Honda Atlas Cars

Executive Summary

Honda atlas Pakistan Ltd was created by the joint venture of Atlas Group of Pakistan

and Honda Motor Company Japan. The first car rolled out from the plant in 1994,

since then Honda Alas has been growing in terms of production capacity, market share

etc. Honda is a strong brand name worldwide and it is differentiated by very high

quality standards, technology, safety standards and advanced designs. In Pakistan

Honda Atlas has successfully maintained its brand image hence they are the only local

manufacturers who are concentrating on these factors other than only making profits

like its competitors. Market share of Honda Atlas is 11%. The customers they make

are very loyal so there is an increasing trend in the market share since the company

started.

Pakistan's automobile industry has flourished more than four times in last six to seven

years and the reason behind that was increasing demand. All the companies are

successfully fulfilling this demand successfully. But currently due to the political

instability, global recession, war on terror and some other factor our economy had

been damaged a lot, due to which buying power has decreased a lot. It resulted in the

decreasing demand of automobiles which affected the local car producers. Moreover

we have analyzed the company thoroughly, internally and externally. We have

analyzed the financial position its competitors and finally the suggested strategies are

given to increase sales and improve the weak areas.

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Acknowledgements

We would like to thank our instructor Mr. Tariq Hamid for providing us knowledge

and support to make this project, then our TA Miss Mehreen Rehmani who kept us

motivated from time to time. We are also thankful to our friends who provided us

support for many different obstacles we faced.

We would also like to thank Mr. Sami Shafi "Senior Manager after sales division" for

providing us very important information.

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Company Background & Milestones

The Honda Atlas Cars Pakistan Limited is a joint venture between two groups:

Honda Motor Company Ltd, Japan : Primarily known as the manufacturer of

automobiles and motorcycles was created by Soichiro Honda. Honda Motor Company

Limited is perhaps best known as an automaker. It is the third largest automaker in

Japan but the company has its roots in motorcycles, and is the world's top motorcycle

manufacturer. Its best market is in the United States, where the majority of its sales

are generated. Honda's automobile product line accounts for approximately 90 percent

of its sales, and includes well-known U.S. top-sellers such as the Accord, Legend,

Civic, Prelude, and the luxury Acura. The Accord is the second most purchased car in

the United States, although it actually ranks first on the country's list of most stolen

(and thus, "in demand") vehicles. Honda also produces motorcycles such as the Super

Cub, Foresight, and Shadow 750. Furthermore, the company's power products

division makes other items that bolster annual sales, such as agricultural and

industrial-use machinery, portable generators, outboard motors, and all-terrain

vehicles.

Atlas Group , Pakistan : The Atlas group was founded by Mr. Yousaf Sherazi, a

former Income Tax official and journalist in 1962. The first company set by the Atlas

Group was Sherazi Investments (Pvt) Limited and since then, there is no looking back.

The East Pakistan tragedy, however, nearly crippled Sherazi but he never lost hope

and went out forming numerous joint ventures with leading Japanese concerns like

Honda. Atlas-Honda today is a name to reckon with in country’s engineering sector

and associated with this just one name are hundreds of vendors. He holds stakes in

insurance, financial services, information technology, leasing, warehouses, office

equipment, motor cars and motorcycle-assembling units, besides running a renowned

firm that manufactures batteries. Sherazi owns the Atlas Investment Bank too. The

Federal Budget 2004-05 is perhaps the only budget in country’s history that has hit the

very influential car manufacturers on the head, otherwise people like Yousaf Sherazi

have always managed to dictate terms where it matters. The Atlas Group owns no less

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http://en.wikipedia.org/wiki/Pakistan

http://en.wikipedia.org/wiki/Atlas_Group

than seven companies quoted on the stock exchanges of Pakistan. The group’s assets

are believed to have touched the Rs 15 billion mark and so have the sales. Below are

the businesses under Atlas Group:

Honda Atlas Cars Pak Ltd was incorporated on November 1992 and a joint venture

agreement was signed on August 1993. The ground breaking ceremony was held on

17th April, 1993 and within a record time of 11 months, construction and erection of

machinery was completed. Official inauguration was done by President of Pakistan,

Sardar Farooq Ahmad Khan Leghari. Mr.Kawamoto, President of Honda Motor

Company Limited Japan was also present to grace the occasion. The company is listed

on Karachi, Lahore and Islamabad Stock Exchanges on 14th July, 1994. Car bookings

started at six dealerships in Karachi, Lahore and Islamabad. Since then the company

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http://en.wikipedia.org/wiki/1994

http://en.wikipedia.org/wiki/Islamabad

http://en.wikipedia.org/wiki/Lahore

http://en.wikipedia.org/wiki/Karachi

has twenty one 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare

Parts) Pit stops network in all major cities of Pakistan. Since the commencement of

production in 1994, the company has produced and sold more than 150,000 cars till

Oct, 2008. All dealerships are constructed in accordance with the standards defined by

Honda World over. Mainly parts are imported from Japan while some percentage of

local parts conforms to the government's policy. Local vendors are continuously

patronized to develop parts locally. The quality of local parts is thoroughly checked to

meet stringent international standards. The company also regularly conducts Service

Campaigns, to facilitate customer's need for service. This has given the customers

absolute confidence in the vehicles, clearly evident from the ever increasing sale

volumes. It is the constant endeavor of Honda Atlas Cars to achieve highest customer

satisfaction. Honda Atlas Cars is committed to meet customer expectations, and to

provide good value for money. Currently they are offering four different vehicles;

each differentiates itself in its class.

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PART 1

THE BUSINESS

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Actual Vision Statement

Focusing on “satisfaction” (customers’, associates’ and shareholders’) with

challenging spirit and flexibility, we are dedicated to supplying latest generation cars

with advanced technology, greater fuel efficiency and competitive prices, along with

friendly and efficient after sales back up, maintaining “quality” as core of all

activities.

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Proposed Vision & Mission Statement

Vision Statement:

"Our vision is to become the market leader and to earn respect by continuous

improvement driven by the integrity, teamwork, and innovation of our people"

Mission Statement:

"We focus on supplying the latest generation cars equipped with advanced

technology, and competitive prices, along with efficient after sales back up to the

educated and elegant class of Pakistan. We will meet customer expectations of

highest quality with the help of our motivated staff while keeping in mind our social

and environmental responsibilities. We are committed to act in the highest ethical

manner and respect the rights and dignity of others. Satisfaction of our

shareholders is also one of our main objectives which will be fulfilled by financial

stability"

Customers

Products and services

Markets

Technology

Concern for survival, growth, and profitability

Philosophy

Concern for public image

Concern for employees

Description of Business

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The Company's principal activities are to manufacture and sell passenger cars and

spare parts. First car manufactured came out of the manufacturing plant in 1994. Since

then company has made its unique image and its target market. The manufacturing

plant is located near Manga Mandi on Multan road which is 42 km from Lahore.

Basically the company only manufactures cars at its plant. Parts are mostly

imported from Honda Motor Co Japan (which is partner in Honda Atlas Cars) and

some are locally manufactured or bought from local manufacturers. The technology

and designs are also imported from the same Japanese company. After the

manufacturing these cars are sold through a sophisticated dealership network, which

stretches throughout the country. These dealerships are 3s and 2s; the staff working in

dealerships is first trained by the company. All kind of services are provided by these

dealers.

This map shows the dealership network of Honda Atlas cars. Mainly all these

dealerships are located in Punjab, which is not going in the favor of the company. A

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major area on map does not show any dealer. Vehicles produced by the company have

made their own market.

Products/Services:

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There are 4 different types of vehicles which are being sold by the company among

which there is one SUV. Two from them are being manufactured here in Pakistan and

other two are being imported directly from Japan. All four products are described as

follows:

Honda City

Honda city is midsized family sedan with a 1300cc engine. It is basically being

targeted to the middle class who use it as their first car and indirectly it is also targeted

to upper middle and upper class that use this vehicle as their 2nd or 3rd car.

Recommend to people who want simple, economical and reliable transportation. It is

more popular in female drivers. This car is manufactured here in Pakistan. Some

strengths of this car as follows:

Very elegantly designed

Smaller engine resulting in more fuel efficiency

Spacious inside room

Class leader in Pakistani market

Honda Civic

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Civic is also manufactured here in Pakistan. This is also a midsized family sedan vary

spacious. It is targeted to the upper middle class who use it as their first car and the

upper class that use it as their 2nd or 3rd car. In the total sales of Honda Atlas this car

contributes major portion and it is the Honda's most popular and favorite car. When

company started in Pakistan this was the first and only car being manufactured and

sold to the Pakistani market. It also faces a very strong competition but due to its

unique features it is also very popular in Pakistani market. It is mainly bought by the

educated, decent and young people. People between 25-35years are the main

customers of this car. Some unique features or strengths are as follows:

Very advance in technology comparing with its competitors

fuel efficient

Safety standards are very high

More accessories and features are offered than any of its competitors

Honda Accord

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This car is imported from Japan and it is manufactured by Honda Motor Co (partner in

Honda Atlas Cars). It is heavily priced according to the Pakistani market. It is targeted

to the upper class of Pakistan. Its share in the company's total sale is very less and the

reason behind is that the market for this car in Pakistan is very less; buying power is

very low in Pakistan.

Intelligently designed

Extremely advanced technology

Beautiful and comfortable interior

Spacious room

Extremely high safety standards

Fuel efficient

Honda CR-V

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This is an only SUV made by Honda. It is also imported from Japan from Honda

Motor Co. price is normal according to the class but in Pakistan this class is less in

quantity and this vehicle is very weak against its competitors. It does not suit the

Pakistan's environment. Its share in the total sales of Honda Atlas Cars is the lowest, it

hardly contributes.

Target Market/Customer Profile

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Market Segmentation:

Honda Atlas Cars has segmented their market according to the product so that they can easily and affectively target them. They have divided it demographically and psychographicaly:

Income

Social class

Occupation

Targeting:

They target their each vehicle differently because of the different market for each of them. Like city has a different target market and accord has different target market.

