Semester project (strategic managment 70415)

Semester ProjectSTRATEGIC

BUSINESS PLAN FOR GHANDHARA

NISSAN LIMITED

Conducted By:Name of Student: Muhammad Asif KhanStudent ID: MB-2-05-51271Semester: Fall-2015

Submitted To:Course Instructor: Dr.Hanif MuhammadCourse ID: 70415

of 58

Campus: PAF-KIET (City Campus)

Strategic Audit Sheet for Ghandhara Nissan Limited

STRATEGIC AUDIT HEADINGANALYSIS

(+) FACTORS (-) FACTORSCOMMENTS

1) CURREENT SITUATION:A) Past Corporate Performance

Includes:B) Strategic Posture:

Current MissionCurrent ObjectiveCurrent StrategiesCurrent Policies

SWOT ANLYSIS BEGINS:2) Corporate GovernanceA) Board of DirectorsB) Top Management

3) EXTERNAL ENVIRONMENT (EFAS):(Opportunities & Threats)

A) Societal EnvironmentB) Task Environment

(Industry Analysis)4) INTERNAL ENVIRONMENT (IFAS):

(Strengths & Weaknesses)A) Organization StructureB) Organization CultureC) Organization Resources

i) Marketingii) Financeiii) Research & Developmentiv) Operations & Logisticsv) Human Resourcesvi) Information Systems

5) ANALYSIS OF STRATEGIC

of 58

FACTORS (SFAS):A) Key Internal and External

Strategic Factors (SWOT)B) Review of Mission And

Objectives6) ALTERNATIVES AND RECOMMENDATIONS:A) Strategic AlternativesB) Recommended Strategy7) IMPLEMENTATION:

8) EVALUATION & CONTROL:

Current SituationPast Corporate Performance:Ghandhara Nissan Was established as a private limited company in August 1981 to import and market Nissan vehicles in Pakistan. It also has been marketing Nissan Diesel Trucks assembled in the country. It was converted into a public limited company in May 1992 to undertake production of Nissan Vehicles. The company has a very low market share and its products are not doing so well in Pakistan market from its beginning. The reasons to which this state is attributed include lack of financial resources, internal strife in the company, and restructuring efforts. To handle this situation the company is considering to have their loans converted into equity, or to sell the stakes to a new group so that outstanding loans could be paid or rescheduled. The problems of Nissan are further aggravated by stiff competition from the large car market covered mainly by Toyota and Honda.

Present Status:To analyze the past performance of the Ghandhara Nissan Limited the following evaluation has been done from their last year financial report displayed for the stakeholders:

i) Return on Investment (ROI)= Net Profit After Tax Total Assets

= 508,867,0003,571,264,000

= 14.24%

of 58

II) Return on Equity Net Profit after (ROE)= Net Profit after TaxesShareholder’s Equity

= 508,567,000

1,274,111,000= 39.90%

III) Earnings per Share (EPS ) = Net Profit after Taxes – Preferred Stock Dividend

Avg. number of Common Share= 508,867,000 – 90,005,000

45,002,500= Rs.9.30

OR

Return on Share (ROS) = Net Income after TaxesNumber of Common Stock

= 508,867,000

45,002,500= Rs.11.30

To analyze company’s long term investment ability:

Leverage Ratios:

i) Debt to Asset Ratio = Total DebtTotal Assets

= 1,248,858,0003,571,264,000

= 0.3496

II) Debt to Equity Ratio = Total DebtShareholder’s Equity

of 58

= 1,248,858,0001,274,111,000

= 0.980

ii) Long term Debt to Capital Structure = Long Term DebtShareholder’s Equity

= 435,544,000

1,048,195,000 = 0.415

Common Size Statements and comparison with last year:

Ghandhara Nissan LimitedBalance Sheet:As on June 30, 2015

Assets:2015

Common Size 2014

Common Size

Difference (+ or -)

Non Current Assets:Property, Plant, and Equipment

1,749,285

0.49

1,764,038 0.51

(14,753)

Intangible Assets 88

0.00002

118 0.00003

(30)

Long term Investments 192,630

0.05

152,630 0.04

40,000

Long term Loans 6,477

0.0018

4,864 0.00

1,613

Long term deposits 16,633

0.0047

8,031 0.0023

8,602

Total

1,965,113

0.55

1,929,681 0.56

35,432

of 58

Current Assets:Stores, Spares and Loose tools

50,174

0.014

44,055 0.05

6,119

Stock-in-Trade 623,847

0.17

692,474 0.66

(68,627)

Trade Debts 345,727

0.10

395,583 0.12

(49,856)

Loans and Advances 40,212

0.01

25,541 0.01

14,671

Deposits and Prepayments 39,094

0.01

15,721 0.00

23,373

Other receivables 30,749

0.01

49,102 0.01

(18,353)

Short term investment 30,092

0.01

38,109 0.01

(8,017)

Taxation-Net 117,341

0.03

96,070 0.03

21,271

Bank Balance 328,915

0.09

148,618 0.04

180,297

Total

1,606,151

0.45

1,505,273 0.44

100,878

Total Assets

3,571,264

1.00

3,434,954 1.00

136,310

EQUITY AND LIBILITIES:

