Atlas Honda

INTRODUCTION OF HONDA MOTORS CARS PAKISTAN LIMITED

Atlas Honda Limited

COMPANY INFORMATIONTHE BOARD OF DIRECTORS

Mr. Yusuf H. Shirazi

(Chairman)

Mr. Saqib Hussain Shirazi (CEO)

Mr. Aamir H. Shirazi

(Director)

Mr. Motohide Sudo

Mr. Sanaullah Qureshi

Mr. Sherali Mundrawala

Mr. Takemi Ishikawa

Mr. Tariq Iqbal Ahmed

COMPANY SECRETARY

Mr. Sohail Ahmed

AUDITORS

Hameed Chaudhri & Company

Chartered Accountants

LEGAL ADVISORSMohsin Tayebaly & Co

BANKERS

Bank Al-Habib Limited

Credit Algricole Indosuez

Deutch Bank AG

Emirates Bank International P.J.S.C.

Habib Bank Limited

Muslim Commercial Bank Limited

National Bank Of Pakistan

The Bank Of Tokyo Mitsubishi Limited

United Bank Limited

REGISTERED OFFICE

1-McLeod Road, Lahore.

FACTORY

F-36, ESTATE AVENUE, S.I.T.E., KARACHI

26-27 KM, LAHORE-SHEIKHOPURA ROAD, SHEIKHOPURA

Introduction of Atlas Honda limitedAtlas Honda limited is a joint venture between the Atlas group and

Honda Motor Company, Japan. The company was created by the merger of Punjdarya Limited Sheikhoopura successor to Atlas Epak Limited, Dhaka. Since taken over by the government of Bangladesh and Atlas Autos Limited in 1991.

Both these motorcycle-manufacturing concerns were established by the Atlas group. Atlas Honda Limited manufactures and markets Honda motorcycles in collaboration with Honda Motor Company. The company also manufactures shock absorbers under a technical assistance agreement with Showa Of Japan, world leaders in shock absorber company Honda motor cycles are by far the best selling motorcycle in the country with an unmatched reputation for high quality, reliability and after sales services.

Atlas has undertaken to develop local manufacturing capabilities to the highest economically feasible level. While a major role in localization has been assigned to vendor industries, atlas has the countries largest in house manufacturing capacity in the industry at its Karachi and Sheikhupura plants. To support the production facilities the company has established an R&D (research and development) wing and tool making facilities, which are growing rapidly in size and functions as the company expands.

Atlas has managed to execute nine joint ventures / technical assistance agreements between local venders and foreign manufacturer for transfer of technology.

Atlas management is striving to modernize company operations by adapting applicable aspects of research and theory and more specially Hondas unique philosophy of hard / soft technologies to the realities of Pakistani conditions. Company management structures, system, and processes are changed frequently to meet demand of customer needs, growth and new technology efforts are being made to develop participation of all levels of personal in decision making and substantial and effective delegation has been established at levels where applicable. Various participation programs such as AALA MAYAR Quality circles movements, launched in 1985, are strongly encouraged to allow constructive self expression and team work. The company training and development program encourage each member to develop himself and contribute to his full potential.

Atlas Honda is playing a pioneering role in creating conditions for easy and confident use of motorcycles all over the country.

A vast and growing network of over 1500 motorcycles sales service and spare parts dealers has been established. To backup the system, atlas has setup technical training statement centers in Karachi Lahore and Faisalabad, which provide several courses of varying duration, and complexity for motorcycles mechanics and users each year. Mobile training facilities take the latest know-how, technology and maintenance of motorcycles to major rural and urban centers around the country.

VISION OF AHLAtlas Honda limited, being Japanese, always believe in quality leadership customer satisfaction and satisfaction of shareholders. The executives and managers at AHL are keen about the staff cooperation and dedication. Thats why promoting teamwork culture is the core activity of the company. The vision of AHL as follows:

To remain a market leader in the motorcycle industry and emerge as a globally competitive center of production and exports..The above statement clearly predicts the overall scenario of the management at AHL.

Mission StatementMission Statement, the statement that further reveals the practicalities of any organization, comparable to its vision statement. The Mission Statement at AHL is highlighted below:

To be a dynamic profitable growth oriented company through market leadership excellence in quality and service optimizing value for the shareholders and maximizing exports

To give attractive return to business associates and shareholders as per their expectations.

Be a responsible employer and reward employees according to their abilities and performance.

To be a good corporate citizen in order to fulfill its social responsibilities.

To create and foster a network of researchers, engineers, who will make unique contribution to the development of motorcycle industry ensuring satisfaction of our valuable customers and protection of the environment by producing emission friendly green products. .The Honda Companys purpose is indispensable to all Honda associates, when it comes to understanding the reason for the existence of the company. Top management at AHL try to ensure that mission statement:

a) Is appropriate to the purpose of organization.

b) Includes commitment to comply with requirements and to continually improve the effectiveness of quality management system.

c) Provides a framework for establishing and reviewing the specified objectives.

d) Is communicated and understood within the organization.

e) Is reviewed for continual suitability.