Honda City

Geographic:

Region--------------------------------------------------Pakistan, mainly Punjab and Sindh

Demographics:

Gender----------------------------------------------------most female and males

Income----------------------------------------------------minimum Rs 150000

Occupation-----------------------------------------------any occupation

Psychographic:

Social class-----------------------------------------------Middle and upper class

Lifestyle---------------------------------------------------believers, achievers and strugglers

Honda Civic

Geographic:

Region----------------------------------------------------Pakistan, mainly Punjab and Sindh

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Demographics:

Gender----------------------------------------------------majorly males, females

Income----------------------------------------------------minimum Rs 200,000

Occupation-----------------------------------------------any

Psychographic:

Social class-----------------------------------------------upper middle and upper class

Lifestyle--------------------------------------------------fulfilled, believers and achievers

Honda Accord

Geographic:

Region---------------------------------------------------Pakistan, mainly Punjab and Sindh

Demographics:

Gender---------------------------------------------------mainly males, females

Income---------------------------------------------------minimum 450,000

Occupation----------------------------------------------any

Psychographic:

Social class----------------------------------------------upper class

Lifestyle-------------------------------------------------fulfilled, believers, achievers, proud

CR-V

Geographic:

Region---------------------------------------------------Pakistan, mainly Punjab and Sindh

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Demographics:

Gender---------------------------------------------------mainly males, females

Income---------------------------------------------------minimum 450,000

Occupation----------------------------------------------any

Psychographic:

Social class----------------------------------------------upper class

Lifestyle-------------------------------------------------fulfilled, believers, achievers, proud

Business Location

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The factory is located on Multan road in Manga Mandi which is 42 km from Lahore.

It is constructed on a large area and includes the building and test driving track of

about one km. this track is divided in different segments for different tests.

Among other offices main registered office is on Mcloed road Lahore, one more is

also in Lahore in DHA. One is in Karachi. Exact addresses with contact numbers are

given below:

Registered Office1-Mcleod Road, LahorePh: (042) 7225015-17Fax: (042) 7233518Factory43 Km, Multan Road,Manga Mandi, LahorePh: (042) 5871100-09Fax: (042) 5877711-12E-mail: [email protected]

Regional OfficesLahore Office293-Y, Commercial Area, DHAPh: (042) 5692644-45 Fax: (042) 5892437Karachi OfficeC-160, KDA Scheme No.1Street H, Karsaz RoadPh: (021) 4854973 Fax: (021) 4854974Web Sitewww.honda.com.

Organizational Charts

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Overview of old structure

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Corporate governance

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The Board of DirectorsMr. Yusuf H. Shirazi - Chairman

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Mr. Atsushi Yamazaki - President/CEO

Mr. Aamir H. Shirazi

Mr. Fumihiko Ike

Mr. Jawaid Iqbal Ahmed

Mr. Masahiro Takedagawa

Mr. Yukimitsu Miyagi

Company Secretary

Mr. Sardar Abid Ali Khan

Chief Financial Officer

Mr. Asad Murad

Executive Committee

Mr. Atsushi Yamazaki

Mr. Sardar Abid Ali Khan


Audit Committee

Mr. Aamir H. Shirazi - Chairman

Mr. Atsushi Yamazaki

Mr. Fumihiko Ike

Mr. Jawaid Iqbal Ahmed


Mr. Imran Farooq - Secretary

Auditors

M/s A. F. Ferguson & Company

Chartered Accountants

Legal Advisor

Cornelius, Lane & Mufti

Bankers

Askari Commercial Bank Ltd.

Atlas Bank Ltd.

Bank Alfalah Ltd.

Bank of Tokyo-Mitsubishi UFJ, Ltd.

Citibank N.A.

Deutsche Bank AG

Habib Bank Ltd.

MCB Bank Ltd.

National Bank of Pakistan

Royal Bank of Scotland

Soneri Bank Ltd.

Standard Chartered Bank (Pakistan)

Ltd.

United Bank Ltd.

Goals

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Create environment friendly attitude among associates.

OPERATING PRINCIPLES

Always keep the deadline.

Never make excuses.

Teamwork.

To achieve best customer satisfaction.

Recognize the factors which impact on the environment, resulting from activities,

products and services.

Operate in compliance with relevant environmental laws, regulations and other

requirements that apply to their activities.

Be a good corporate citizen; assume a responsible role in community.

Design facilities and conduct operations in a way that avoids risk to human health,

safety and the environment.

Objectives

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Meet the highest standards of quality.

Proceed always with ambition.

Develop fresh ideas, and make effective use of time.

Enjoy your work and encourage open communications.

Strive constantly for a harmonious flow of work.

Create ideal working environment for continuous development of product and

personnel.

Provide adequate return to share holders.

Follow 3S spirit i.e. small, smart and speed.

Believe in 3A “Hands on Approach” i.e. be on Actual Spot, look at the Actual Spot

and confront the Actual Situation.

There can be no production without safety.

Productivity: With safety and quality each of us will strive to excel the

performance in all fields of our activities i.e. Production Divisions, Marketing &

Planning, After Sales Service, Finance, Import, Purchase & Logistics and Human

Resource & Administration etc.

To hire young, fresh, energetic and active associates, to meet the existing and

future workforce requirements and providing its associates maximum opportunities

for internal mobility through personal training and development to enable them to

take higher positions.

Company Performance:

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During the year under review, the upward exchange rate movements were enormous

as Japanese Yen depreciated by 30.5% during April 08 to March 09and US Dollar by

28.2% in the same period. The impact of rupee depreciation was further aggravated by

the rising inflation and putting pressure on cost structure of our products. The

Company passed on minimum possible impact to the New City price.

Due to the factors mentioned above, the company suffered loss after tax of Rs 401.8

million during the year against the profit of Rs 75.0 million in the last year. The net

sales for the year were Rs 17,055.1 million against Rs 14,715.5 million of last year.

The administrative and selling expenses were Rs 362.2 million against Rs 348.8

million in the same period of last year. Other operating expenses were Rs. 64.5 against

Rs. 23.6 last year. Taxation was Rs. 217.1 against 11.3. Last year. The company is

focusing on cost effective measures to reduce the running cost of business and to

improve sales.

Industry/Market Analysis

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Economic Characteristics:

In general Pakistan did not face a major setback from the global crisis. The economic

hardship by the country has mostly been the result of domestic issues internal strife,

political instability and poor governance has slowed down the economy. As a result

the GDP growth rate for the year 2008-09 initially projected at 5.5 percent has now

been revised downward to 2.5 percent compared to 5.8 percent of last year. The major

pressure in the economy has stemmed from inflation. The SBP has projected inflation

to slow down in the final quarter of FY08-09. Controlled inflation may usher in lower

interest rate and improved liquidity, so necessary for growth of industry. IMF has

disbursed the first two tranches of $ 3.1 billion. The World Bank and ADB have

pledged support and an independent overseas support group, Friends of democratic

Pakistan have decided a support of $ 5.28 billion. Eased out political situation in the

country will help in an improvement in business environment. The stock market has

exhibited a growth of 36 percent post March 16. Foreign exchange reserves have

crossed US $11 billion. The commodity prices are reflective of an inherent demand in

the economy. What are needed are right policies that reassure economic dynamism.

Key Success factors:

Honda is a very strong brand name in terms of quality and new technology. Secondly

their good image is because of winning several awards and due to the production of

green vehicles. They won the best quality award of Asia.

The key success factors of Honda Atlas Cars Pakistan Ltd are it's mainly its unique

selling propositions. Honda Atlas has a very unique image in Pakistan when ever

name Honda comes in your mind u think of style, elegance, technology and comfort.

Honda is the only manufacturer in Pakistan which is making vehicles with very high

standards of quality and passengers safety. No other manufacturer is focusing on these

important factors. Their cars are equipped with state of art technology features and it’s

a complete car you just need to register it. On the other hand if you buy for instance a

Toyota you will have to change its tires, need seat cover floor mats etc but Honda are

focusing on these factors and their main objective is customer satisfaction. Their

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vehicles are very environment friendly or you can call green vehicles. Honda is

always the first company in Pakistan to introduce new technology in their vehicles.

Weather its engine or brakes they always set high standards for their competitors.

Highly qualified and experienced staff is hired and the structure is very efficient.

Pakistani and Japanese cultures have been blended to form a professional team of

dedicated specialists. Mostly the production department is under Japanese personnel

and other are under Pakistani personnel. There is no discrimination between the

employees at any level. Even the chairman Mr.Shirazi himself has no secretary and he

sits with his managers. There is no communication barrier between them even from

the lowest level.

Honda has made many loyal customers since the first car rolled out from the

assembly line. People who own Honda in Pakistan always want to buy Honda. These

all are the key success factors of the company and due to them they have captured a

lot of Pakistani market in very short time.

Trends and Opportunities:

The current economic recession has hit the world economy generally and automobile

industry particularly, with some of the world renowned companies facing hardships.

However, Honda Motor Company Japan is among the few automakers with positive

bottom line of 162 billion Yen in the Year ending March 2009. The automobile

industry depends on economic uplift, availability of auto financing at favorable terms

and sustainable consistent industry friendly policies. In the recent past, with the help

of these factors, the automobile production surged four times from 39,167 units in the

year 2002 to 164,340 units in 2007. Responding to the increasing demand and the

government target to produce 500,000 units by the year 2011, all OEMs expanded

their production capacity to meet the target set by the Government.

However, following the emergence of financial crises in early 2008 and increase in

interest rates, the financial institutions tightened the auto financing policy, which

coupled with the upward surge in exchange rates have pulled the auto sector down to

four years ago i.e. 2004-2005 level. In addition to above, the auto industry had to face

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the challenges of un-favorable budgetary impacts of increase in sales tax by 1%, levy

of Federal Excise Duty of 5% and additional taxes at the time of registration of

vehicles. In addition, 35% cash margin on imports was also levied, though reversed

later. All these factors resulted in sharp decline in auto production in all segments of

the industry. The quarterly analysis of the production data of the industry is as under:

Following the inflationary and exchange rates impact, the prices of all vehicles were

increased during the year, which contracted the demand of locally manufactured

vehicles. However, unlike the previous years, 21.7% decline was witnessed in the

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category of 1300cc & above and in the category of 1000cc; it was 50.5% over the

corresponding period last year. In the category up to 1000cc the decline was 32.3%

and 43.7% in Dec-08 and Mar-09 quarters respectively. Other sectors of auto industry

also witnessed decline. During the year under review, your company produced 12,780

units against 15,080 units in the corresponding period last year. The sales were 12,502

units against 15,604 units of last year. The decline in production and sales was due to

overall decline in the 1300cc & above category segment by 21.7% and 24.8%

respectively. It however combined with the phase out period of old City when only

Honda Civic 1800cc was produced and sold.