Share Capital And Reserves:

Share Capital 450,025

0.13

450,025 0.13

-

Share Premium 40,000

0.01

40,000 0.01

-

of 58

Unappropriate Profit 784,086

0.22

334,375 0.10

449,711

Total Equity

1,274,111

0.36

824,400 0.24

449,711

Surplus on Revolution of fixed Assets

1,048,295

0.29

1,054,188 0.31

(5,893)

Liabilities:

Non Current Liabilities:Liabilities against assets subject to finance lease

45,635

0.01

13,006

0.0038

32,629

Long term deposits 9,611

0.01

10,611

0.0031

(1,000)

Deferred Liabilities 111,969

1.98

94,795 0.03

17,174

Deferred Taxation 268,329

1.59

158,039 0.05

110,290

Total

435,544

7.46

276,451 0.08

159,093

Current Liabilities:

Trade and other payable 642,881

0.74

767,840 0.22

(124,959)

Accrued Mark-up 7,985

0.09

5,178

0.0015

2,807

Short term finances 32,259

0.04

448,861 0.13

(416,602)

Running Finances under mark-up arrangements

118,802

0.43

54,380 0.02

64,422

Current portion of liabilities against assets subject to

11,387

0.02

3,656

0.00 7,731

of 58

finance lease

Total

813,314

0.23

1,279,915 0.37

(466,601)

Total Liabilities

1,248,858

0.35

1,556,366 0.45

(307,508)

Total Equities and Liabilities

3,571,264

1.00

3,434,954 1.00

136,310

“Amount in 000”

Ghandhara Nissan LimitedProfit Loss Account (Income Statement)For the Year Ended June 30, 2015

Particulars

2015Common Size 2014

Common Size

Difference (+ or -)

Revenue (Sales) 5,445,392

1

2,619,910

1

2,825,482

Less: Cost of Sales

4,314,378

1

2,148,821

1

2,165,557

Gross Profit 1,131,014

0

471,089

0

659,925

Less: Distribution Cost

56,435

0

19,318

0

37,117

Administration Expenses

168,995

0

124,565

0

44,430

Other Expenses 58,348

0

19,988

0

38,360

Add: Other Income 26,335

0

12,695

0

13,640

Profit from Operations

873,571

0

319,913

0

553,658

Less Finance Cost 86, 50 36,0

of 58

: 294 0 ,218 0 76

Profit Before Taxation

787,277

0

269,695

0

517,582

Less: Taxation

278,410

0

95,765

0

182,645

Profit after Taxation

508,867

0

173,930

0

334,937

“Amount in 000”

Z-Value (Altman’s S Bankruptcy Formula):Z-Value formula combines five ratios by weighting them according to their importance to a corporation’s financial strength. The Formula is:

Z= 1.2X1+1.4x2+3.3x3+0.6x4+1.0x5 X1= Working Capital (%) = 792,837,000 = 0.220

Total Assets 3,571,264,000

X2= Retained Earnings (%) = 784,086,000 = 0.219Total Assets 3,571,264,000

X3= Earnings Before interest & Taxes (%)Total Assets

= 787,277,000 = 0.2203,571,264,000

X4= Market Value of Equity (%) = 1,274,111,000 = 1.020Total Liabilities 1,248,858,000

X5= Sales (Number of times) = 5,445,392,000 = 1.524Total Assets 3,571,264,000

Z-Value = 1.2 (0.220) + 1.4 (0.219) + 3.3 (0.220) + 0.6 (1.020) + 1.0 (1.524)

= 0.264 + 0.3066 + 0.726 + 0.612 + 1.524Z-Value = 3.4326

Note: Score below 1.81 indicates sufficient credit problems Score above 3.0 indicates a healthy firm Score between 1.81 and 3.0 indicates question mark of uncertainty

of 58

Index of Sustainable Growth:

This is useful to learn if a company embarking on a growth strategy will need to take on debt to fund this growth, the index indicates how much of the growth rate of sales can be sustained by internally generated funds.

If the planned growth rate calls for a growth rate higher than the g*, extended capital will be needed.

The formula is:g*= [P (1-D) (1+L)]

[T-P (1-D) (1+L)]

P= (Net Profit before Tax / Net Sales) x 100 =787,277,000/5,445,392,000*100

= 14.45D= Target Dividends / Profit after Tax =

90,005,000/508,567,000= 0.1768

L= Total Liabilities / Net Worth =1,248,858,000/1,274,111,000

= 0.9801T= (Total Assets / Net Sales) x 100 = 3,571,264,000/5,445,392,000*100

= 65.58

g* = [14.45 (1-0.1768) (1+0.9801)][65.58-14.45 (1-0.1786) (1+.9801)]

g* = 23.55342.077

g* = 0.5597 or 55.97%

Note: If the planned growth rate is higher than the g*, extended capital is required.