COMPANY POLICYCUSTOMER

Our customers are the reason and source of our business , it is our joint aim with our dealers to ensure that the customer enjoy the highest level of satisfaction from use of Honda motorcycle.

QUALITY

To ensure that our product and service meet the set standards of excellence.

LOCAL MANUFACTURING

To be the industry leader in indigenous of motorcycle parts.

TECHNOLOGY

To develop and maintain distinct business advantage through continuous induction of improved hard and soft technology.

SHAREHOLDERS

To ensure health and viability of business and the safeguarding shareholder by maximizing profit, payment of regular satisfactory dividend and adding values of the shares.

EMPLOYEE

To enhance and continuously update each members capabilities and education and to provide an environment to encourage practical expressions of individual potential in goal directed team efforts and compensate them attractively, according to their abilities and performance.

CORPORATE CITIZEN

To comply with all government laws and regulations and to maintain high standards of ethics in all operations, and act as a responsible member of community.

QUALITY POLICY Commitment to provide the high quality motorcycles & parts

Right work in first attempt and on time

Maintain and continuously improve quality

Training of manpower and acquisition of latest technology

Safe, clean and healthy environment Market leadership and prosperity for all.PHILOSOPHY AT AHLThe center of AHLS philosophy is based on the companys principle. Underlying the companys principle are two fundamental beliefs:

1. Respect for individuals and

2. Three Joys.

1. RESPECT FOR INDIVIDUALSAt AHL individuals are counted as a member of team that is working for the achievement of specific targets. So here every individual from the top management to the employees is categorized as an important part of the company. Also every associate is honored for his or her efforts and contribution.

Associates at Honda are motivated to think creatively and act on their judgment and initiative.

All members at AHL are equally recognized, no discrimination is made on the basis of race, age, sex, religion, national origin, educational background and social and economic status.2. THREE JOYSAHL believe that each person working, or coming in touch with our company directly or through our products, should share a sense of joy through the experience. This feeling is expressed as Three Joys.

AHLS goal is to provide joys to those who:

Produce their Products.

Sell their Products.

Buy their Products.

CULTURE OF ATLAS HONDADuring my stay at atlas Honda Limited Karachi I have found a unique blend of different valuable cultural variables that includes

There is egalitarian system in the whole organization i.e. there are equal opportunities and chances of progress for all employees.

There is power delegation at every level.

There is lesser power distance between top-level management and lower level management for example each and every employee can have an easy access to even the CEO of organization.

There is room for innovation. Each employee is encouraged to pave a better way for innovation.

There is practical implementation of TQM (total quality management) and continuous improvement which is inherited in Japanese culture , in the form of KAIZEN ( a slight change towards improvement ) and AALA MAYAR.

There exists equality in overall organization, which is well represented by the thing that the lower level workers and top level management even the CEO of the organization wear the same uniform.

Employees are very much cooperative with each other.

Management and employees are open to market challenges.

There are no unnecessary bindings of excessive rules and regulations.

There is effective interdepartmental communication between all the departments.

There are no communication gaps between top-level management and lower lever workers.

There is almost 100% job security for employees, so employees are devoted towards their jobs and are well satisfied with their jobs. There is almost zero percent job turn over.

Customers satisfaction is the major focus of the organization. Customer is king for the organization.

DEPARTMENTSI have visited following departments of ATLAS HONDA LTD, Karachi.

Human resource

Finance

Maintenance

Vender procurement

Production

Information technology

Marketing

HUMAN RESOURCE DEPARTMENT This department has three sections

1. Human resource

2. Administration

3. Industrial relations

HUMAN RESOURCES

This section performs following functions

Recruitment & selection of employees

Training & development of employees

Succession planning of employees

ADMINISTRATION

This section performs following functions

Facilitation of company guests and executives

Employees Mess management

Utilities administration

Miscellaneous administrative activities

INDUSTRIAL RELATIONS This section performs following functions

To build a healthy cooperation between management and workers.

FINANCEAtlas Honda has a well established finance department. It is totally computerized .it has its own system which is prepared by IT department.

Finance department has further following sections.

Finance

General ledger

Costing

Taxation

Sales

Payables

Payroll

FINANCE

This section deals with the

Banking matters

Fund management

Import accounting.

COSTING

It is an important section of finance department, which deals with all costing matters including all material, labor, and overhead costs.

TAXATION

It deals with all tax and custom duty related affairs.

PAYABLES

This section deals with the following activities.

Vender payables

Utility payables

Insurance payables

Tax payables

Club payments

Other payable

PAYROLLSThis section controls the salary system of the organization. All the system is computerized. First of all the attendance of all employees is recorded and at the end of the month salary of all employees are paid after all deductions*

* Tax deductions, absenteeism deductions and all other deductions

GENERAL LEDGERFinally all the transactions are recorded in general ledgers. General ledger for each account is maintained separately. There is a computerized system, which then produce different statements.