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5 Forces Analysis (Porter):

Possible development of substitute products:

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Rivalry among competing firms in the industry

Potential entry of new companies

Potential development of

substitute vehicles

Bargaining power of

supliers of parts

Bargaining power of

consumers

The possibility of the development of substitute product is high because other

competitors like Toyota, Nissan or Mitsubishi can adopt the strengths of Honda

products. If they did so then there will be a great threat t the company and especially if

Toyota makes these changes Honda can lose its market share because Toyota's

strengths will add in those changes. Currently it is happening Toyota has increased its

market share since the launch of its new Corolla and there is a decrease in Honda's

share. This new corolla is equipped with modern technology and accessories like civic

has but Toyota is stronger brand name then Honda so some people shifted but due to

customer loyalty Honda still managed to reduce this threat. To avoid this threat Honda

should focus on the following factors:

Maintain its quality.

Maintain the image of always being the first one to introduce new technology and

features.

Give more focus on customer satisfaction to make loyal customers.

Increase after sale services to again make more loyal customers.

Potential entry of new competitors:

Potential entry for new companies is also very high and the Pakistani market has a lot

of opportunities and companies already present are generating a lot of revenues. There

are no barriers for any new company from government. The customers are also

looking forward for new entrants to enter in this market. In past many new companies

entered in this market but some could not sustain the Pakistani market. Every new

entrant is a threat to Honda Atlas Cars Pak ltd. The policies of government are

attractive for any company to enter this market. So in order to avoid any direct or

indirect threat from any new entrant company should:

Maintain the good image of its brand name.

Make changes in strategies and increase market share.

Bargaining power of consumer:

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Bargaining power of customers is high in the Pakistan's market. There is intense

competition. Especially due to the imports of used vehicles a large no of customers

have shifted. If a consumer is not satisfied from any vehicle he can easily shift to the

substitute.

Bargaining power of suppliers:

Bargaining power of suppliers is very high because a lot of companies here in

Pakistan are importing a lot of parts from Japan, Korea etc. and they cannot shift to

any other supplier because if it's Honda Atlas they have to import parts from Honda

Motor Co Japan, no one else can provide those parts. Some parts which are being

provided by the local suppliers or any company other than Honda Motor Co can be

bought from its substitute company, so in the case of those suppliers their bargaining

power is low. But in Pakistan all the manufacturers are importing most of the parts

from those parent companies so overall bargaining power of suppliers is high.

Rivalry among competing firms:

Rivalry among competing firms is very strong especially between the market leaders.

Competition between Honda Atlas, Toyota Indus, Mitsubishi, Nissan Pak Suzuki etc

is very high weather they are in direct or indirect competition. These companies are

spending a lot to remain in competition. Their strategies change time to time

according to the level of competition.

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Management & Organization

SWOT analysis: (Honda Atlas Cars Pak Ltd)

Before analyzing the key internal and external factors we thoroughly studied the

overall presence of the company starting from the history, analyzing products,

management till the financials and in the end we have listed some most important

factors of the company which will help us in making strategies and analyzing

competitors.

Strengths

1. Strong brand name and good image:

Honda is a very strong brand name in terms of quality and new technology. Secondly

their good image is because of winning several awards and due to the production of

green vehicles. They won the best quality award of Asia.

2. Very strong financial background of the owners of the company:

The Atlas group of Pakistan is linked with many different businesses and they are

financially strong, the other partner is Honda Motor Co Japan and it is a very large

company. So they both can sustain heavy losses and they can also invest a huge

amount any time when needed.

3. Loyal customers:

Honda has made many loyal customers since the first car rolled out from the

production plant. People who own Honda in Pakistan always want to buy Honda.

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4. Environment friendly vehicles:

Honda is producing green vehicles which mean environment friendly vehicles. Honda

launched the country's first Euro-3 complaint car.

5. Strong management structure of the company:

Highly qualified and experienced staff is hired and the structure is very efficient.

Pakistani and Japanese cultures have been blended to form a professional team of

dedicated specialists. Mostly the production department is under Japanese personnel

and other are under Pakistani personnel.

6. Always first one to introduces new technologies:

Honda is always the first company in Pakistan to introduce new technology in their

vehicles. Weather its engine or brakes they always set high standards for their

competitors. In Pakistan only Honda meets the safety standards, there are no standards

set by the government but in comparison Honda is the safest vehicle.

7. High quality products:

A lot of importance is given to the quality control department; the personnel in this

department are highly qualified. In the production of their vehicles they give a lot of

stress on quality. Each vehicle before delivery to the customer is completely tested on

the tracks of the test track of their production plant.

8. State of art production plant:

Production plant is equipped with state of art machines and its one of its kind plant in

Pakistan. There is a 1 km long testing track which is different in different segments

according to the test.

9. Attractive after sale services:

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Customers are offered with attractive services like warranty of the vehicle, free

checkups.

10. Vehicles offered with more features and accessories, in short its complete car.

Vehicles delivered to the customers does not need any addition like tire changes, floor

mats etc they have more features including CD changers, alloy rims, etc. Vehicles are

fuel efficient, have greater stability, new generation engines, attractive colors and

safest passenger safety features offered in Pakistan.

11. No Hierarchal discrimination in the staff:

There is no discrimination between the employees at any level. Even the chairman

Mr.Shirazi himself has no secretary and he sits with his managers. There is no

communication barrier between them even from the lowest level.

Weaknesses

1. Company is financially weak:

From last 3 years company's income is decreasing, expenses are increasing heavily.

Liabilities have also increased and sales have decreased a lot. In 2006 profit was

705294 thousand rupees and in 2007 and it kept decreasing until in 2008 there was a

profit but not much then again in first quarter of 2009 there was a loss of (2131114)

thousand rupees.

2. Low resale value of vehicles:

Resale value of vehicles made by Honda is comparatively low. Only civic and city

have improved a lot in last few years but still people don’t pay a lot for a used Honda.

There are many factors due to which resale is low.

3. High maintenance cost of vehicles:

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High maintenance cost is due to expensive spare parts and high labor cost of the

mechanics. Due to the Chinese spare part market the cost have decreased a lot but the

company always tells the customers to use expensive genuine parts.

4. Vehicles do not suit the Pakistani environment completely:

Road network in Pakistan is not very good and people have less awareness about these

vehicles which include mechanics. Especially in remote areas and a large numbers of

Honda customers drive their cars in those areas, vehicles are delicate and by driving in

those areas they need more maintenance. Most importantly these vehicles are not very

successful on CNG and in Pakistan very major part of vehicles run on CNG.

5. Unavailability of spare parts in the market:

Except few large cities where there are dealers of Honda spare part is not easily

available in the market and if it is available then there is a doubt that it may not be

genuine part.

6. Small network of dealers:

Network of dealers is very small they are not covering the whole region and many

people don’t buy Honda because of this reason. Dealers provide maintenance services

by their trained staff and where this facility is not provide people look for the

substitute. Mainly the dealers are located in Punjab.

7. Vehicles require Honda trained mechanics and modern gadgets for maintenance

and repairs:

Where they are not available customers have to travel to their nearest dealer for this

purpose. Because not every mechanics can resolve the problem in the vehicle, they

computerized electronic vehicles even for engine tuning you need a computerized

system. So where these facilities are not available customers look for substitutes.

8. They have limited their target market:

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Honda is only targeting their vehicles in few large cities while the other major part of

the market is not being targeted which includes the remote areas and small cities

which collectively represent a major part of the market.

Opportunities

1. Automobile production surged four times from 39,167 units in the year 2002 to

164,340 units in 2007.

The automobile industry depends on economic uplift, availability of auto financing at

favorable terms and sustainable consistent industry friendly policies and in the above

mentioned time Pakistan these all factors increased a lot.

2. Auto financing:

Auto financing has dramatically increased the sales of all the companies. After the

start of auto financing demand increased hugely.

3. Government has set the target of 500,000 units to be produced by 2011.

This target is given by the local auto makers by the government in order to meet the

demands.

4. Due to the support of IMF, World Bank, ABD and overseas friends group's

financial support, economy will rise:

IMF has disbursed the first two tranches of $ 3.1 billion. The World Bank and ADB

have pledged support and an independent overseas support group, Friends of

democratic Pakistan have decided a support of $ 5.28 billion. Foreign exchange

reserves have crossed US $11 billion. Due to all these factors economy will rise and

demand of cars will automatically increase.

5. Decrease in the interest rate for auto financing:

Last year it was around 19% and currently it is 15%.

6. Changing life style of people:

37

Lifestyle of people is changing with time, every member of family needs a separate

vehicle, more trend of working women is seen so they also need a car.

7. Contract with government or private institutions, motorway police etc:

They can make contracts with motorway police, traffic police, government officer's

vehicles etc in order to sell their car to them in large quantity.

8. Increasing income levels:

If we analyze the last 10 years the income level of people have increased alt, buying

power have increased between 2002 and 2007 demand of cars increased about 4 times.

Currently we are passing from a recession but it will not remain forever in further 2 or

3 years economy will come back on rise and demand will increase.

Threats

1. Increase in the value of yen:

Around 2 years back 0.55 yen was equal to 1 rupee currently 0.95 yen is equal to 1

rupee. Due to increase in the value of yen the expenses of the company already have

increased dramatically, which lead to increase in the prices of vehicles. But company

cannot increase prices a lot.

2. Strong competition:

Their competitors are giving Honda a very hard time. Toyota Indus Motors and Pak

Suzuki specially have captured the major part of the market. Their resale value is also

excellent.

3. Dramatic decrease in the demand of cars:

21.7% decline was witnessed in the category of 1300cc & above over the period of

last year. The demand of total passenger decreased by 36.2% in 2007-08.

4. Variation in interest rates in auto financing:

38

Interest rate increased a lot in last few years until last year it was around 19%.

And last few years back it was around 8%.

5. Weak economy:

The economy of Pakistan is very weak due to the global recession. It was already

not that much strong and the recession further destroyed it. The political

instability is also a reason for this.

6. Un-favorable budgetary impacts:

like in the current budget increase in sales tax by 1%, levy of Federal Excise Duty of

5% and additional taxes at the time of registration of vehicles. These all factors

decrease the demand of cars.