Leverage Buy Out:

Operating Cash Flow:

Net Income= 787,277,000Add: Depreciation= 75,575,000

Depletion= --------Amortization= --------Interest Expense= --------

of 58

Income Tax Expense= 162,374,000Operating Cash Flow= 1,025,226,000

Free Cash Flow:

Net Income= 787,277,000Add: Depreciation= 75,575,000

Depletion= ----------Amortization= ----------Total 862,852,000

Less: Capital Expenditures= 17,517,000Dividends= 90,005,000Free Cash Flow= 755,330,000 Nissan Motors Corporation (Global)

VISION:Enriching People’s Lives

MISSION: Nissan provides unique and innovative automotive products and

services that deliver superior measurable values to all stakeholders*in alliance with Renault.

Nissan will continue to offer innovative products and services today and in the future.

What drives us and gives birth to new value is the Nissan spirit, embodied in the phrase.

The power comes from inside. Nissan builds high-quality cars that are safe and have the bold design

and innovative technology to satisfy our customers’ needs. As a responsible corporate citizen, Nissan is committed to contributing

to the advancement of society and the preservation of our natural environment.

Our corporate vision is enriching people’s lives.

Nissan (Corporate): Established in Yokohama, Kanagawa in 1933, Nissan Motor Co., Ltd.

currently manufactures vehicles in 20 countries around the world, including Japan and sells them over 170 countries. Global production volume of fiscal 2013 was 5.08 million units.

of 58

Nissan, Infiniti & Datsun (Brand) Nissan has a portfolio of three brands, Nissan, Infiniti and Datsun. Nissan vehicles are marketed in all major markets worldwide. Infiniti was launched as a premium brand in North America in 1989.

The new global headquarters for Infiniti in Hong Kong was opened in 2012 with sales operations in over 50 countries.

Global unit sales of Nissan Motor Co., Ltd. in fiscal 2013 totaled 518.8 million vehicles.

In 2012, Nissan Motor Co., Ltd. announced the return of the Datsun brand. Datsun is for risers, optimistic, up-and-coming customers in high-growth markets.

Strategy:

Focus:Brand power:To strengthen Nissan’s brand power, we will expand our strength in engineering and production to the sales, marketing and ownership experience. We will raise the level of interaction with our customers to create a world-class standard of service that will build lasting relationships with every Nissan car owner. We recognize that having a stronger brand will help close the gap with our top competitors in every measurable area – from revenue generation to overall opinion and purchase intention.

Sales power:Sales power in the mid-term plan refers to fully grasping the needs of customers in each market, resulting in more sales volume and greater market share. In emerging markets, we will focus on building a robust dealer network with market positioning and staffing optimized to meet the needs of local Nissan customers. In mature markets, where our dealer network is already established, we will take a strategic approach to improve customer loyalty and improve sales efficiency by increasing sales volume per outlet.

Enhancing quality:Nissan intends to make steady progress in improving product quality. During Nissan Power 88, our aim is to raise Nissan into the top group of global automakers in product quality and elevate Infiniti to leadership status among peer luxury products.

Zero-emission leadership:Nissan has taken the lead as the all-time volume leader in dedicated electric vehicle sales. The Nissan LEAF is the best-selling EV in the world. Nissan’s EV lineup has expanded with the launch of the e-NV200 light commercial vehicle. An all-electric premium car will be launched by Infiniti in the near future. Together with our alliance partner

of 58

Renault, we have plans to launch eight all-electric vehicles. In addition, Nissan continues to take a leadership role in every aspect from the development of batteries, chargers and vehicle lineup to electric grid studies, battery recycling and the use of batteries for energy storage, so that we will contribute to the establishment of sustainable mobility.

Business expansion:Regarding the 8% market share objective under Nissan Power 88, we estimate that 35% of the growth in volume will come from mature markets and 65% will come from emerging markets. We will achieve this through a steady tempo of new product launches averaging every six weeks, a continued focus on growth markets and the expansion of our Infiniti and light commercial vehicle businesses. Investments in manufacturing capacity expansion, particularly in China, North America, Brazil, Russia and India, will enable us to increase sales volume.

Cost leadership:We have been successful in reducing costs by 5% annually, due mainly to our cross-functional monozukuri activities involving our supplier base. As our production footprint is increasingly global, we will maintain this pace by enhancing and deepening these activities in every Nissan production base across the regions. Moreover, evaluating not only purchasing costs but also logistics and in-house costs, we have set an objective to reduce total costs by 5% each year.

Together with a stronger brand, investments in products, technologies and global capacity, we aim to both achieve and grow beyond the Nissan Power 88 plan.

Mid – term plan Nissan Power 88 :

Nissan operates its business based on a six-year mid-term plan, Nissan Power 88, which began in fiscal year 2011. Power derives its significance from the strengths and efforts we will apply to our brands and sales. Our commitment is to renew our focus on the overall customer experience, elevating Nissan’s brand power and ensuring quality and excellence for every person who buys a Nissan car.

88 denote the measurable rewards from achieving our plan. We aim to achieve a global market share of 8%, up from 5.8% in 2010, and we will

of 58

increase our corporate operating profit to a sustainable 8%, up from 6.1% in 2010.