VENDOR PROCUREMENT DEPARTMENTAt present, 82 vendors are working with the company.

This department performs following functions

This department is responsible for all the relations and dealing with different vendors.

This department motivates vendors to produce excellent quality and train them to achieve the highest level of quality.

This department also deals with the CKD (complete knock down). This department performs VIP (vendor improvement programe). Under this programe, the department representatives go to the vendors and train them for new methods to produce better quality at reasonable price.PRODUCTION DEPARTMENT

It is very important department as it produces the main product of the company, which will eventually generate revenue. The production department has twelve different shops. Each shop is responsible for different production functions. These shops include

Raw material shop

Cutting shop

Press shop

Dying shop

Welding shop

CKD shop

Switch assembly shop

Tire shop

Engine shop

Washing shop

Final assembling shop

Inventory shop

The productions department is very efficient. The average per motorcycle assembling time is four minutes. The production department of Karachi plant can produce 250 motorcycles per day.

INFORMATION TECHNOLOGY DEPARTMENTAtlas Honda has a sophisticated IT system. All the departments are linked through network. Each and every department is computerized. This computerization has reduced the burdens on employees. Particularly the employees of finance department have different soft wares to support their work. All these soft wares have been developed by companys own IT department. Mostly soft wares are developed in-house and in some special cases outsourcing is also being used.VISION STATEMENT OF IT DEPARTMENTI.T Department is dedicated to provide reliable information base using most modern technology to potential users at all levels. Our professionals individually and collectively, will constantly improve their competitive skills and excel in providing quality service covering all the aspects of the technology.By embarking into the digital age we will accelerate the positive effects and mitigate the challenges as knowledge grows when shared.We will innovate in a research-oriented manner with technologies to create our own future and value added activities for profitable relationships with our stakeholders, thus encouraging intellectual curiosity for our products, service and insight that will help people around the world, shape the ways business and education will be done in future. Our professionals and their competitive skills will be the hallmark, that combined with technology innovation, expert skills and teamwork, will keep us leaders in "CHANGE" to open new doors.MAINTENANCEThis department is responsible for all the maintenance of the whole factory, offices and even the houses of top management. In order to provide effective, efficient and timely maintenance this department has two type of information.

It has Machine wise spare parts report

Machine and equipment list

Seventeen employees are there in this department. Three are engineers and others are workers.

It provides two types of maintenance.

Corrective/ Breakdown maintenance

Preventive maintenance

CORRECTIVE/BREAKDOWN MAINTENANCEThe same department also carries out Emergency/breakdowns of machines & equipments and plant maintenance work. If any of the above problems occur then the concerned department sends a Work Request to this department, then this department resolves the problems according to the Work Request.

PREVENTIVE MAINTENANCE In this maintenance system department tends to provide and follows a comprehensive preventive maintenance program. According to this program the department set a sequence of maintenance activities for all the machines

of different production shops on continuous basis. Some machines are checked on monthly basis and others are maintained on some other fix intervals in order to prevent any breakdown and to streamline the production process.

MARKETING DEPARTMENTMarketing department is divided into three parts on behalf of its functions.

Sale

Service

Spare partsSALE

It is an important division of marketing department. It is the profit centre of the company. It deals with three types of sales.

1. INSTITUTIONAL SALE

The company provides the direct sale to the institutions. Company provides the motorcycle to following institutions.

Police departments

CSD (canteen store department)

TCS (technology communication supplies)

Pesticide companies

Many others

2. INDIVIDUAL SALE

This is the usual sale to the individuals. This usually follows the following path.

Company Dealer

Customer

3. EXPORTS

Company also exports CG 125 to Sri Lanka, Nepal and Bangladesh.

FUNCTIONS PERFORMED BY SALE SECTION

The sale section of the marketing department performs the following functions

Forecasting of sale

Booking of motorcycles through dealers

Managing the payment

Manage the dealership network

The company follows the policy of advance booking which means company first receive the payment and then produce the product according to demand and this is the reason that the company has a very low amount of receivables and most of the receivables are based on the sale made to institutions.

SHOW ROOM

Sale section also deals with the showroom. There is only one company owned showroom in Karachi and this showroom is meant only for the display of motorcycles. In the past the company used to sell the motorcycles from the showroom but now a days company doesnt sell the motorcycles through its showroom. But in some special cases the company sells the motorcycles from showroom to the persons that have relationship to the company employees.

SPARE PARTS

This is another important division of the marketing department. Basically company doesnt consider it as profit center rather a supportive section to produce better customer service. It has separate distribution system and different parts dealers in different regions.

SERVICE

The second major section of the marketing department is service section. The service section deals with

Antenna or service dealers

Warranty and training centre

ANTENNA OR SERVICE DEALERS

These are the authorized dealers of the company. The company provides them autonomy while dealing with the claims and these dealers have the autonomy to replace the defected part without consultation with the company. Company provides two free tunings after the sale of motorcycle. Basic reason for the establishment of these dealers is to satisfy their customer and increase the customer loyalty.