7. Changing government policies:

A major threat is the changing political and economic scenarios of Pakistan.

Changing government policies affect the company’s performance. Trade policies

of government are a threat.

8. Devaluation of rupee:

Mainly due to inflation in last couple of year's rupee is devalued a lot, due to this car

prices increased and demand decreased.

9. Increasing used Auto imports:

The increasing car imports have decreased the demand of local vehicles considerably,

and it is still increasing.

10. Increasing oil prices:

Oil prices globally and domestically increased. Especially in Pakistan there is almost

no subsidy being given on diesel and gasoline so the vary major part of the public

cannot afford gasoline.

11. Increase in utility bills:

Per unit price of electricity have also increased and it increased the total expenses of

the company.

39

SWOT Analysis of Competitors:

Toyota Indus Motor Co

Strengths

1. Strong brand name:

2. Financially very strong:

3. Large market share:

4. Very good after sale of vehicles:

5. Diversified product line:

6. A huge network of dealers throughout the country:

7. Vehicles are suitable for Pakistani environment:

8. Availability of spare parts even in remote areas:

9. Low maintenance costs:

10. Good marketing:

11. Huge target market:

12. Provides vehicles to government sectors:

Weaknesses

1. Vehicles lack in quality:

2. Low safety standards:

40

3. Vehicles lack in technology:

4. Fewer accessories offered:

5. Lacks in after sales services:

6. Does not focus on environment friendly vehicles:

7. No attractive after sales services are offered:

8. At dealership staff is not properly trained:

9. Weak management:

10. Spend less in acquiring new technologies:

Opportunities

1. Increasing demand for automobiles in last decade:

2. Changing trends in economy:

3. Decreasing interest rate in auto financing:

4. Increasing income level in last decade:

Threats


2. Strong strategies are being used by competitors:


4. Weak economy:


6. Currently decreasing demand of vehicles

7. Increase in car imports:

41

Gandhara Nissan Ltd

Strengths

1. Vary strong financial position:

2. Very diversified product line:

3. Vehicles are suitable for Pakistani environment:

4. Have captured the heavy vehicle market completely:

5. Strong management:

6. Huge target market for its heavy vehicles:

Weaknesses

1. Lacks in quantity:

2. Bad image for cars:

3. Very low no of dealers:

4. Small market share for its cars:

5. Lacks new technology:

6. Very low resale of its cars:

7. Unavailability of parts:

Opportunities:

42

1. Changing trends in economy:

2. Increasing demand of heavy vehicles (trucks)

3. Increasing demand for automobiles in last decade:

4. Decreasing interest rate in auto financing:

5. Increasing income level in last decade:

Threats


2. Strong strategies are being used by competitors:


4. Weak economy:


6. Currently decreasing demand of vehicles

7. Increase in car imports:

43

TWOS matrix (Honda Atlas Cars)

SWOT Matrix

SO

Launch a smaller car up to 1000cc and target lower income group (S1, S7, S9, O2 O5, and O6).

Open more 3s and 2s dealers and target those areas which are neglected before (S2, O3, and O6).

They should make contracts with government departments and sell them cars (S7, S9, S10, and O7).

WO

Make changes in the cars according to the Pakistani environment (W4, O8).

Increase the target market and target them efficiently (W8, O1, O2, O7).

Increase the no of 2s dealers (W6, W7, O3).

ST

Make strong strategies to compete the competitors (S5, T2)

Make some changes in the vehicles so they run successfully on CNG (S6, T10).

Introduce smaller and cheaper cars (S1, S7, T3, and T5).

Make new plant, buy machinery and technology and make all the parts in Pakistan in order to cut short

WT

Target those areas which are neglected and increase sales (W1, T2, and T9).

Spare parts should be delivered provided in the market of those areas where there is no dealer (W5, T2).

Camps should be organized for a week or two where there is no dealership and Honda trained mechanics should carry out free

44

expenses. (S2, T1). checkups of Honda vehicles (W7, T2).

We have suggested these changes after thoroughly inspecting all the internal and

external factors of the company. We will just tell u about the main important changes.

The first SO strategy of launching a smaller car to target the lower income group was

stated after inspecting brand name, high quality and services of the company. And this

market is not being targeted before so it is a great opportunity for Honda to increase

their sales.

BCG Matrix (Honda Atlas Cars)

It is divided in four quadrants:

Stars: These are units with a high market share in a fast-growing industry. The hope

is that stars become the next cash cows.

Cash Cow: They are units with high market share in a slow-growing industry. These

units typically generate cash in excess of the amount of cash needed to maintain the

business.

Question Mark: This Indicates low market growth and high market share. These are

growing rapidly and thus consume large amounts of cash, but because they have low

market shares they do not generate much cash.

Dog: These are units with low market share in a mature, slow-growing industry.

These units typically "break even", generating barely enough cash to maintain the

business's market share.

High Medium Low

1.0 0.50 0.0

45

High +20 STARS Question Marks??

CIVIC & CITY ACCORD ?

Medium 0 CASH COWS DOGS

CRV

Low -20

The main selling products of Honda atlas are civic and city. They contribute the major

part of the market share of Honda Atlas. Their market share is more than medium and

the industry sales growth rate is also high. On the other hand Accord's market share is

just over low but its industry sales growth rate is just over medium so that is why it is

in the first quadrant. CRV has both low market share and industry growth sale rate.

Overall Honda Atlas would be in second quadrant, it would be star because accord

and CRV collectively just contribute over 2.5% sales of Honda Atlas cars. So the

company's overall sales are done by civic and city.

46

Core Competencies and Competitive Advantage

IFE Matrix

weight rating weighted

score

Strengths

1. Strong brand name and good image. 0.07 4 0.28

2. Very strong financial background of the owners. 0.05 3 0.15

3. Loyal customers. 0.04 3 0.12

4. Environment friendly vehicles (green vehicles). 0.03 3 0.09

5. Strong management. 0.04 4 0.16

6. Always first one to introduce new technology. 0.06 4 0.24

7. High quality products. 0.08 4 0.32

8. State of art production plant. 0.02 3 0.06

9. Attractive after sale services. 0.04 3 0.12

10. Cars offered with more features and accessories. 0.10 4 0.4

11. No hierarchal discrimination in the staff. 0.06 3 0.18

Weaknesses

47

1. Company is financially weak. 0.09 1 0.09

2. Low resale value of vehicles. 0.06 1 0.06

3. High maintenance cost of products (cars). 0.05 2 0.10

4. Vehicles not completely suitable for Pakistani environment. 0.03 2 0.06

5. Unavailability of the spare parts in the market. 0.04 2 0.08

6. Small network of dealers. 0.06 1 0.06

7. Trained mechanics and modern gadgets required for repairs. 0.03 2 0.06

8. They have limited their target market. 0.05 1 0.05

Total 1 - 2.68

1. Major weaknesses 2.Minor weakness 3.Minor strength 4.Major strength

EFE Matrix

weight rating Weighted

score

Opportunities

1. Automobile production increased four times between 2002-2007. 0.05 3 0.15

2. Auto financing. 0.08 4 0.32

3. 500,000 units to be produced by 2011, target set by government. 0.06 3 0.18

4. Financial support by IMF, World Bank etc to boost economy. 0.03 2 0.06

5. Decrease in interest rates by State Bank. 0.05 3 0.15

6. Changing life style of people. 0.05 2 0.10

7. Contracts with government of private institutions. 0.06 2 0.12

8. Increasing income levels. 0.05 4 0.20

Threats

1. Increase in the value of yen. 0.10 4 0.4

2. Strong competition. 0.07 3 0.21

3. Dramatic decrease in the demand of cars. 0.08 3 0.24

4. Variation in interest rates for auto financing. 0.03 2 0.06

5. Weak economy. 0.06 3 0.18

6. Un-favorable budgetary impacts. 0.03 3 0.09

7. Changing government policies. 0.01 1 0.01

8. Devaluation of rupee. 0.04 2 0.08

48

9. Increasing used auto imports 0.07 3 0.21

10. Increasing oil prices. 0.08 2 0.16

Total 1 - 2.92

1. Poor 2.Average 3.Above average 4.Superior

CPM Matrix

HACPL TIMCL GNL

Critical success factors weight rating score rating score rating score

Market Share 0.10 2 0.20 4 0.4 1 0.10

Customer Loyalty 0.07 4 0.28 3 0.21 1 0.07

Financial Position 0.09 1 0.09 3 0.27 4 0.36

Management 0.06 3 0.18 3 0.18 3 0.18

Price Competitiveness 0.04 2 0.08 3 0.12 2 0.08

Product quality 0.08 4 0.32 2 0.16 2 0.16

Technology 0.12 4 0.48 2 0.24 2 0.24

Brand Name 0.08 3 0.24 4 0.32 3 0.24

Resale value 0.13 1 0.13 4 0.52 1 0.13

durability 0.06 2 0.12 4 0.24 3 0.18

Product diversification 0.05 2 0.1 3 0.15 4 0.20

Sales distribution 0.05 1 0.05 3 0.15 1 0.05

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Production capacity 0.04 3 0.12 4 0.16 4 0.16

After sale services 0.03 4 0.12 3 0.09 1 0.03

Total 1 2.51 3.21 2.18

1. Major weakness 3. Minor strength

2. Minor weakness 4. Major strength

In the competitive profile matrix we have listed 14 key success factors which we

thought are the main factors. Among them the market share, resale value, financial

position, product quality technology and brand name were given more weight age than

others because they are more important according to our market to analyze

competitors. According to the analysis Toyota Indus Motor Co Ltd have the more

competitive advantage on the other two companies. Their market share brand name

resale value, durability, financial position were the major strengths and they are they

factors which make a company strong, but in some areas like technology, product

quality they lack. Gandhara Nissan Ltd got the lowest score they are strong financially

and diversified product line but in other factors they lack a lot. The reason for their

strong factors is that they are the market leaders of heavy transport vehicles.

50

IFE Matrix

THE IFE TOTAL

WEIGHTED SCORES (3.01)

Strong Average Weak

3.0 -4.0 2.0-2.99 1.0-1.99

51

I II III

IV V

Honda Atlas Cars

VI

VII VIII IX

High

3.0-4.0

Medium

2.0-2.99

Low 1.0-1.99

Space Matrix

Rating

Financial Strength:

Increasing inventory turnover ratio from 6.27 to 8.74.