Nissan is implementing six tactics under Nissan Power 88:

Business expansion in progress: During fiscal year 2013, we made record investments to grow and

enhance our operations. Our capital expenditures peaked as a percentage of revenue. At the same time, we will reap the benefits of our newly installed capacity.

In November 2013 in Mexico, and in February 2014 in Brazil, we opened new plants. We expanded operations at plants in Russia and India.

In June 2013, we started production in Vietnam. We began a capacity-development project in Myanmar in September 2013.

And we executed expansion plans for our plants in Indonesia in May 2014 and in Thailand in June.

Nissan will continue to drive into untapped markets. During 2014, we began production activities in Nigeria - the largest and most affluent market in Sub-Saharan Africa.

Nissan is the first major auto brand to localize production in Nigeria. During 2014, we expect the Datsun brand to drive strong sales in high-potential markets worldwide.

In the last fiscal year, we began local production and sales of the Datsun GO in India. Since then, production and sales of the Datsun GO-plus have started in Indonesia.

In April 2014, we unveiled the all-new Datsun on-DO in Moscow and began Datsun sales in Russia in September.

In June, we showcased the Datsun model that will be sold in South Africa. During 2014, we will continue to evaluate potential expansion opportunities for the Datsun brand.

The Renault-Nissan Alliance is a strategic partnership between France-based Renault and Nissan, which is based in Japan. Together Renault and Nissan sell one in ten of all cars worldwide.

The companies, which have been strategic partners since 1999, sold 8.3 million cars in nearly 200 countries in 2013. In addition to AVTOVAZ, the Alliance operates strategic collaborations with other automakers including Germany's Daimler, China's Dongfeng, and India's Ashok Leyland.

The 15-year old Alliance between Nissan and Renault delivered a record 2.9 billion euros in synergies in 2013. Purchasing, power train and vehicle engineering remained the biggest contributors as the Alliance geared up for the launch of its first Common Module Family (CMF) vehicles.

Through the Renault-Nissan Alliance, we are offering more than just cars; we are working toward the creation of a zero-emissions society.

of 58

This process will involve mass production of vehicles for sustainable mobility for markets throughout the world. Collaboration with countries, local governments, electricity providers and many experts will be required to help develop the necessary infrastructure and to make the whole system work.

Nissan is committed to zero-emission leadership, and taking the initiative to make the necessary investments to make it happen. Zero-emission mobility is our passion, a true breakthrough and a key to our future.

Convergence Projects : Since April 1, 2014, the Renault-Nissan Alliance launched convergence

projects in four key functions to enhance performance and achieve at least a €4.3 billion annualized synergy goal by 2016. To achieve that synergy target, the Alliance will focus on closerintegration in four key areas: R&D, Manufacturing & Logistics, Purchasing, and Human Resources.

Common Module Family (CMF): Common Module Family (CMF) is the Alliance’s unique system of

modular architecture and an increasing source of synergies. CMF enables Renault and Nissan to build a wide range of vehicles from

a smaller pool of parts, while at the same time increasing customer choice and quality. Small vehicles are based on CMF-A, while mid-sized vehicles are CMF-B, and the largest vehicles are CMF-C/D.

In November 2013, Nissan began selling its first vehicle on CMF in the United States; the new Rogue sports utility vehicle is built on the CMF-C/D. The following month, Nissan began selling the X-Trail crossover SUV in Japan, also based on CMF. In February, Nissan began selling the Qashqai crossover in Europe. Renault’s first CMF vehicle, the new Espace, will launch in 2015. It will also be built on CMF C/D architecture.

In 2013, the Alliance also began development work on the CMF-A, the most affordable category of cars. Production of CMF-A vehicles will begin in 2015 at the Renault-Nissan Alliance plant in Chennai, India.

Alliance and Daimler New Plant in Mexico:In June 2014 the Renault-Nissan Alliance and Daimler AG announced joint development of premium compact vehicles and joint production in Mexico. The Alliance and Daimler will establish a 50:50 joint venture which will oversee construction and operation of the new plant in Aguascalientes in north-central Mexico. The new plant will be built in the immediate vicinity of an already existing Nissan plant and will have an annual capacity of 300,000 vehicles when fully ramped up.

of 58

Infiniti models will start production in 2017, and Mercedes-Benz models will follow in 2018.

Autonomous drive technologies:Nissan will be ready with revolutionary, commercially-viable Autonomous Drive in multiple vehicles by the year 2020. Our R&D activities are progressing rapidly and testing is underway on public roads. Nissan’s goal is to put autonomous drive within the reach of most consumers. We forecast significant demand for autonomous drive as consumers understand its benefits.

By the end of 2016, Nissan will make available the next two technologies under its autonomous drive strategy. We are bringing to market a traffic-jam pilot, a technology enabling cars to safely navigate on congested highways. In the same timeframe, we will make fully-automated parking systems available across a wide range of vehicles.

This will be followed in 2018 by the introduction of multiple-lane controls, allowing cars to negotiate hazards and change lanes. And before the end of the decade, we will introduce intersection-autonomy, enabling vehicles to negotiate city cross-roads without driver intervention.Nissan is an industry leader toward the introduction of vehicle enhanced systems, aimed at relieving motorists of mundane tasks while increasing safety, reducing congestion and helping to lower emissions.