WARRENTY CENTRE

In Karachi the company has a well-established warranty and training centre. this centre handles the service section. Warranty and training section performs the following functions

Deals with the claims

Training to different service dealers

CLAIMS

The company has a policy that customers claims will be settled if these are made within the six months or 1000 km coverage (whatever occurs first) warranty conditions.

TRAINING

Warranty center not only provides training to their antenna and service dealers but also the mechanics of ordinary workshop in order to develop the skilled four stroke mechanics. Company organizes the workshops on regular basis and invites antenna and service dealers from all over the Pakistan to participate in these workshops and training program.MARKETING MIXThere are four elements of marketing

Product

Price

Place

Promotion

PRODUCTAtlas Honda has two basic products

Honda CD 70

Honda CG 125

Both of them are the four stroke motorcycles. Both the products have a good repute in the market and that is the reason that Honda has approximately 63% market share now a days.

The basic reason of the success is the quality maintained by the company throughout its career.

These two models of HONDA are being manufactured in Sheikhupura and Karachi. Each plant has a capacity to produce 250 motorcycles per day, but still the market demand is not being fulfilled.

In order to increase market share marketing department perform following activities

New model

Changes in design

In-house production

NEW MODEL

In order to get more market share atlas Honda has been introducing new models over the time. The latest model was launched by company in 1992-93. Previously there was a small fuel tank but in the new model company introduced a large fuel tank as compared to the previous one. But the company always maintained the quality of its motorcycle.

CHANGES IN DESIGN

There was a great demand from the customers to launch a new model but it is a difficult job to launch a new model so in order to fulfill the customer wants the company has a policy to change the stickers of fuel tank and side covers and some other nominal changes in indicators headlights etc. time by time, in order to satisfy customers needs. But the engine and other main accessories are the same.

INHOUSE PRODUCTION

At the outset of company 90-95% parts were imported from Japan and were assembled in Pakistan. With the passage of time company introduced the concept of localization. Company encouraged the local vendors and suppliers to produce the parts of motorcycle according to the level of Honda international. So in order to maintain the quality, the parts made by local vendors were approved by the Honda international and then they were used in local production. So now Atlas Honda has managed to localize almost 89% of the parts. Still 11% parts are being imported from Japan. Atlas Honda also provides assistance to their vendors to maintain high quality. They send their engineers to check the quality and to train the vendors in order to produce the required qualitative product. This all is done under the head of marketing department.

COMPETITORS BRANDS & MODELS Yamaha

Yb-100

Excellence

Yama-4

Suzuki

SD-110

SD-Flash

Sohrab

JS-70

JC-125 (china)

Pak hero

PH-70

Hero

RF-70

RF-125

Star

DS-70

C-70 (CBU)

Lifan

LF-70

LF-150

Jailing

JH-70 (Remot-Self)

JH-70 (Without)

PRICEAtlas Honda has two products and their prices are as under

Honda CD70 Rs. 58500

Honda CG 125 Rs. 73000

The company uses the single price strategy. It means the product has the same price all over the Pakistan.

Initially Atlas Honda was the only producer of qualitative four-stroke motorcycle in Pakistan. So they were taking the advantage of this monopolistic situation and using the price skimming strategy and were charging higher prices.

Till 17th may 2003 company had the high prices for its motorcycles. Due to these high prices the competitors found a gap and entered into the market with low prices and start capturing market share. After the intense research work Atlas Honda was in a position to reduce prices. The major objective to reduce the prices was to increase the market share and to utilize full production capacity. So company has reduced Rs. 10,000 in HONDA CD70 and almost Rs. 5000 in CG 125.

COMPETITORS BRAND PRICESYamaha

Rupees

Yb-100

61800

Excellence

62500

Yama-4

63300

Suzuki

SD-110

64000

SD-Flash

76500

Sohrab

JS-70

43500

JC-125 (china)62000

Pak hero

PH-70

42500

Hero

RF-70

46000

RF-125

70000

Star

DS-70

40400

C-70 (CBU)

52000

Lifan

LF-70

40000

LF-150

85000

Jailing

JH-70 (Remot-Self)46000

JH-70 (Without)42000 PROMOTIONPromotion mix is

Advertisement

Sales promotion

Personal selling

Publicity

ADVERTISEMENT

Atlas Honda uses the print media as well as electronic media for advertisement. In print media the company gives advertisements in newspapers and it also uses billboards on the road side for the promotion of the product.

On electronic media, company gives their advertisement on GEO channel during hourly news. Company has a contract with AdCom (advertising agency) for all of its advertising activities.

SALES PROMOTION

Atlas Honda also promotes its product through different sales promotional activities.

Company sponsors different functions and activities in main cities.

Company provides rewards and incentives to their dealers on achieving targets. Company send their successful dealers to different trips all over the world.

PERSONAL SELLING

The company does personal selling as well, not to individuals but to institutional customers.