Slight increase in total assets turnover ratio from 2.05 to 2.16.

Increased earnings per share from (3.71) to 0.55.

Increased gross profit margin 0.01 to 0.042.

Debt to equity ratio decreased from 1.60 to 1.11.

Income increased from (2645400000) to 75010000.

+4

+3

+2

+3

+5

+4

Average +3.6

Industry Strength:

Demand of cars increased 4 times in last 6years.

Industry is meeting the demand

+5

+4

52

THE

EFE

TOTAL

WEIGHTED

SCORE

Financial stability

Technological know-how

Ease of entry into market is high

Productivity capacity utilization

+3

+2

+4

+4

Average +3.67

Environmental stability:

Rate of inflation

Demand of vehicles

Competition

Risk involved in the business

Technological changes

Increasing income levels

Changing life style

-5

-5

-2

-3

-4

-4

-2

Average -3.57

Competitive advantage:

Strong brand name

Market share

High product quality

Customer loyalty

Technological advances

Control over dealers

Environment friendly vehicles

Attractive after sale services

-2

-3

-1

-2

-1

-3

-2

-2

Average -2

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Directional vector coordinates X- axis: (-2.00) + (+3.67) = +1.67

Y- axis: (-3.57) + (+3.60) = +0.03

FS

Conservative Aggressive

+ 0.5

0.03

CA -1.5 -1.0 - 0.5 + 0.5 +1.0 +1.5 IS

-0.5

Defensive Competitive

After listing all the factors and giving them rating accordingly the averages are

mentioned above. And after calculating directional vector points the line stretches in

the first quadrant. Which means the company needs aggressive strategies like:

Backward, forward or horizontal integration.

Market penetration.

Market development.

Product development.

Diversification related or unrelated.

54

The Grand Strategy Matrix

2nd Quadrant 1st Quadrant

55

Product diversification

Market Penetration

Product development

Market development

3rd Quadrant 4th Quadrant

According to all the data gathered and our analysis Honda Atlas Cars Pak Ltd is

placed in 2nd quadrant. We have suggested some strategies below among which some

will be analyzed by QSPM:

Product diversification:

A new smaller car should be launched in order to target the lower income group which

is not being targeted before. Income levels in Pakistan have decreased a lot and

buying power have also decreased so by offering such car and by keeping in mind the

strengths they will be able to capture this market and will generate more sales.

Market penetration:

It is also a good strategy for Honda Atlas they can penetrate market by making good

marketing techniques and this will also increase sales of existing products.

Product development:

As Honda Atlas's cars are not very much according to the Pakistan's environment so

some technical changes are needed in order to make it completely successful.

Market development:

This one is the important strategy. Honda is currently targeting large cities of Punjab

and two cities of Sindh. Other remaining areas have no dealers. By entering those new

56

geographic areas they can easily increase sales of their existing products.

Quantitative Strategic Planning Matrix

1 2

Key factors weight AS TAS AS TAS

Opportunities1. Automobile production increased four times between

2002-2007.

0.05

2. Auto financing. 0.08 4 0.32 4 0.32

3. 500,000 units to be produced by 2011, target set by

government.

0.06 3 0.18 3 0.18

57

4. Financial support by IMF, World Bank etc to boost

economy.

0.03 1 0.03 1 0.03

5. Decrease in interest rates by State Bank. 0.05 2 0.10 2 0.10

6. Changing life style of people. 0.05 1 0.05 2 0.10

7. Contracts with government of private institutions. 0.06 1 0.06 1 0.06

8. Increasing income levels. 0.05 2 0.10 3 0.15

Threats

1. Increase in the value of yen. 0.10 4 0.40

2. Strong competition. 0.07 3 0.21 3 0.21

3. Dramatic decrease in the demand of cars. 0.08 1 0.08 2 0.16

4. Variation in interest rates for auto financing. 0.03

5. Weak economy. 0.06 1 0.06 1 0.06

6. Un-favorable budgetary impacts. 0.03

7. Changing government policies. 0.01

8. Devaluation of rupee. 0.04

9. Increasing used auto imports 0.07 2 0.14 2 0.14

10. Increasing oil prices. 0.08

Strengths

1. Strong brand name and good image. 0.07 4 0.28 4 0.28

2. Very strong financial background of the owners. 0.05 2 0.10

3. Loyal customers. 0.04 2 0.08 3 0.12

4. Environment friendly vehicles (green vehicles). 0.03 2 0.06

5. Strong management. 0.04

6. Always first one to introduce new technology. 0.06 3 0.18

7. High quality products. 0.08 4 0.32 4 0.32

8. State of art production plant. 0.02

9. Attractive after sale services. 0.04 1 0.04 2 0.08

10. Cars offered with more features and accessories. 0.10 3 0.30 3 0.30

11. No hierarchal discrimination in the staff. 0.06

Weaknesses

1. Company is financially weak. 0.09 1 0.09

58

2. Low resale value of vehicles. 0.06 2 0.12 2 0.12

3. High maintenance cost of products (cars). 0.05 3 0.15 2 0.10

4. Vehicles not completely suitable for Pakistani

environment.

0.03 1 0.03 1 0.03

5. Unavailability of the spare parts in the market. 0.04 2 0.08

6. Small network of dealers. 0.06 3 0.18

7. Trained mechanics and modern gadgets required for

repairs.

0.03 3 0.09

8. They have limited their target market. 0.05

Total 3.5 3.19

Strategy 1:

Product diversification, introduce a new smaller and cheaper car of 1000cc class, and

target it to the lower income group, by this sales will increase.

Strategy 2:

Market Development, Honda is only targeting in major cities of Punjab, they should

also target other areas which represent major part of market and make their 3s

dealerships in those new geographic areas.

The scores clearly show the effectiveness of these both strategies and we think that

both of them should be implemented by Honda Atlas Cars Pak Ltd. They will

dramatically increase their sale and their market share in the Pakistani market.

59

60

Part 2

Marketing

Marketing Objectives

To survive in the Pakistani market you one has to make very efficient marketing

strategies because of the high competition and more other substitute products. Already

there was tierce competition the imported cars added up the competition, so marketing

objectives should be very efficient. Marketing department is directly controlled by the

CEO Mr. Mamoru Suwama. After him comes Mr. Ayaz Hafez as general manager,

after him comes Senior Manager and Deputy Manager. Marketing standards of Honda

Atlas are very high and efficient.

Marketing Strategies:

Honda is very much concerned about the product development strategy that seeks

increased sales by improving or modifying present products or services. Honda is in

61

continuous process for improving its products more quickly with advance

technological changes as compare to its competitors, Honda always comes with the

innovations in the market. They are the first one who introduced VTI technology,

ABS breaking system, and passenger's safety measures. From this it is very much

clear that Honda is following the product development strategy, they also won the

Asian award for providing best quality of the product in automobile.

Marketing operation functions is the very essential tool and it is excellent essence of

any business same as this strategy imply by Honda Atlas Company to its authorized

Dealer. It is dealing with brand loyalty of Honda products my concern exists between

dealers and customers. Honda Atlas also depends on 3S as Indus Motors Imply its

strategy in market operations but also Honda Atlas has been facilitating with

separately 2S as well (Service and Spare Parts). This offer of facilities Honda Atlas

Motor compares to the Total Quality Management style of Honda Atlas Itself.

Moreover, Honda Atlas has a very useful sales strategy, their sales network is

covering all their target markets, HACPL covers both 3S (Sales, Service, Spare parts)

and 2S (Service and Spare parts) dealerships in different parts of the country. In total

HACPL is covering 20 cities where they are providing 3S or 2S dealerships, out of

which 11 cities covers 3S and 9 cities covers 2S dealerships. The dealers engaged in

providing facilities to the customer to buy Honda cars. All of the sales strategies

followed by Honda Atlas Itself , do analysis of the sales, performance of the dealers

most importantly after sales, customer satisfaction report. Sales facilities part of

Honda Atlas is to facilitate its loyal customer and overcome customer’s ambiguity,

buying conflict and provide them maximum information before purchase. Honda

Atlas is also very conscious in sales as well as Customers Satisfaction. All the

authorized dealerships in Pakistan are a source of customer satisfaction. The after

sales are supported by the immaculate service and the availability of spares at

competitive prices for every car sold. To facilitate the customers for any assistance

they require, Honda Atlas has a separate department, called Customer Relations, at the

head office. This department is supported by the subsequent Customer Relations

Officers at all dealerships. The purpose of Customer Relations Department and

62

Customer Relations Officers is to enable our customers in getting any sort of help

required by them.

Customer Analysis

Honda Atlas Pak is currently offering our different vehicles which are being targeted

to four different types of market. From those products Civic is the main product which

has the largest share in Honda's total market share after that it's City.

Civic:

The customers of civic are the upper middle class who are using this car as their first

car. Secondary consumers are the upper classes that are using it as the 2nd or 3rd car.

Honda sis providing them a complete car in the normal price range which satisfies

their need. Most buyers are males and age between 25 till 40 in upper middle class

while between 25 till 35 for upper class.

City:

63

The customers of city belong to the middle class who use this car as their main car.

Most of the customers are female. Male customers mostly do not prefer this car. Most

of the house wives drive this car. It is very economical and fuel efficient.

Accord:

The customers of Accord belong to the upper class. They brand conscious trendy rich

people who use it for normal daily usage. Their age is mostly 30+.

CR-V:

This is basically a SUV can be used for off-Roding. But very less people buy it and

those who buy it they are of course from upper class. They are also very rich brand

conscious people who buy this vehicle and use it rarely.

Marketing Mix

Products & Price:

Honda Atlas cars Pakistan limited is basically offering four products in Pakistan from

which two are being produced in Pakistan but major parts are being import from Japan

and other two are totally being import from Japan. The cars which are assembled here

include Honda City and Honda Civic and imported cars of Honda includes Honda

Accord and CRV.

Currently, Honda City is provided in five different colors, Civic in seven colors,

Accord in three and CRV in four different colors.

64

All the products of HACPL have a high quality in terms of:

comfort

reliability

technology

All these cars are basically for the educated people who are well aware when it comes

to quality, comfort, technology. Honda Atlas has been on the top in terms of

technological advancement of their product, HACPL products are unique because of

the shapes and different features of the cars they provide in the Pakistan market.