Nissan in Pakistan

Nissan is represented by Ghandhara Nissan Limited in Pakistan and operates under the leadership of CEO Mr. Ahmad Kuli Khan Khattak. Ghandhara Nissan Limited is committed to serve the market efficiently, through satisfying internal and external customers and be accountable to stakeholders and the community as responsible corporate citizens. They are determined to reciprocate their trust reposed in Nissan by delivering on promises to customers, providing quality product, economically priced vehicles complete with after sales service.

Vehicles:

Nissan has been offered following vehicles with the collaboration of the Ghandhara Nissan Limited:

Passenger Cars:

of 58

Sunny (Discontinued)

TEANA (Discontinued)

TIDA (Discontinued)

Jeep 4x4:

X-TRAIL

Patrol

Light Commercial Vehicle:

Pick Up

Urvan

of 58

http://www.nissan.pk/en/web/models/TEANA%28Discontinued%29/home/hpage.htm

http://www.nissan.pk/en/web/models/X-TRAIL/home/hpage.htm

http://www.nissan.pk/en/web/models/PICK%20UP/home/hpage.htm

Bus:

Civilian

Ghandhara Nissan Limited (GNL) is a part of Group of Companies of Bibojee Services (Pvt.) Limited. The Company was incorporated in 1981 as Private Limited Company having the sale Licensee for the distribution of Nissan vehicles in CBU condition in Pakistan; it was converted in to a Public Company listed in Karachi Stock Exchange.

GNL has Technical Assistance Agreement with Nissan Motor Co. Japan and joint Venture Agreement with Nissan Diesel Co. Japan for the progressive Assembly of Passenger Cars, Light Commercial Vehicles and Heavy Duty Vehicles. GNL’s Car and Truck are located at port Qasim adjacent to each other.

It is the only Automobile Company in the country assembling complete range of product i.e. passenger cars, light commercial vehicles and heavy-duty trucks and buses.

The company is committed to achieve high quality products, customer’s satisfaction, market leadership, contribution in the economic growth of Pakistan and comply with all regulatory and other requirements for making the environment user friendly.

Head Office:Ghandhara House, 109/2, Clifton,Karachi.E-mail: [email protected]

of 58

http://www.nissan.pk/en/web/models/URVAN/home/hpage.htm

Plant (Truck):Plot Survey No. 362, Deh Kanto, KDA Scheme No. 25-A, Port Bin Qasim,Karachi.

Plant (Car):Plot Survey No. 362, Deh Kanto, KDA Scheme No. 25-A, Port Bin Qasim, Karachi.Nissan’s Vision:

To maximize market share by producing and marketing highest quality vehicles in Pakistan.

Nissan’s Mission:

As a customer oriented Company, Provide highest level of customer satisfaction.

To accelerate performance in all operating areas, ensuring growth of the Company and increasing return to the stakeholders.

To create a conducive working environment leading to enhanced productivity, job satisfaction and personal development of the employees.

To contribute to social welfare by adopting environment friendly practices and processes for the well being of society.

Current Objectives:

Maximize its market share in automotive sales in Pakistan Market. Create new joint ventures to achieve its ultimate goal. Focusing on its product line of LCVs, Trucks and Buses and maximize

its profit.

Current Strategies:

Presently Ghandhara Nissan Limited has been focusing on horizontal growth strategy through creating a joint venture with dongfeng and has formed its subsidiary as Ghandhara Nissan Dongfeng Limited.

They also opted retrenchment strategy for its product line and discontinued the passenger cars production.

Current Policies:

GNL is emphasizing to carry out its business in an ethical manner that it will become beneficial for all of its stakeholders.

Unnecessary competition must be avoided. Focusing on business expansion.

of 58

SWOT ANALYSIS BEGINSCorporate Governance:

Board of Directors Responsibilities:

Board of Directors is responsible to evaluate quarterly, half yearly and annual performance of the GNL.

Review and approve policies proposed by the top management for the GNL & for its subsidiaries and wherever necessary recommend suggestions.

Board of Directors Continuum:

Board directors actively participate in policy formulation, approval and implementation. It is possible due to the most of the top management of the Ghandhara Nissan Limited are the part of the top management team of the company. They are not only part of the policy making team but also the part of policy implementation.

Inside Directors:

Mr. Raza Kuli Khan KhatakLt. Gen. (Retd.) AliKuli Khan KhattakMr. Ahmed Kuli Khan KhatakMr. Mushtaq Ahmed Khan (FCA)Ch. Sher MuhammadMr. Jamil A. Shah

Outside Direstors:

Syed Haroon RashidMr. Mohammad ZiaMr. Larbi Hbil

Top Management:

The top management of GNL is consist on the following:

Mr. Raza Kuli Khan Khatak ChairmanLt. Gen. (Retd.) AliKuli Khan Khattak PresidentMr. Ahmed Kuli Khan Khatak Chief Executive OfficerMr. Aqiel Amjad Ghani Company SecretaryMr. Muhammad Saleem Baig Chief Financial Officer

of 58

Competency of Top Management:

Director’s and top management Profile:

Mr. Raza Kuli Khan Khattak - Chairman Raza Kuli Khan Khattak, MA (Oxon) was educated at Aitchison College Lahore and Brasenose College Oxford from where he graduated with honours in 1961. He subsequently joined his father in the Family Business and is presently the Chairman of ‘Bibojee’ / Gen Habibullah’s Group of Companies.