DISTRIBUTIONAtlas Honda gained good market share due to its strong distribution network. For distribution atlas Honda has divided the whole country into two regions.

1. South region

2. North region

SOUTH REGION

It includes following territories

Karachi

(Karachi region covers whole Sindh province)

Quetta

(This covers whole Baluchistan province)

NORTH REGION

It includes following three territories

Multan

(Its includes all lower Punjab cities)

Lahore

(It covers cities from upper Punjab)

Rawalpindi

(It covers Islamabad and NWFP.)

5S DEALERS

This is a new emerging trend set by atlas Honda. Now days the company is emphasizing on 5S facilities to their customers through 5S dealers.

5s stands for the following five facilities

1. Sale

2. Service

3. Spare parts

4. Special sale

5. Second hand sales

SALE

It includes only the sale of new motorcycles.

SERVICE

It includes after sale service to the customers like Warranty claims, Tuning of motorcycles, Repair of motorcycles etc.

SPAREPARTS

Company provides spare parts facility to their customer

.

SPECIAL SALE

It deals with the credit facility. In special sale, the dealer provides the customer with credit facility at his own behalf. Atlas Honda does not provide any support for credit sale.

SECOND HAND SALE

Dealer also deals in second hand Honda motorcycles. The company wants that the customer might not switch to other brand even in second hand motorcycles.

SALES PROFILES

SALES TRENDS

SALES GRAPH

MARKET SHARES2 WHEELER MARKET SIZE IN PAKISTAN

2002-2003

BRAND JULY~JUNE 2002-03

HONDA 117000 60%

YAMAHA 28000 14%

SUZUKI 14000 07%

CHINESE 36000 18%

TOTAL 195000 100%

FINANCIAL ANALYSISIn order to know whether a firm is using its resources efficiently or not, financial analysis is necessary. The information derived from these types of analysis is used to determine the overall financial position of the company. I have calculated certain ratios which will be helpful to determine the existing financial position of AHL.

TYPES OF FINANCIAL RATIOS

Different ratios can be calculated from financial statements. Major categories are as follows. A. Liquidity ratios

B. Leverage ratios

C. Activity ratios

D. Profitability ratios

LIQUIDITY RATIOS

It measures the firms ability to meet its short-term obligations as they come due. If a firm is unable to pay its current liabilities through its current assets it can become insolvent in future. This ratio includes:

1) Working Capital = Current Assets-Current Liabilities

2002 2001

Rs. 347,904,000 Rs. 327,842,000

Working capital of AHL has increased in 2002 as compare to 2001, which is a good sign for the company. It means firm has enough cash to meet its short-term obligations.

2) Current Ratio = Current Assets / Current Liabilities

2001

2002

1.48 1.38

A little bit decrease has occurred in year 2002 but still it is not good as it is above 1.s

3) Quick (Acid-Test) Ratio = Current Assets Inventory / Current liabilities

2001

2002

64.8 % 83.5 %

It also shows an increase as compare to previous year, so AHL has enough cash available to pay all its current assets.

Cash Ratio = Cash Equivalents + Marketable Securities / total assets

2001

200215.7 % 32 %

cash ratio has gone up in 2002. its a good indicator but company can earn more by investing it in some other activities.

LEVERAGE RATIOIt measures a firms long-term solvency problems whether a firm is able to pay its long-term debts or not.

This includes following Ratios:

4) Debt Equity Ratio = Current Liabilities + Long Term Liabilities / Stock Holders Equity

2001 2002

0.57

0.616

This ratio has gone up from previous year. It is a good indicator as this ratio is going up. It means company is making progress.

5) Debt Ratio = Total Liabilities / Total Assets

2001

2002

55%

56%

This ratio is almost same in both years. it means there is stability . this is a good indicator.

ACTIVITY RATIOIt indicates how efficiently management utilizes its assets in generating revenues. It can be measured by:

6) Total Asset turnover = Sales / Total Assets2001

2002

3.16 3.015

Ratio has decreased from previous year.

Fixed Asset turn over = Sales / Fixed Assets

2001 2002

10.46 10.31

It has approximately the same as in 2001. AHL is more efficiently utilizing its fixed assets, as fixed assets are more productive. So it is a good sign.

7) Inventory Turn over Ratio = Cost of Goods Sold / Inventory

2001

2002

7.92 times

10.36 times

There is increase in this ratio, which shows good performance. It shows that company has increased its sales in this year to a great extent.

8) Average age of Inventory = 365 / Inventory Turn Over

2001 2002

45 days

35days

It shows that after how many days inventory is being sold out. It has also reduced to 35 days in 2002, which shows that AHL is making progress. This is because the sales have gone up in year 2002.

PROFITABILITY RATIOS

It measures the overall record of management in generating profit. If a firm does not earn adequate profit, its long run survival will be threatened.

9) Gross Profit Margin = Gross Profit / Net Sales

2001

2002

9.7 %

13.31

This ratio has increased in 2002. It means that management is efficiently controlling its variable cost, and the efficiency of the firm is increasing as the gross profit margin is increasing.