City

65

Strong yet relaxing…..

See it coming, like an arrow. Striking good looks, cutting-edge design, sharply

focused tension. See it shoot straight ahead. What is it? Discover the compact sedan

breakthrough with strength to open a new era and outlast fleeting trends. Sleek styling

and strong performance, with swift, gutsy response to the driver's pedal action. Class-

leading* spaciousness and relaxing ride for outstanding comfort. Imagine the pride of

driving and owning this distinctive new-generation standard. Get ahead in the new

City. People will be watching. *1.3-liter compact sedan class.

Honda Civic

66

Rising Spirit

What moves you? What drives you? What excites you? Honda seeks the pinnacle of

technology in pursuit of answers. Now, we present a bold way to stir the body and

soul, designed to quicken the pulse at first glimpse, and stimulate the senses with each

and every encounter. The sporty new Honda Civic possesses rare spirit, and so do you.

See, touch, feel, drive and discover.

Honda Accord

67

Move up to new status sedan….

Witness the debut of the astonishing new Honda Accord: the outcome of our all-out pursuit of sedan excellence, successfully uniting all contradictory elements. A bold exterior presence with a luxury air, yet a sporty youthful feeling. An expansive upper-class cabin with comfortable travel space for five adults and panoramic visibility. A larger body with sportier performance than ever before, and powerful i-VTEC engines designed for high fuel economy. A renowned global car with all advanced Honda technologies for driving command, plus eco-performance for increased recyclability. And, Honda's world-leading safety protection, which even extends to pedestrians and those in other vehicles. Experience its overall quality, riding comfort, and details for yourself, and you'll know why the new Accord represents a distinct "status upgrade" for the sedan.

Honda CR-V

68

Open a new world of great pleasure….

Dynamic styling appeal. Elevated SUV outlook. Premium driving refinement. And an exhilarating yet stable feeling. The new Honda CR-V has all you want, and more. A spacious cabin and utilities, due to packaging innovation. Plus superb i-VTEC response, quietness, and safety. Discover delightful CR-V driving. Now, all roads are exciting.

Placing

69

Placement is one of the important tools of marketing mix and placing your product to

the right market is an essential part before the success starts. The Honda Atlas has

been applying its distribution strategy by nature of product, Atlas cars car plant

established in Punjab and supply to supply to all over Pakistan’s distributors; it is

providing the opportunity to customer that they can buy Honda atlas cars from

authorized Dealers. In distribution aspect, Honda Atlas has mission to make

convenient and provide valued product to customers, they have more than fifteen

dealers all over Pakistan who are providing 3S ( Sales, Service and Spare parts ), these

dealers are being spread 11 major cities of Pakistan(maximum in Punjab) which are as

follows:

Lahore

Islamabad

Multan

Sialkot

Gujranwala

Faisalabad

Sargodha

Mirpur

Hyderabad

Karachi

Peshawar

Promotion

The advertising and promotion of Honda Atlas Company Pakistan (HACPL) has a modest

program of marketing its services that include the following:

Newspaper and magazines ads

Press releases and magazines articles

Car shows

Website

70

Calendars

Honda Atlas Company also makes possible of having a grand opening program that

would sponsorship, charity, social walk, donations, exhibition, functions, display in

the large market. Honda Atlas spends a much amount at advertising and it feel that the

company website is one of its best marketing strategies. It is linked to top listed web

sites like Google.com and many other classic car restoration oriented websites and

portals. The site has news about HACPL business, answers to FAQ's and pictures of

cars restored and the process of the restoration.

Customer Relations Department

HACPL always strive to give outstanding service to our valued customers. In addition

to providing regular service to customers, the company also regularly conducts

Service Campaigns, to facilitate customer's need for service. This has given their

customers absolute confidence in their cars. To facilitate the customers for any

assistance they require, they have a separate department, called Customer Relations, at

the head office. This department is supported by the subsequent customer relation

officer at all dealerships. The purpose of Customer Relations Department and

Customer Relations Officers is to enable our customers in getting any sort of help

required by them.

Free services

The product sold is not means that close the window for customer now, it is beyond

that further after sales customer has largely engaged to deal in service and Spare parts

aspect. HACPL is a customer service conscious company, for which it is always

looking for avenues to develop further relations with the customers who have already

purchased the cars. They consider purchase of car as the beginning of relations with

customers. To prolong this relationship and encourage the customers to keep on

coming to the dealership, to get theirs cars maintained the Honda way they provide

three FREE CHECK-UP SERVICES to their customers. These are basically three

periodic check-ups at 1,000 Km, 5,000 Km and 10,000 Km mileage which are

71

normally done after 1 month, 3 months and 6 months of running the car. Other than

providing service to customers another reason for this facility is to stress on the

importance of periodic maintenance. Periodic maintenance is essential for every car

and if this is performed regularly as per the maintenance schedule the car is trouble

free and life of car increases by many years. For these free services the labor is not

charged, where as the customer has to pay for only the consumable like engine oil, oil

filter, etc.

Training of dealers technicians

HACPL is providing regular trainings to the dealers' technicians. The trainings cover

all aspects of the cars and related Products including the periodic maintenance,

diagnostics, trouble shooting and repairs according to HONDA standards. From this

they want to facilitate the customers in maintaining their cars in top-most condition

and enjoying the comfort and performance of the luxury vehicles they own. It is their

endeavor to have uniform service standards made available at all dealerships in

accordance with the international Honda standards. They consider the properly

maintained vehicles not only to be a source of satisfaction to our customers; they also

increase the sale value of their car.

Spare parts

Honda Atlas always follow those strategies which they can gain customer most

attention to its brands. Honda Atlas always make possible to be genuine and look

genuine. Honda attract its customer in under the statement that “Buy Honda genuine

parts from Honda dealers and enjoy 6 month's Honda Warranty, the Honda warranty

can vary product to product and contribute to the country’s economy and enjoy the

satisfaction of using 100% genuine Honda Parts. But if customers buy the parts from

open market; most probably is that customer may be buying smuggled parts and thus

committing a moral crime and robbing your country from precious revenue, customer

may unable to claim but if customer buy from Honda authorized Dealer so the part

will be 100% genuine, customer has no need to buy from open market, the trust

72

between customer and Honda Dealers become long lasting etc. It is the Honda Atlas’

aim to be No.1 in customer satisfaction in all three S, Sales, Service and Spare Parts

and two S in the same time.

73

Part 3

Financials

74

Financial Ratios

Current Ratio

Year 2007 2008

Honda Atlas 0.94 0.79

Indus Motor 1.83 2.56

Ghandara 1.36 1.33

Year 2007 : 3681213/3906115

: 0.94

Year 2008 : 2435529/3087066

: 0.79

The Current Ratio expresses the relationship between the firm’s current assets and its

current liabilities. Current assets normally include cash, marketable securities,

accounts receivable and inventories. Current liabilities consist of accounts payable,

short term notes payable, short-term loans, current maturities of long term debt,

accrued income taxes and other accrued expenses.

Decreasing trend has been seen in the current ratio of HACPL from year 2007 to 2008

from the above data which is a negative point for the company; the main reason for

the decrease in the current ratio is due to the decreases in the current assets from

3681213000 to 2435529000 in year 2008.

Indus Motor current ratio has increased from year 2007 to 2008 which is a positive

sign for the company itself, this upward shift is due to the decrease in the value of

current liabilities from Rs. 7410926000 to 3779631000, whereas a slight decrease has

been seen in Ghandhara Nissan ltd current ratio.

75

Quick ratio

Year 2007 2008



Ghandara 0.62 0.77

Year 2007: (3681213 – 2704946)/3906115

: 0.25

Year 2008: (2435529 – 1612696)/3087066

: 0.27

There is a very slight increase of point 0.02 in the HACPL Quick ratio, this ratio is to

check that how quickly a firm can meet its short term obligations without relying upon

the sales of its inventories. This slight increase is because company decreased its

inventories in 2008 to Rs. 1612696000 as compare to 2704946000.

Increasing trend has been seen on Indus Motor’s quick ratio in year 2008 as the

company inventory value declined from 2859951000 to 2637629; moreover

investment was made in year 2008 of 54171000 while there was no investment value

in 2007. Ghandara’s quick ratio is also increasing in 2008, although value of

inventories has increased in 2008 as compare 2007 but other currents assets values

such as accounts receivables, bank balance and trade debts have increased in a much

greater number as compare to the value of inventories.

Debt to equity ratio

76

Year 2007 2008



Ghandara 1.35 1.11

Year 2007: 5864449/2440668

: 1.60

Year 2008: 3587066/3229678

: 1.11

Debt to equity is basically defined as the percentage of total funds provided by

creditors versus by owners, debt to equity of HACPL has declined from 1.60 to 1.11

because the value of to total debts decreased and total share holders' equity was

increased which overall decreased the debt to equity ratio and same is the case with

Indus Motor as its debt to equity also decreased due to the reasons mentioned for

HACPL.

Ghandara Nissan ltd debt to ratio also decreased from 2007 to 2008; there was an

increase the value of both i.e. total debt and total equity but the equity increased in

larger proportion which has resulted into the decline of this ratio.

Inventory turnover ratio

77

Year 2007 2008



Ghandara 3.75 4.70

Year 2007: 17055115/2704946

: 6.27

Year 2008: 14715495/1612696

: 8.74

Inventory turnover determines whether a firm holds excessive stocks of inventories

and whether a firm is slowly selling its inventories compared to the industry average.

Honda Atlas inventory is increasing from 2007 to 2008 which is a positive sign for the

company as firm is selling its inventories as compared to the industry average and

improving their stock turnover operations. Sales of HACPL decreased in from 2007 to

2008 from Rs. 17055115000 to 14715495000 but inventories decreased in greater

percentage which has made inventory turnover to rise.

Indus Motor is also enjoying the increasing trend in terms of inventory turnover, as

there sales increased in 2008 as compare to 2007 and their inventories decreased from

2007 to 2008 which shows that company improves their stock turnover operations.

Ghandara Nissan ltd inventory turnover has also increased because their sales are

increasing in greater proportion i.e. Rs. 2894826000 to 3708889000 in 2008 as

compare to its inventories i.e. Rs. 772792000 in 2007 and 789663000 in 2008.

