Levels in Hierarchy Span of control of CEO Span of control of first line supervisor Type of structure Cost of operation Small Batch technology Mass Production technology 4 3 Continuous Process technology

10

Organic\mechanistic Medium

Routine tasks Vs Non routine tasks:

The task variability is low and the task analyzability is high in case of Pak Suzuki. It is due to the routine tasks because each worker gets the target and has to perform certain and fixed number of tasks. And these routine tasks result in more task analyzability.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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This can be analyzed by the help of the following table: Structural Characteristics Standardization Mutual Adjustment Specialization Formalization Hierarchy of authority Departmentalization Decision making authority Overall structure Routine tasks High Individual Low Tall High Centralized Mechanistic Nature of technology Non Routine tasks High

Organic

From the above table it is evident that the structure of Suzuki is neither mechanic nor fully organic. It lies in between because certain aspects of each are present in it.

STRATEGIC RECOMMENDATIONS
Product Development is the selected strategy at this point of time for Pak Suzuki Motor Company Limited that we observed from our strategic analysis of the firm. In product development strategy we recommend the company to focuses on having the highest level of product performance, the highest level of functionality or functions and features, the latest technology or the highest level of product innovation. This strategy might have some risk for the company as innovative products are involved but proper research and development will cater the risk and company can pursue with the strategy to be the market leaders and get on top. One major setback is the shape of Suzuki LIANA, which was not able to meet the expectations and couldnt hold the market it was made for. But company didnt stop its journey there, and now Suzuki SWIFT has recently been launched in the market, which seems to be an

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

P a g e | 21 attractive offer for the market in the 1300cc class. But still company has nothing to compete with HONDA and TOYOTA. The Suzuki needs to enter into the 1600cc and 1800cc market to expand its market share and market growth. But for that purpose they need to put more efforts of product development as the new product must have all the required features and technology that is needed to compete with giant competitors.

REFERENCES

http://www.paksuzuki.com.pk http://www.we.com.pk http://www.maxi-pedia.com

And various news paper articles, research findings and blogs, which helped me indirectly to build up my mind about Pak Suzuki Motor Company Limited and figure out their External and Internal Factors which were involved in the project.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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Automatic tuning device, the divice tunes the latest efi cars in matter of minutes and a touch of buttons completes the process. The device is handled by specialized mechanic under the supervision of Manager Services.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance

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CONCLUSION
Competition will deliver benefits to consumers through lower prices, increased consumer choice and service quality, and improved incentives to invest and innovate. These problems may be draining your organization's strength and ability to compete, thereby impacting sustainable growth and profitability. These business issues are often symptomatic of poor or ineffective enterprise alignment between strategy, processes, measurements and communications. Along with improving alignment, your staff, suppliers and technology architecture must be effectively integrated into your business system. The head office should improve the quality of training of its employees and the honesty, controls and efficiency of its structure and procedure. Pak Suzuki does not follow professional attitude and a lot of biasness and personal favoritism is present and employees are also evaluated on the personal relations with their respective upper management without taking performance much into consideration. The ultimate impact is on the performance of the firm.

Pak Suzuki Motor Company Limited.


Hailey College of Banking & Finance