Lt.Gen.(Retd.) Ali Kuli Khan Khattak - President General Ali was educated / trained at Aitchison College Lahore and the Royal Military Academy Sandhurst and holds a Masters Degree from the Quaid-e-Azam University, Islamabad.He retired from the Pakistan Army as its Chief of General Staff in 1998 and then joined the Family Business which includes, Tyre manufacturing, Automobiles, Insurnace, Cotton Spinning Mills, Woollen Textiles, Finance, Construction and Trading Services Companies. He is the Chairman of The General Tyre and Rubber Company of Pakistan Ltd., President of Ghandhara Nissan Limited and also the Chief Executive of Gammon Pakistan.

Directorships in Companies: - Bibojee Services (Pvt.) Ltd. - Babri Cotton Mills Ltd. - Janana De Malucho Textile Mills Ltd.- Rehman Cotton Mills Ltd.- Bannu Wollen Mills Ltd.- Universal Insurance Co. Ltd.- Ghandhara Industries Limited - Pakistan Tobacco Co.- Liaquat National Hospital

Mr. Ahmed Kuli Khan Khattak - Chief Executive

Educational Qualification:• Graduated from Pakistan Air Force.• Completed Various Courses from PAF.Experience:Served PAF for nearly 21 years during which he achieved different Honours Award Medals then he retired in 1987 as Wing Commander.16 years management experience in the business of Automobile and Textile Sector.He is also the Chairman of All Pakistan Textile Mills Association

of 58

(APTMA)Directorships in Companies:- Bibojee Services (Pvt.) Ltd.- The General Tyre & Rubber Co.of Pak.Ltd.- Babri Cotton Mills Ltd.- Janana De Malucho Textile Mills Ltd.- Rehman Cotton Mills Ltd.- Bannu Wollen Mills Ltd.- Ghandhara Industries Ltd.- Universal Insurance Co. Ltd.

Mr. Mushtaq Ahmed Khan (FCA) - Group Director Finance

Educational Qualification:• Fellow Member of the Institute of Chartered Accountants of Pakistan. Experience:34 years experience in Financial Management, since 1975 serving the Bibojee Group as Group Director Finance.Directorships in Companies:- Bibojee Services (Pvt.) Ltd.- The General Tyre & Rubber Co.of Pak.Ltd.- Babri Cotton Mills Ltd.- Janana De Malucho Textile Mills Ltd.- Rehman Cotton Mills Ltd.- Bannu Wollen Mills Ltd.- Ghandhara Industries Ltd.- Universal Insurance Co. Ltd.

Mr. Jamil Ahmed Shah - Director

Mr. Jamil Ahmed Shah has over 47 years of experience in working with different automobile companies in Pakistan. He is working in Ghandhara Industries Limited and Ghandhara Nissan Limited as Adviser to Chairman since 1995.

Directorships in Companies:- Ghandhara Industries Limited - Ghandhara Nissan Limited

Responsibilities of the Top Management:

The top management of the company has responsible for the following:

Top management is responsible to develop and implement strategies that will help the GNL to maximize its profits and achieve its vision.

of 58

They responsible to carry out the company’s operations in a manner that it will be meeting or exceed company’s define ethical standards of running business.

They are responsible to make sure that the Ghandhara Nissan Limited strategies are developed in accordance with the company’s mission in order to achieve its vision.

They responsible to produce the vehicles that will be environment friendly and will provide value to the customers through exceeding their expectations.

They are responsible to increase stakeholder’s wealth through increasing company’s profit.

They are responsible to maintain a safe and healthy workplace through ensuring that the company’s define ethical standards no discrimination on the basis of sex, color, religion disability or nay other impermissible factors.

Executive Leadership:

Executive leadership of the company is based on the following:

Mr. Raza Kuli Khan Khatak Chairman Lt. Gen. (Retd.) AliKuli Khan Khattak President Mr. Ahmed Kuli Khan Khatak Chief Executive

Officer

They are responsible to provide the strategic direction to the company and motivate all the relevant participants to achieve their predefined goals. CEO is responsible to lead the entire organization and motivate them for them attainment of the goals collectively and individually.

Social Responsibility:

The GNL is committed to operate its business in an ethical and responsible manner that it will become mutually beneficial for the organization and as well as for its stakeholders including stock holders, customers and the for the society where we are operating our business.

They are also committed to provide environmental friendly vehicles and completely adhere with the laws pertaining for the same. To achieve zero emission is our strategy for the long term.

Competency of Top Management:

The top management is competent enough to manage the affairs of the Ghandhara Nissan Limited in accordance to its vision and mission. Most of the top management representatives are foreign qualified and running the

of 58

affairs of the more than one business at one time. The Chief Executive Officer of the company is the grandson of the Chairman and Son of the President and belongs to the third generation of the Bibojee Group.