10) Operating Profit Margin = EBIT / Net Sales

2001

2002

4.69 %

7.48%

It has increased in year 2002 it shows, AHL has a good control over its expenditures.

11) Net Profit Margin = Net profit after Taxes / Net Sales

2001

2002

2.5%

4.9 %

Net Profit Margin has also increased. Profit margin is almost double in 2002 than in 2001. it shows that company is on its way to progress. If a company is not able to earn profit, it will be no longer in the industry. It shows the strength of the company.

12) Return on total assets = Net Profit / Total Assets

2001

2002

7.91%

14.76 %

It measures the firms ability to utilize its assets to generate profit. It has been increased in year 2002; it means that the productivity of assets to generate profit has been increased. Same assets are now generating more profit.

13) Dividend payout Ratio = Dividends / Net Profit after Taxes

2001

2002

44 %

40.9 %

Dividend pay out ratio has been reduced but it cannot be a bad indicator always. Profit may be reinvested which is a good approach by management to be successful in long run.

SWOT ANALYSISSTRENGTHS

Atlas Honda Ltd. has following strengths.

QUALITY PRODUCT

Atlas Honda Ltd. has quality products, which is one of its major strengths.

GOOD IMAGE

Company has a good and favorable image in the market and in the mind of customers.

EXCELLENT SERVICES

Company provides excellent services (after sales services) to its customers.

FINANCIAL STRENGTH

Atlas Honda ltd. is financially strong company which is its another strength.

INTENSIVE DISTRIBUTION NETWORK

Company has intensive distribution network (dealers) through out the country which is it strength.

COMMITTED EMPLOYEES

Company has committed and devoted employees that are loyal to the company, which is another strength of the company.

FOUR STROKE TECHNOLOGY

Four-stroke technology is being used in Honda motorcycles that is again another strength of the company. This is the latest technology being used in this industry.

AVAILABILITY OF PARTS

The Spare Parts OF the motorcycles are easily available all over the country which is another strength of the company.

LARGEST SERVICE NETWORK

The company has the largest service network through out the country.

RESEARCH AND DEVELOPEMENT

The company has an R&D department which suggests the production department to use latest technologies.

MARKET RESEARCH

Company has a sophisticated market research system. With the help of this system company is able to get knowledge about competitors activities and market trends.

LATEST PRODUCTION FACILITIES

The company has latest production facilities which increases the production level and quality.

INNOVATIVE CULTURE

The culture of the company is very rich which is supportive for employees to innovate new ways to improve the things.

VENDOR IMPROVEMENT PROGRAM

Company has a vendor improvement program. With the help of this program company is able to convince vendors to produce better quality for the company productions.

LOCALIZATION

Till now company is in a position to localize its productions up to 89%. Almost 89% of parts to be used in production are in house.

LESS EMPLOYEE TURN OVER

Employee turn over is very less at Atlas Honda ltd. this shows that the employees are well satisfied with their jobs.

WEAKNESSESHIGH PRICE

The price of Honda motorcycle is relatively higher than others.

LACK OF NEW MODEL

Company has not introduces any new model with major changes from a long time.

LESSER PROMOTIONAL ACTIVITIES

Company has lesser promotional activities. Usually it do not use electronic media to promote the motorcycle but now company is adopting the strategy to use the electronic media as well for promotion.

OPPORTUNITIES

5S CONCEPT

New concept of 5S is an opportunity for company to develop. With this new concept company has introduced two new S other than sales, spare parts and service. These are special sales and second hand sale. According to this new idea dealers will help the customers to replace their second hand motorcycle with new one and customers can get motorcycle on credit as well.

POOR QUALITY OF CHINESE BRANDS

Chinese brands that are available in the market are not comparable with HONDA motorcycle in quality terms. So the poor quality of Chinese brands is an opportunity for the company as the company believes that people using Chinese brand will eventually switch back towards HONDA because of relatively poor quality of Chinese brands.

GOVERNMENT RULE OF LOCALIZATION

Recently government of Pakistan has passed a rule for the motorcycle industry in Pakistan. According to this rule, within few years only that motorcycle company will be able to sell their brands which will localize its production at a rate of 5% to 10 % each year. HONDA has localized its production up to 89% till now. So the company is leading the industry in this regard. This is an opportunity for company as it has more government support because of this reason (localization).THREATS

MARKET CONDITIONS OF KARACHI

Karachi is most populated city of Pakistan. So it is a huge market for the company. But now a days snatching of new HONDA motorcycle is very common in Karachi. Because of this reason people are reluctant to buy new motorcycle. So it is a great threat for the company.

NEW CHINESE BRANDS

There are more than 15 Chinese brands of motorcycle available in the market. These are competing HONDA in price terms very badly. So it is a threat for the company.

