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Business Policy & Strategy

“REPORT”

SUBMITED BY:
 Haseeb Riaz
 Saad Gull Mughal
 Husnain Javed
 Mona Farooq
 Sumaira Hanif

SUBMITTED TO:
 DR. Abdul Waheed

SUBMISSION DATE:
21st JAN 2019
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PAK SUZUKI MOTORS

Table of Contents
Introduction to the company .......................................................................................... 1
Pak Suzuki Motor Company Limited ............................................................................ 1
Vision ......................................................................................................................... 1
Mission....................................................................................................................... 2
Executives Profiles......................................................................................................... 2
Current Position ............................................................................................................. 3
Future Goals ................................................................................................................... 3
Internal Assessment of Company .................................................................................. 4
IFE Matrix .................................................................................................................. 4
Justifications of Weights and Ratings used in IFE .................................................... 4
IFE Score ................................................................................................................... 6
External Assessment of Company ................................................................................. 6
EFE Matrix................................................................................................................. 6
Justifications of Weights and Ratings used in EFE ................................................... 7
EFE Score .................................................................................................................. 8
Match between Internal and External Environment ...................................................... 9
SPACE Matrix ............................................................................................................... 9
Decision about Final Strategy ...................................................................................... 10
QSPM........................................................................................................................... 12
References .................................................................................................................... 13
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Introduction to the company

Suzuki Motor Corporation headquartered in Minami- Hamamatsu is a Japanese

multinational automobile manufacturer, which manufactures four, two wheel, auto

terrain vehicle and other small internal combustion engines. It was ninth biggest

automaker achiever in 2014 by production in the whole world.

The story of Suzuki starts in 1909 when Michio Suzuki established Suzuki loom

works in a small village near seacoast of Hamamatsu Japan. Suzuki manufactured

orders from giant silk industry of build a weaving loom. Suzuki innovate the looms

and soon their business started expanding to overseas. After 30 years later, by 1954

Suzuki started building motorcycle engines with an operational productivity of 6000

motorcycles per month. After the success two wheel engines, Suzuki with his son in

law manufactured two cars in 1955, and after this formally started its production.

Pak Suzuki Motor Company Limited

Pak Suzuki Motor Company was formed in August 1983 due to the joint venture

of Suzuki Motor Corporation and Pakistan Automobile Corporation; it was formed as

a public limited company.

PSMCL started by acquiring the assets of Awami autos Limited, further it started

its commercial operations with a primary objective of manufacturing cars, jeep ,

pickups and 4*4 vehicles in January 1984.

Vision

“To be recognized as a leading organization that values Customer’s needs and

provides motoring solutions with strong customer care.”

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Mission

 Develop products of superior value by focusing on the customer

 Establish a refreshing and innovative company through teamwork

 Strive for individual excellence through continuous improvement

Executives Profiles
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Current Position

Pak Suzuki mission is to provide superior value by focusing on customers but they

themselves are negating their mission because their products are outdated, they do

lead in cars that are cost effective for consumers but the main problem is they still are

manufacturing outdated shape and technology while competitors and new entrants

are planning on hybrid and electric cars. They have not capitalized on this problem;

their low-range cars are popular among certain income group due to low cost;

however their large engine cars such as Suzuki Ciaz, Vitara are not popular among

consumers. Their major competitors such as Honda, Toyota do offer cars better in

terms of interior and exterior but fails it providing in low price.

Future Goals

The main aim is to further increase in the sales and to defend and maintain the

market share from new entrants of manufactured vehicles, and this is an intuition that

sales could be increase through adoption of innovative principles in their product

lines, this is important as new entrants are planning to introduce electric and hybrid

system into their above vehicles, whereas doing so may lead to decrease in sales of

Pak Suzuki vehicles. The future goal of the company is to incorporate innovation into

their product line in terms of technology and aesthetics. This would increase the cost
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of the vehicles, but in comparison to their competitors, their prices still will be less,

which may turn the company upward in claiming considerable market share.

Internal Assessment of Company

IFE Matrix

Key Internal Factor

Strengths Weight Rating Score
Monopoly in small car .18 4 .72
manufacturing
Established distribution .08 3 .24
channels
Highest market share .12 4 .48
Only Car manufacturer of .10 3 .30
some models in Pakistan
Cost leadership .13 4 .52
Weaknesses
Outdated Technology .12 2 .24
Less attractive interior .07 2 .14
Less attractive exterior .07 1 .07
High staff turnover .03 2 .06
Minimal safety features .10 1 .10
Total 1.00 2.87

Justifications of Weights and Ratings used in IFE

Strength

1. Firstly, in strength we have assigned the weightage of 0.18 which is

according to the importance of success in of company according to industry

monopoly is important because it would create uncontested market, it is our

major strength right now, so we have given the rate equal to 4.