Total Asset Turnover

78

Year 2007 2008



Ghandara 1.21 1.20

Year 2007: 1705515/8305117

: 2.05

Year 2008: 14715495/6816744

: 2.16

Total asset turnover determines whether a firm is generating a sufficient volume of

business for the size of its asset investment, there is a slight increase in the total asset

turnover, overall company is in a strong position in terms of total asset turnover with a

figure of 2.16 in year 2008 which shows that the company is in a better position as the

sales of the company are increasing with a larger extent. There is an increasing trend

in the asset turnover ratio. This is good for the financial strength of the company. So

the company utilized their asset in better way they increase their output. They do not

purchase the extra assets that are not used in production so the ratio becomes better.

Same is the case with Indus Motor that their sales are increasing in a larger extent as

compare to their assets, whereas Ghandara Nissan ltd has shown a slight decline in

terms of total asset turnover as both, sales and total assets increased but total assets

increased in a greater percent.

Gross Profit Margin

79

Year 2007 2008



Ghandara 0.17 0.14

Year 2007: 172915/17055115

: 0.01

Year 2008: 627494/14715495

: 0.04

Gross profit margin is the total margin available to cover operating expenses and yield

a profit. Gross profit margin of Honda has increased with a small amount from year

2007 to 2008 but it is a positive sign for the company as in 2008 company is able to

cover its expenses and has earn a profit whereas in 2007 it was not able to cover its

expenses and faced losses.

GP margin of Indus Motor has decreased because the cost of goods sold increased in a

greater number as compare to the sales due to which the value of gross profit

decreased from Rs.4440594000 to 3848487000 and same is the case with Ghandara

Nissan ltd, gross profit of Ghandara has increased from 2007 to 2008 but sales

increased in a larger number which resulted into fall of Gross profit margin.

Net Profit/(loss) Margin

80

Year 2007 2008

Honda Atlas (0.015) 0.005


Ghandara 0.006 0.005

Year 2007: (264540)/17055115

: (0.015)

Year 2008: 75010/14715495

: 0.005

This is a widely used measure of performance and is comparable across companies in

similar industries. Honda atlas were facing losses in year 2007 as they had a negative

value on the net profit margin but in 2008 company were in profits which increased

their net profit margin from (0.015) to 0.005.

Net profit margin of Indus Motor has decline from year 2007 to 2008, gross profit of

the company decreased because of the increase in the cost of goods sold, moreover

there was also increase in the value of distribution and administration expenses which

decreased the net income of the company in 2008 as compare to 2007.Ghandara’s net

profit margin has also decreased from 2007 to 2008 as their net income decreased to

Rs 187231000 to 178157000 in 2008.

Return/(loss) on Total Assets

81

Year 2007 2008



Ghandara 0.08 0.06

Year 2007: (264540)/8305117

: (0.03)

Year 2008: 75010/6816744

: 0.01

This ratio is also called return on investments; Return on assets shows the relationship

between the net income and the total assets. It has increased from year 2007 to 2008

which is better for Honda atlas Pakistan in terms of profitability, in 2007 the company

was facing losses due to which their ROA is in negative but in 2008 there is an

upward shift because of the profit they earned of Rs.75010000.

There is a slight decrease in the ROA of Indus Motor, as both i.e. net income and total

assets has been decreased but net income decreased to a slighter greater percentage as

compare to total assets and same is the case with Ghandara Nissan ltd but there sales

have decreased and total assets have increases as compare to previous year.

Return/(loss) on Stock holders Equity

82

Year 2007 2008



Ghandara 0.18 0.12

Year 2007: (264540)/2440668

: (0.11)

Year 2008: 75010/3229678

: 0.02

It determines after tax profits per dollar of stockholders investment in the firm as it

shows the profit attributable to the amount invested by the owners of the business. It

also shows potential investors into the business what they might hope to receive as a

return. Positive trend has been seen as compare to 2007, as in 2007 it has a negative

value of 0.11 because of the loss Honda atlas were facing losses but in 2008 the value

of ROE shifted to 0.02 as the company was in profits in 2008.

ROE of Indus Motor is decreasing because of the two reasons. Firstly there is a

decrease in net income from year 2007 to 2008 and secondly there is an increase in the

stockholders equity, decrease in the value ROE is not a good sign for a company in

terms of profitability because they might lose the potential investors and same is the

case with Ghandara as their profit is also decreasing.

Earnings/(loss) Per Share

Year 2007 2008

83



Ghandara 4.16 3.96

Year 2007: (2.08)

Year 2008: 0.55

It is the earning available to the owners of common stock. Honda atlas were in losses

in 2007 due to which there EPS has a negative value but in 2008 it showed 0.55 EPS

because of the profits they earned, it is a positive sign for the company in terms of

profitability and more people will be interested to invest in the company.

Earnings per share of Indus Motor went down as the net income for 2008 was Rs.

2290845000 as compare to 2745701000 in 2007 and same is the case with Ghandara

Nissan Ltd.

84

Part 4

Production/Operations

Process and Technology:

85

Honda Atlas cars Pakistan limited is a joint venture between Honda Pakistan and

Honda motors Japan. Two cars which are totally targeted to the upper-upper class

which are Honda Accord and CRV are imported from Japan (ready made cars comes

in Pakistan to sell) , whereas for Honda City and Civic some of the parts are

assembled and manufactured here, for example wind screens and other glass related

material, body of the car, bumpers, dashboard, seats, AC parts etc. The batteries which

are used in Honda City and Civic are of the Honda Atlas Company itself (Honda

Pakistan also manufactures batteries of cars). All the other technical parts of the cars

are imported from Japan which includes the technology of ABS breaking system,

transmission, engine, some parts of the suspension etc.

Capacity:

Honda Atlas cars produced maximum of their products in year 2006 and in year 2008

they faced major crises in terms of productions. Year wise, production of Honda Atlas

cars are as follows:

Year Production in units

2006 31476

2007 18250

2008 15800

2009 till end June 19140

The production at Honda is based on different factors. Most important factor is the

market demand of their product. They do not adopt the lean production phenomenon

but they use the flexible production method. The plant needs to be utilized at 100%

efficiency so as to minimize the fixed costs.

Inventory:

86

Honda Pakistan does not follow the Just in Time Approach. They rather adopt the

Just in Case approach in their working. They keep stocks of the manufacturing parts

due to the poor infrastructure which may result in the delayed supply of the parts. The

infrastructure in Pakistan is much underdeveloped as compared to that of Japan.

Furthermore, the attitude of the people of Pakistan is much more casual compared

with that of Japan.

Another reason of not following the Just in Time approach is that most of the parts

needed to assemble the car are not manufactured in Pakistan. Delay in transportation

can result in ineffective utilization of the time, hence forgoing the optimal

productivity. Therefore, keeping stocks in Pakistan is a necessity.

Workforce:

There are 800 employees in this organization.

There are 20 female performing in management.

In this way the male workers Are 96%, while 4 % are female.

The minimum education required for managerial post is bachelor in

Management & so on, while in production related diploma holders and

specialized people are preferred.

Quality:

Purchasing Policy

When purchase material arrives, thorough checking of that material is made. If any

deficiency is found then it is reported. If the deficiencies are beyond the acceptable

level then the material is returned to supplier according to terms and conditions of the

contract. However, the chances of such happenings are very less because HACPL has

very tight purchasing policy and it has no compromise on quality.

TOTAL QUALITY CONTROL

87

Total Quality Control is strictly observed strictly in compliance with the standards set

by the Headquarters (Japan). The product is checked at each step and error is removed

right there and then. This saves the company from wastage cost, and hence there

remains no need of the Quality Assurance Department.

QUALITY CONTROL CIRLCES

In case of the Quality Control Circles, Honda uses the term New Honda Circle. It is a

self-triggered group activity that includes 5 – 7 people. They can be from the same

department as well as from different departments. They identify a departmental level

problems or an organizational problem and they hold meetings, brainstorm and share

ideas to find solutions to it. The basic issues discussed in the meetings are cost,

efficiency and quality. There are various groups working on different problems within

the organization. Open participation of the people is invited.

The company conducts a competition between these groups. Each group is given a

chance to present the ideas to their identified problems. The President and Vice

President of the concerned department sit in the presentations, listen to their ideas and

decide the best group on the basis of the contents and benefits to the concerned

department and eventually, the organization.

The best group is sent to the world convention held which enriches them with a vast

exposure to the other firms. The second best group or the runners-up are sent at a

Regional Activity conducted every year within a specific region. In case of Pakistan,

the concerned region is Asia and the competition can be held in any Asian country.

STATISTICAL PROCESS CONTROL

As in case of the Total Quality Control, the Statistical Process Control is strictly

followed at the line. Tasks are performed in a definite sequence with the compliance

of the practices followed in Japan. They are given the name of Set Operating

Procedures, which implies that things are to be performed in a definite sequence and

no compromise will be performed in this regard. These standards are strictly followed

all over the world at any of the Honda assembling plants.

88

KAIZEN (CONTINUOUS IMPROVEMENT)

Kaizen is very much common at the Atlas Honda Pakistan. The individual makes a

proposal for the improvement of productivity or quality of the product as well as the

workplace conditions. He then gives the proposal to his supervisor. The supervisor

does not reject any proposal, as it would prove be demotivating factor for the

individual who gave the idea. The idea is taken into consideration, validated and if

feasible, it is implemented. The individual who gave the original idea is given

incentives in the form of world tour of Honda factories where he can get a vast

exposure and groom his personality

Finished product testing

Finished product is tested before delivering it to the customers in order to assure the

quality standards, basically car is tested for 1 kilometer to check that everything is up

to the mark. On the whole the quality control / quality assurance personnel are

continuously engaged in improving quality to need the requirements of each customer

individually and the market as a whole.

HACPL is 9002 certified. It was the winner of “Best Quality Award for Asia” in

1996, 1997 and 1998.

89

Part 5

Human Recourse Management

Human Resources Changes:

90

During the year, Mr. Masaaki Suzuki who served as Director/GM Purchasing & Local

Development Division returned to Japan after serving the company for almost three &

half years. Mr. Masahiro Takedagawa has succeeded him as new Director effective

from April 01, 2009. The Board appreciated the contribution made by Mr. Masaaki

Suzuki and welcome Mr. Masahiro Takedagawa on the Board. During the year, Mr.