The experience of all the top management is multifaceted and they are part of the different other company’s boards. These companies are belongs to the different sector of the industries which are tyre manufacturing, textile and insurance.

External Environment (EFAS):

Global Scenario of Auto Industry:

The automotive industry is considered as an economic heavyweight due to which it has acquired the status of a key sector of the economy for every major country in the world. The annual global turnover of auto industry during the year 2005 remained $2.8 trillion while the size of trade has grown to a massive level of $ 1,016 billion, which represents 9% of the world merchandise trade. In 2006, over 69 million motor vehicles including cars, vans, trucks, buses and coaches were produced worldwide. In 2006 Japan (11.484 million units), US (11.264 million units), China (7.189 million units), Germany (5.820 million units) and South Korea (3.840 million units) were the top five motor vehicle producing countries in the world. Auto industry employed directly over 5% of the world’s total manufacturing labour force and contributed over $ 634 billion in tax revenues of twenty countries only. The auto industry is one of the largest investor in Research and Development, which help to increase the technology level in other industries as well.

The competition in the global market is getting fiercer; the global players are eying their presence in the new developing markets. The markets in Canada, USA, Western Europe and Japan are stagnating, while those in South America (especially Brazil), Eastern Europe (especially Russia), and Asia are growing. China has become the second largest car market in the world outrunning Germany last year and getting closer to Japan this year.

The global industry is slowly and gradually shifting towards Asian countries, mainly because of saturation of automobile industry in the Western world. The world' largest automobile manufacturers are planning to invest into production facilities in emerging Asian markets in order to reduce production costs. Low cost vehicles (scooters, motorcycles, small passenger cars etc) are driving the growth of automotive industry in China and other developing economies. It offers immense opportunities for global players in these economies. These emerging markets include Latin America, China, India, Malaysia and other markets in Southeast Asia. From long-term perspective, cheap financing and price discounts, rising income levels, and infrastructure

of 58

developments will drive the growth in majority of the Asian automotive market. Pakistan also have the opportunity to become a part of the global supply chain by increasing capacities, achieving certain level of economies of scale, technology up gradation and skilled human resource. To save the time in designing and improving the quality of automobiles, the world automobile companies are adopting computer aided manufacturing tools due to rising pressure of cost and quality. The changing models, fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges for the auto industry in a fast globalizing world.

Global auto industry is faced with two following challenges which need to be addressed in order to remain competitive;

• The carbon and climate protection• Make availability of vehicles at low cost with new climate friendly

energies.

i) The auto industry is generally faced by multiplicity of taxes; the presumptive tax regime has led to increase in prices of imported inputs and the finished goods. Component manufacturers are struggling to compete with under-invoicing, misdeclaration and smuggling. Import of used parts is still continuing at a large scale.ii) Imposition of Federal Excise Duty on the royalty and technical fee remitted to the suppliers of technology remains a potential barrier to innovation.iii) High cost of capital and relatively difficult access for the small and medium enterprises and lack of any incentive in the financial policy for the auto industry. Need of a dedicated fund for technology and Human Resource Development.iv) Manufacturing of modern machine tools and dies & moulds

Market Structure:

The market structure of the automobile industry in Pakistan is concentrated. In economic term, we could say it’s an oligopoly, which is characterized by imperfect competition in which the industry is dominated by a small number of suppliers. This is because the auto industry is highly capital-intensive requiring high investments and the products are expensive. Hence the barriers to entry are high resulting in the presence of limited number of suppliers.

Moreover, the market can also be categorized as price-oriented. As care are luxury items, especially in developing countries (Pakistan being one of them), the demand for them is elastic. Any prices change affects the sales of the company to a great extent.

Economic Position of the Market:

of 58

Pakistan is amongst a few countries of the world which manufacture all kinds of vehicles i.e. 2/3 wheelers, motorcars, LCVs, tractors, prime-movers & trucks and buses. The total country requirements are generally met from the local production except the import of certain categories of trucks & prime-movers. Import of used cars is allowed to the bonafide ex-patriate Pakistani’s and travelers only under the baggage scheme. The presence of few of world acclaimed brands and multinationals in the manufacturing of vehicles for the last 2 to 3 decades and their regular expansion plans speak of their confidence on the market, government policies and economic potential of the country. Pakistan auto industry turnover during the year 2005-06 crossed US $ 3.6 billion which comes to 2.8% of GDP (2005-06), thus saving substantial foreign exchange on imports. The job contribution by auto industry comes to nearly 1.392 million which includes direct jobs of nearly 192,000. The auto industry remains second largest tax payer in terms of its contribution to customs duty, sales tax and withholding tax. The export contribution however, is marginal and growing slowly, which otherwise has high potential to grow in the coming years.

Growth Opportunities:

In Pakistan context there are 10 cars in 1,000 persons which is one of the lowest in the emerging economies which itself speaks of high potential of growth in the auto sector and more so in the car production. Rising per capita income with changing demographic distribution and an anticipated influx of 30 to 40 million young people in the economically active workforce in the next few years provides a stimulus to the industry to expand and grow.