2. All the competitors in the industry have distribution channels that are

working very efficiently so it is somewhat considered important but not highly

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important when compared to other internal factors in terms of success and

weightage of 0.08 is assigned to it. It do have importance but not to a huge

extent. It is minor strength of Suzuki so its rating is assigned as 3.

3. The high market share is one of the many strength of a company it is

considered one of the important factor in success of company in an industry

as Suzuki would be considered trend setters and other competitors would

design strategies to break market of Suzuki because of this weightage of 0.12

is given to this internal factor, and it is our major strength

4. Fourth key factor manufacturing has been given weightage of 0.10

pertaining to success of this factor in industry, this is somewhat important but

not so much important factor, it is our minor strength.

5. Less cost is considered as the key importance of a vehicle in a developing

country and it does attract customers. Suzuki has taken leverage on this point

of strength and attains the position of cost leadership because of its low cost

cars sales would increase further growing the company so weightage assigned

to it is 0.13 and considered it as major strength.

Weaknesses

1. Technology is considered one of the important elements in automobile

industry as it is the basis of superior engine performance of automobile that’s

the main reason it has been given rating of 0.12 and as Suzuki has outdated

technology so it is one of the minor weakness.

2. Exterior and Interior is considered somewhat important in Pakistan’s

automobile industry but not very much, the importance given by all the

companies is less as it was required so looking at the scenario we have

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assigned weightage of 0.07. Exterior design of Suzuki is major weakness and

interior design is minor weakness.

3. High staff turnover is one the weakness of Suzuki Company but industry

wise it is given very less importance equal to that of 0.03 as in each and every

company there is certain turnover ratio that do not effect performance of

company that much.

4. Safety feature is important aspect industry wise and given weightage of

0.10 as now customer are getting awareness about safety measures in cars and

it would be considered important success factor aspect in coming time, it is

Suzuki’s minor weakness as their cars are not equipped with safety features.

IFE Score

The score of IFE matrix for Suzuki is 2.87 which is above average this means that

the company has strong internal position, but there is room for improvement. Suzuki

should further increase their strength and minimize the weaknesses.

External Assessment of Company

EFE Matrix

Key External Factors

Opportunities Weight Rate Score
FTA with Turkey .07 1 0.07
High custom duty on imported vehicle .15 3 0.45
Easy Auto loan policy from banks .12 4 0.48
Increase in car demand due to new cab .13 4 0.52
services
Free trade agreement with Thailand .07 1 0.07
Threats
New entrants i.e. Kia lucky, Hyundai .15 2 0.30
Nishat and United motors
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Cheaper imported car with efficient .12 2 0.24

technology
Ride sharing and rent a car decrease .07 2 0.14
demand
Own money an illegal trend .12 3 0.36
Total 1.00 2.63

Justifications of Weights and Ratings used in EFE

Opportunities

1. FTA with Turkey and Thailand is given equal weights as it is not a huge

factor for the company in industry as it may sound somewhat unrealistic, the

company response towards this external factor is poor.

2. High custom duty on imported vehicle is assigned 0.15, it important key

external factor which may be success of company as it helps company to

improve its sales; the response of company towards this would be above

average so rate of 3 is given.

3. Easy auto loan policy from bank is given weightage of 0.15 which is

external key factor that may help company to increase its sales; the response

towards this opportunity from company is given 4 as Suzuki has increased its

plant size as is capable of dealing with the demand.

4. Increase in demand due to new cab services is given weightage of 0.07

which is external key factor that somewhat may help company to increase its

sales; the response towards this opportunity from company is given 4 as

Suzuki had increased its plant size in past and is capable of dealing with the

demand.

Threats
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1. New entrants would increase the competition and can be very dangerous for

Suzuki Company so it is assigned higher weight; the response of Suzuki

toward this external factor is average as it lacks well-built strategy for this

threat.

2. Cheaper imported car with efficient technology may also be an important

threat for Suzuki but relatively less than the new entrants and can decrease

sales for them, the weight assigned to it is 0.12 and response towards this key

factor is average because Suzuki cars lacks that much of efficiency present in

imported cars in every aspect.

3. Ride sharing and rent a car decrease demand it is given low weightage of

0.07 and the response is average for this external factor, as it may not directly

hit companies success.