SURVEY(During my stay at Atlas Honda ltd. I have conducted a survey (research) under the supervision of national manager sales and marketing manager.)MARKETING RESEARCH PLAN

Objective:

What is the impact on sales of different brands of Motorcycles after price reduction?

Topics:Dealer Related:

How much price has been reduced?

Why prices have been reduced?

Impact of price reduction on sales?

Is there any chance for further price reduction?

Public Related:

Why do people prefer to buy specific brand of motorcycle?METHODOLOGYI have conducted interviews of dealers and customers based one the questionnaires given here. I have gone to dealers outlets in order to get forms filled by the dealers and went to different markets in order to approach customers.

TARGETED LOCATIONS

My main target market for dealers was Akbar Road and for customers identification, we have chosen Zainab market, Tariq Road, Akbar market and Karachi University.

TIME FRAME

I have spent three weeks for this research project.QUESTIONNAIRESQUESTIONNAIRE (FOR DEALERS)

1. Name of Dealer__________________________________________________

2. Name of dealership/outlet__________________________________________

3. Since how long are you in this industry_______________________________

4. Had you been dealing in other brands_________________________________

Yes

No

5. If yes, what are those brands________________________________________

6. Why have you chosen this specific brand to deal in______________________

7. What strategy have you used to cope with the decreased prices of the motorcycle industry? _______________________________________________________________

8. What was your old price and what is your new price?____________________

9. To what extent would you like to further reduce your prices? ______________

10. How much your sales have been changed?

Previous average sales_______________________________________

New average sales__________________________________________

11. What impact does it has on the prices on second hand motorcycles?

Models

1999

2000

2001

2002

Before reduction____

____

____

____

After reduction____

____

____

____

Difference____

____

____

____

12. How do you see the future of your brand and other brands_______________

QUESTIONNAIRE (FOR CUSTOMERS)

1. Name of respondent____________________________________________

2. Which Motorcycle do you have___________________________________

3. Which Motorcycle did you had before this one_______________________

4. Why have you kept/replaced the previous one _______________________

5. Why have you decided to buy this brand? __________________________

Friends/Relatives suggestion

Your own decision

6. If it was your own decision, why have you decided this brand

Brand loyalty

Better quality

Lesser price

Design

Economy

Others

7. Are you satisfied with this brand?

Yes

No

8. If no, why____________________________________________________

9. If you have to buy another motorcycle, will you choose the same brand again?

Yes

No

10. If no, why____________________________________________________

11. Please rank these brands in preference order (most preferred at # 1 and least preferred at last)

Yamaha ______ Suzuki ______ Pak Hero ______Hero ______

Sohrab ______Honda ______ Super star ______Jinan ______

Star ______Lifan ______ Jialing ______

12. Suggestions for improvement, if any ______________________________

RESULTSSAMPLE SIZE

(I have chosen sample on the basis of random method)

Dealers

=

13

Customers

=

30

DEALERS

Among these 13 dealers, I have chosen four HONDA dealers and nine dealers of other brands including Chinese.

Dealers who have ever dealt in some other brands = 07 (54%)

Dealers who have never dealt in some other brands = 06 (66%)

Dealers who have been switched from HONDA to some other brands = 01

REASONS:

There was no sale of HONDA in Karachi market before price reduction, so he has decided to deal in some other brand.

Dealers who have switched from some other brand to HONDA. = 01

REASONS:

He has felt that in near future HONDA will capture the motorcycle market, so he has left the dealership of VESPA and started dealing in HONDA.

Impact of price reduction on sales of new Motorcycle:

HONDA = Sales have increased by 3 to 4 times after the price reduction.

OTHER BRANDS = Sales have decreased by one half.

Impact of price reduction on the prices of second hand Motorcycle:

Prices of all models of HONDA (from 1999 to 2002 model) have gone down by Rs.7,000 to Rs.10,000.

There is no specific market price for second hand motorcycles of Chinese brands.

Future of different brands:

According to different dealers point of views, the HONDA may remain market leader but the market will be in the hands of the brand, which will be able to provide better quality at reasonable prices and will be able to provide services as well.

Almost more than 80% of Chinese brands will be out of the market in near future just because of poor after sale service.

CUSTOMERSCustomers using HONDA

= 22 (73.33%)

Customers using YAMAHA

= 03 (10.00%)

Customers using SUZUKI

= 01 (03.33%)

Customers using other brands*

= 04 (13.34%)Total number of customers

= 30 (100%)

*All Chinese, Vespa and Kawasaki.

Customers who are satisfied with HONDA = 22(100%)

Customers who are not satisfied with HONDA = 00(0%)

Users of HONDA who want to repeat the same brand = 21(95.45%)

Users of HONDA who dont want to repeat the same brand

= 01(05.55%)

ReasonsThe person has told that he will not repeat Honda because he want to have some new motorcycle at lower price, so he will like to have some Chinese motorcycle because of its low price.

Ranking of different Brands by Customers

Position

Brand

Number one

=

HONDA

Number two

=

YAMAHA

Number three

=

SUZUKI

SUGGESTIONS BY CUSTOMERS:

During this research project we have found some major demands from customers. Few of them are as follows.