Razi-ur-Rahman General Manager Import, Purchase and Logistics Division also

returned to Atlas Group Company after serving your company for more than three

years. Mr. Maqsoodur- Rehman Rehmani has succeeded him as new GM in the same

position. Mr. Hiroshi Uo and Mr. Yasushi Ito from Honda Motor Company have also

joined your company as Chief Engineers in Purchasing and Local Development

Divisions respectively. The Board welcomes them and look forward to their high

performance.

Honda atlas believes that a skilled, motivated and diversified workforce is the key to

success in today's global market. Their belief is that the best people produce the best

products. That's why Honda is constantly on the lookout for bright, ambitious team

players who have a strong commitment to improving society, the environment, even

themselves.

Now a days, human resource management is very important for any firm to succeed

and achieve its long term objectives an goals because if the company’s HRM is not

working in a proper manner than there are bright chances that employees may get

demoralized which is going to affect the output and company’s overall performance.

Honda Atlas cars Pakistan limited human resource department has certain steps to be

followed which starts from the planning of hiring an individual and ends on the

benefits given to the individuals according to his/her position.

Personnel Policies:

91

Honda Atlas Human Resource policy is to hire young, fresh energetic and active

associates to meet the existing and future workforce requirements and providing its

associates maximum opportunities for internal mobility through personal training and

development to enable them to take higher positions. Human Resource Division has to

have succession plan for each key job/area to make sure the continuity of operations in

the relevant division and to fill the temporary/ permanent vacancy.

Job Analysis:

HR department of Honda Atlas analyze the job and then add is given on newspapers

and Honda’s website, interested candidates sends their respective CV’s to the HR

department, the HR department analyze the CV’s and call the candidates which fulfills

the requirements of the job according to their CV’s, interview of the candidates takes

place, interviewer includes one HR person, one person from that particular department

for which this whole activity is taking place, for example if a job is available for the

marketing department than a marketing person will be sitting in that panel.

Recruitment:

Hiring of an employee has a long procedure, when a certain department of the

company needs an employee, for example Production department , this department

will going to send the related information to the HR department that what kind of

person is required for the job which is available, this information may include past

experience, qualification, skill level (it differs from department to department and job

to job).

HR department of Honda Atlas analyze the job and then add is given on newspapers

and Honda’s website, interested candidates sends their respective CV’s to the HR

department, the HR department analyze the CV’s and call the candidates which fulfills

the requirements of the job according to their CV’s, interview of the candidates takes

place, interviewer includes one HR person, one person from that particular department

for which this whole activity is taking place, for example if a job is available for the

marketing department than a marketing person will be sitting in that panel. Most of

the hiring takes place at the base level but if the hiring is taking place for the upper

92

position (e.g. marketing manager) than one or more than one director of the company

will going to join the HR person to conduct the interview. When the company selects

the candidate, a certain document is presented to the candidate which includes the

salary package, working hours, Honda’s policies and regulations etc, after accepting

all the terms candidates signs the document and joining takes place.

Training:

Now the training period starts, which includes different activities for different

departments and individuals. There are courses which are meant for each department

which includes technical training etc which takes place for the lower management. In

addition to that Honda Atlas also offer specialized courses for different designations,

such as Logistics, Engineers and Managers e.g. Honda Manager Learning Program is

devised specifically for the Deputy Managers and above.

Management Development:

Efforts done by HR department to develop the management:

ENTERPRISE UNION

SUGGESTION SYSTEM

Team effort

The company does have an enterprise union which does the collective bargaining and

keeps the interests of the employees and the organization in the same direction. The

purpose of having an enterprise union is that the internal employees are far more

understanding than the external people and can serve the purpose of the bridge more

effectively.

Suggestions from employees are taken so as to improve the product quality and

eventually satisfying the customers at a greater extent. The employees get motivated

93

once they are asked to give their views. The useful suggestions from them help in

increasing the productivity of the organization.

Teams are much common part of the company. People from the same as well as

different departments are grouped as teams. They are assigned different set of tasks.

They brainstorm and hold meetings on the issues like output, quality of product and

customer demands. In the end, they present their ideas to the concerned authorities.

They are accountable for their progress and the tasks they perform to achieve their

objectives.

Moreover, since all the management sits in the same hall irrespective of designation,

the way of communication at Honda atlas Pakistan is informal and people can interact

freely with each other without any fear. The worker on the line can directly talk with

the Manager without any barrier. Since all the departments are located within the same

factory, the informal and free communication can help in resolving the problem right

there and then.

Performance Appraisal:

Performance appraisal has a great importance in Honda Atlas cars Pakistan limited,

the criterion of promotion varies from company to company. In Honda Atlas Pakistan,

an employee is promoted totally on the basis of his performance and age or seniority

does not play any role. They believe that promoting a senior inefficient person will

just result in a decline of productivity and furthermore, this would act as a

discouraging factor for the efficient and hardworking employees, who in turn may

give up the rigorous work they do to achieve organizational objectives. Thus, it is

better to give the credit to the deserving person. Number of factors is included when

checking the performance of an individual behavior with colleagues, team work,

output and overall performance. Lower and middle management are given bonuses,

certain liters of petrol, mobile bill etc. On higher level car, petrol, travelling allowance

for the family to a hill station, certain number of shares of Honda Atlas is given to

them.

Compensation and Benefits:

94

The company has permanent and contractual employees. Whenever downsizing is to

be done due to any reason, it is the contractual employees who have to leave the

company. The contractual employees are given overtime if they work for extra hours.

Overtime is not given to permanent employees. The permanent employees are

however, given pension once they retire. Deputy Managers are given a Honda City

from the company while the Manager and senior employees are given Honda Civic for

their use. Such facilities are not provided to the employees on contract. Medical

facilities, bonuses, and different basic allowances are given to both the categories, but

there is a difference in the magnitude of these incentives.

The issue of punctuality and absenteeism is of much importance in the company. The

company has its own pick and drop service which takes a 50 minutes time to get the

people from the city to the factory which ensures complete punctuality and a

minimum chance of getting late at work. Furthermore, the employees can cash their

unveiled casual leaves.

Employee Retirement Benefits:

The company operates a funded defined benefit gratuity scheme for all its permanent

employs. Under the scheme gratuity is payable on the basis of last drawn basic salary

at following rates:

Service in the Company per completed year of service

0-4 years and 364 days Nil

5-9 years and 364 days 15 days

10 years or more 30 days

95

Part 5

Recommendations

Recommendations

96

Honda Atlas Pak Ltd has lot of USPs and by using them it can increase its market

share. They just need to change some strategies and look their weak areas. Currently

its weak financial position and decreasing market share is due to the current position

of economy. This majorly contributed in the weaknesses. The buying power in

Pakistan has decreased a lot which resulted in decrease demand of vehicles and this

resulted weakness. We have analyzed everything very thoroughly; its internal and

external factors, competitors, the position of economy, industry's position and now we

are in position to give some recommendations which will hopefully reduce the

weaknesses of the company.

One main problem is the increasing prices of yen which resulted in dramatic

increase in the company's expenses. Because a lot of parts are being imported from

Japan, so what we suggest is that the financial background of both the partners is

very strong so they should invest and bring all the technology and machinery here

in Pakistan so that they can make all the parts here in Pakistan. Then there will be

no need to import any part and in future any fluctuation in the exchange rate won't

affect the company's expenses.

In Pakistan the buying power of people have decreased a lot so the market which

Honda Atlas is targeting has decreased. What we suggest is that they should

introduce a smaller car up to 1000cc and because of their unique strengths it will

attract many customers. They should target the lower income group with that car.

This market of lower income group has increased in last two to three years.

Currently Honda Pakistan is targeting only major cities of Punjab and some cities

of Sindh other area is still neglected there is no dealership there. So people in those

areas do not buy Honda. Honda requires trained mechanics which are only present

at the Honda's dealerships. They should increase the no of their dealerships and

expand in those areas which are neglected. It will increase the sales.

Vehicles made by Honda are not completely suitable for Pakistan's market. For

example they does not run successfully on CNG, specially City, the shields under

the engine are made of plastic so they come out more often etc. by making some

97

changes in these existing vehicles they can reduce these problems because they

have the modern technology perfect engineers. After resolving these problem

make some campaigns and tell the customers that these problems have been

resolved than sales increase.

They should make contracts with government departments like Toyota does, give

some attractive offers and sell them vehicles in large quantities. This will increase

sales rapidly.

Spare part is not available in the market especially in those areas where there is no

dealer. Make some contracts with the markets of such places and provide them

spare parts so the people in those areas who have Honda vehicles could be

satisfied.

Increase the no of 2s dealers everywhere so that customers could get services of

maintenance and repairs.

Make good marketing strategies and increase advertising.

The new civic is only being made in 1.8 liter VTI engine. The smaller 1.5 liter

simple engine which was being offered before the current model was discontinued.

That model was more popular because of its fuel economy. The customer who

owned that model of civic with 1.5 liter is buying Corolla instead of new civic.

Company has made a big mistake by making this change. What we suggest that

they should offer that smaller engine in this new shape also so that old EXI market

could be captured again.

They can also start exporting these vehicles to countries like Bangladesh or

Srilanka. Toyota once started importing their vehicles to Bangladesh which

resulted in a lot of revenues.

98

Appendix

References

References:

99

www.honda.com.pk www.corporate information.com

www.atlasfunds.pk

www.wikipedia.com

www.pakautocar.com

www.gift.edu.pk

www.brecorder.com

www.carsurvey.org

www.toyota-indus.com

www.ghandharanissan.com.pk

www.dawn.com

www.sbp.org.pk

A Honda City sale at Kalima Chowk was visited to get some information about the

company.

Interview was taken from Mr., Sami Shafi (Senior Manager, After sales

department).

Got annual reports of the companies from stock exchange.

These all internet websites were visited some were useful and some were waste of

time. We got all the links some of them may be missing.

100

http://www.sbp.org.pk/

http://www.dawn.com/

http://www.ghandharanissan.com.pk/

http://www.toyota-indus.com/

http://www.carsurvey.org/

http://www.brecorder.com/

http://www.gift.edu.pk/

http://www.pakautocar.com/

http://www.wikipedia.com/

http://www.atlasfunds.pk/

http://www.honda.com.pk/

Documents

Honda Atlas Cars