4. Own money is an illegal trend a threat which might be important one from

company because it directly hits demand of company as official dealer may

switch to this illegal trend due to more profits that’s why it is given weightage

of 0.12, and response of above average is given because Suzuki and other

companies can easy form pressure groups for common purpose and may

convince government to ban this.

EFE Score

The score of EFE matrix for Suzuki is 2.63 which is above average this means that

the Suzuki is doing well, taking the external advantage of the opportunities and

avoiding the threats, but there is definitely room for improvement for Suzuki. Suzuki

can further take advantage by improving or rebuilding it which may further allow
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them to take excessive advantage and reduce the external threats from the

environment.

Match between Internal and External Environment

SPACE Matrix

Internal strategic dimensions

Financial position
Leverage ratio +4
Efficiency ratio +3
Net profit +5
Debt to equity +4
Cash flow +6
22/5 = 4.4
Competitive position
Market share -1
Profitability -2
Brand Image -4
Product quality -4
Customer loyalty -3
-14/5 = -2.8
External strategic dimensions:
Stability Position
Govt. Policies -3
GDP -5
Inflation -4
Peace and security -3
Tax exemptions -4
-19/5 = -3.8

Industry Position
Barriers to entry +5
Technology +4
Growth +3
Resource Utilization +3
Rivalry +5
20/5 = 4

Y axis FP-SP (4.4-3.8 = 0.6) X axis IP-CP (4-2.8 = 1.2)

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Space matrix scores came out to the first quadrant Y axis FP-EP (4.4-3.8 = 0.6) .X

axis IP-CP (4-2.8 = 1.2) which identifies that the company should adopt aggressive

strategies.

Decision about Final Strategy

In this step, we would choose our final strategy as in previous step we conducted

space matrix which was a match between internal and external environment. It was
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concluded that our strategy should be aggressive. Before all the analysis, our intuition

was the company should go with product development but it was rather confusing as

we wanted a solid proof and intuition is just based on our past experience which

might not be true always as the situation may differ in every case, so companies take

support of quantitative analysis which includes several matrices, our companies final

decision about the particular strategy would be based on Quantitative Strategic

Planning Matrix. Through space matrix we found out the overall strategy should be

aggressive but it do not precisely tells which part of aggressive strategy company

should go with, therefore to build a strong case QSPM is conducted, from previous

analysis and some of our intuition we further intuited that from that aggressive

strategy we would choose product development or Market penetration strategy.

PRODUCT DEVELOPMENT: Hybrid cars with better exterior and interior

MARKET PENETRATION: We should decrease prices of our current products

Next process would further clarify which particular aggressive strategy we should

choose.
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QSPM

PRODUCT MARKET
DEVELOPMENT PENETRATION
KEY FACTORS WS AS TAS AS TAS
STRENGTHS
Monopoly in small car manufacturing .18 3 0.54 2 .36
Established distribution channel .08 - - - -
Highest Market share .12 3 0.36 2 .24
Only car manufacturer of some .10 - - - -
models in Pakistan
Cost Leadership .13 - - - -
WEAKNESSES
Outdated Technology .12 4 0.48 1 0.12
Less Attractive interior .07 2 0.14 1 0.07
Less Attractive exterior .07 4 0.28 1 0.07
High staff turnover .03 - - - -
Minimal safety features .10 4 0.40 1 0.10
Total 1.00
Opportunity
FTA with Turkey .07 - - - -
High Custom duty on imported .15 - - - -
vehicles
Easy Auto loan policy from banks .12 - - - -
Increase in car demand due to new .13 2 0.26 3 0.39
cab services
FTA with Thailand .07 - - - -
Threats
New Entrants i.e. Kia lucky, Hyundai .15 4 0.60 2 0.30
Nishat & United motors
Cheaper imported car with efficient .12 3 0.36 4 0.48
technology
Ride sharing & rent a car decrease .07 - - - -
demand
Own money an illegal trend .12 - - - -
1.00 3.42 2.13

There were some factors that helped company in choosing final strategy, however

there were some factors that were not linkable to the strategies so those factors are

being ignored. Between the two strategies 1) Product development received sum total
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attractiveness score of 3.42 which is well above the score of 2) Market penetration

2.13, the sum of total attractive score suggest executing the first strategy which is to

develop new products with better inbuilt quality, aesthetics of interior and exterior

and crafting hybrid technology into the new product. Product development is highly

attractive to the given opportunities, threat, weaknesses and strength.

References

Wikipedia Contributors. (2019). Pak Suzuki Motors. In Wikipedia, Free

Encyclopedia. Retrieved on: January 15, 2019, from:

https://en.wikipedia.org/wiki/Pak_Suzuki_Motors