Customers are very happy because of the price reduction by HONDA. But customers still want further price reduction by the company.

It is a major demand from the customers that now company should introduce some major change in model.

Customers want the company to introduce some new models in addition with CD 70 and CG 125.

FINDING AND SUGGESTIONS

I have found the following things important during this project

The company should try to improve the relations with dealers, as some dealers are not satisfied and happy with some of the companys policies.

It is a better time to introduce some new model. There is an intense competition in the market so major change in model will pave a better way for the company not only to maintain the existing shares but also to increase the number of market share.

Company should increase its capacity in long run and in short run company should start night shifts to fulfill the increasing market demands of their products.

Company should develop proper measures to eliminates the rumors from the market regarding the company and its dealers

Company should control the prices of the motorcycle in the markets. We have observed some dealers at our own, selling the motorcycles to the customers above the market price. Although the company has already a system to control the price but it is not sufficient.

EMBED Excel.Chart.8 \s

EMBED Excel.Chart.8 \s

EMBED Excel.Sheet.8

42

_1125267487.xlsChart2

430731552458597

577912033078121

628282723690064

8000037000117000

CD70

CG125

TOTAL

ATLAS HONDA LIMITED SALE 1999 ~ 2003

Sheet1

ATLAS HONDA LIMITED

MAJOR MARKETING ACTIVITIES PLAN 2003-2004

S.NOACTION2 0 0 3 - 2 0 0 4

1QTR.2QTR.3QTR.4QTR.

1Credit Sales through Sales dealers and

Consumer Finance Scheme.

2Improve quality of dealership and

increase 5s dealership

3Dealers Training and Customer

Education Program

4Media Campaign

6Mega Hoardings & Flex Signs

7Promotional and sports activities in all

regions.

8Mechanics Factory Visit

Sheet2

MARKETING PERFORMANCE

HIGHLIGHTS OF 2002 / 2003

SALES

CATEGORY2001/20022002/2003UNITS%

MARKET768001018002500033

INSTITUTION840011400300036

POLICE2300--2300-

EXPORT25003800130052

TOTAL900001170002700030

Sheet4

Sheet4

430731552458597

577912033078121

628282723690064

8000037000117000

CD70

CG125

TOTAL


Sheet5

HONDAYAMAHASUZUKICHINESE

2001/0290,06422,0248,0628,000

2002/03117,20928,00014,00036,000

Sheet5

2001/02

2002/03

ATLAS HONDA LTDSALES TREND2001/02-2002/03

Sheet3

ATLAS HONDA LIMITED

MARKETING ACTION PLAN 2002-2003

S.NOACTION2 0 0 2 - 2 0 0 3


1HOLIDAY TRIP FOR DEALERS

2CONSUMER FINANCE SCHEME

3MMC CD70

45'S DEALERSHIP

54-STROKE MECHANICS FACTORY

VISIT

6DEALERS INCENTIVE SCHEME

FOR CG125

7PRICE REDUCTION

8MEDIA CAMPAIGN ( GEO TV )

_1126714824.xlsSheet1

ATLAS HONDA LIMITED


S.NOACTION2 0 0 3 - 2 0 0 4







Education Program

4Media Campaign



regions.


Sheet2



SALES

CATEGORY2001/20022002/2003difference%

MARKET768001018002500033


POLICE2300--2300-

EXPORT25003800130052

TOTAL900001170002700030

Sheet4

Sheet4

430731552458597

577912033078121

628282723690064

8000037000117000

CD70

CG125

TOTAL


Sheet5


2001/0290,06422,0248,0628,000

2002/03117,20928,00014,00036,000

Sheet5

00

00

00

00

2001/02

2002/03


Sheet3

ATLAS HONDA LIMITED


S.NOACTION2 0 0 2 - 2 0 0 3




3MMC CD70

45'S DEALERSHIP


VISIT


FOR CG125

7PRICE REDUCTION


_1125266170.xlsChart1

90064117209

2202428000

806214000

800036000

2001/02

2002/03


Sheet1

ATLAS HONDA LIMITED


S.NOACTION2 0 0 3 - 2 0 0 4







Education Program

4Media Campaign



regions.


Sheet2



SALES

CATEGORY2001/20022002/2003UNITS%

MARKET768001018002500033


POLICE2300--2300-

EXPORT25003800130052

TOTAL900001170002700030

Sheet4

Sheet4

430731552458597

577912033078121

628282723690064

8000037000117000

CD70

CG125

TOTAL


Sheet5


2001/0290,06422,0248,0628,000

2002/03117,20928,00014,00036,000

Sheet5

00

00

00

00

2001/02

2002/03


Sheet3

ATLAS HONDA LIMITED


S.NOACTION2 0 0 2 - 2 0 0 3




3MMC CD70

45'S DEALERSHIP


VISIT


FOR CG125

7PRICE REDUCTION


Documents

Atlas Honda