• Auto sector contributes 16% to the manufacturing sector which is 19% of the total GDP. It is expected that to increase to around 25% in the next 5 to 7 years. Auto industry’s present contribution to GDP stands at 2.8% which is expected to reach 5.6%. The GDP is expected to grow from $145 billion to $210 billion by the year 2012 and it will aim to increase continuous basis.

• The government’s strong commitment on investment in the infrastructure projects particularly the roads and highways, ports and shipping and Pakistan’s unique geographical location, providing an easy ground access to Central Asian Republics, China, Afghanistan, Iran and India is expected to push the auto industry growth in the cars, LCVs and HCV sectors. The growth of auto component industry is directly linked to the growth in assembly sector. As Pakistan auto industry is expected to reach a critical mass of production of cars and LCVs within next 5 to 10 years, the components production will become more competitive, technologically advanced and taking its due share in the global supply chain.

of 58

• Above factors in view and the governments’ commitment to create stable and predictable policy environment, involving the stakeholders in consultation process, implementation and assessment of policies will lead to more investment, high production, innovation and competitiveness besides maintaining the high growth of recent years.

Progress of Pakistan’s automotive industries:

Sales summary of automotive products manufactured and sold in Pakistan:

Automotive Products

Sales in units2014-

152013-

142012-

132011-

122010-

112009-

102008-

092007-

08Passenger

Cars 151134 118102 118830 157325 127944 12957 82844 164,65

0Truck 4111 2663 1948 2394 2942 3620 3136 5,350BUS 569 577 510 609 515 657 685 1,195

Jeeps (4X4) 1163 1151 1438 342 807 1201 1066 1,448Pick-Ups 27656 17635 15042 21472 17746 16496 15397 21,321

Total Sale 184,633

140,128

137,768

182,142

149,954 34,931 103,12

8193,96

4

Overall Sales of Passenger Cars:

Passenger Cars Category Wise

Sales in units2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-08

1300 CC and 78533 58050 60103 65816 61147 61008 38,755 50,8

of 58

above 24 1000 cc 19133 16455 13308 29981 23360 23696 16,152 48,8

87 800 cc & Below 1000cc 53468 43597 45419 61528 43437 39253 27,937 64,9

39 Total 15113

4 118102 118830

157325

127944

123957 82844 164650

Task Environment:

a) Threat of new entrant: There is a strong probality that the number of empetitors in the auto product will be increased and the existingones those who has not been operating the manufactruing facilites will staart their operation in the years to come.

b) Baragining Power of the Buyers: The data reveal that the infaltion of theeconomy has been upward trend in the past decades, on the other hand the economy is also progressing rapidly the purchasing ability of the buyers has been increased and this trend will be remain same, if there is no poiltical distrubance in the market.

c) Bargaining power of the supplier: The grwoht in the automotive industry will strengthen the bargaining power of the suppliers and the availability of the limited number of supliers endorsed it.

d) Rivalry among the competing firms: The market is oligopolistic which can be changed as pure perfect competition in near future, if number of mnaufacturer inreases.

of 58

e) Relative Power of unions, governments, special interest groups:The tade unions are not in very strong position in the industry but they exist through the auto industry and the provinacail governments are now responsible to deal with the labour intensive issues.

The importers of the auto products can also distrub the local manufactruing industires through influencing over the goernment. At present the government has shown the rigid attitude towrds the miniization of duties on the import auto products.

Summary of External Environment (EFAS):

Factors Weight Rating Weight ScoreOpportunities:

Large Market segment with potential purchasing ability

Sustainable growth of economy

Consistency of political government

Strict import policy of the government

Stability of the region Cost effective and fuel

efficient vehicle is required by the customer

.20

.05

.05

.05

.05

.10

4

3

3

4

1

4

.80

.15

.15

.20

.05

.40

Threats: Unavailability of Highly

Skilled manpower Expensive Raw Material New entrant in same

industry. Strong competitors

existing in the market with global image which can counterfeit the strategies

.10

.15

.10

.15

4

4

2

4

.40

.60

.20

.60

Total 1.00 3.55

Rating Criteria:

of 58

4= The response is superior3= The response above average2= The response is average1= The response is poor

Competitive Profile Method:

An overview of the competitor’s performance in past years:

Atlas Honda Motors (Manufacturer of Honda Autos):

Product Sales in Units

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09 2007-8

Honda Civic 7805 9933 9950 4977 6365 5908 4662 5,762

Honda City 15817 13741 11285 7142 9121 8212 6482 8,439

Total Sale 23622 23674 21235 12119 15486 14120 11144 14201

Indus Motors Limited (manufacturer of Toyota and Daihatsu Autos):

of 58


2014-15 2013-14 2012-13

2011-12

2010-11

2009-10

2008-09

2007-8

Toyota Corolla 51398 29087 32608 46207 41111 43510 26760 33,6

40 Diahatsu Core 0 0 71 3857 6007 5301 5,852 12,2

04 Toyota Fortuner 722 390 812 0 0 0 0

Sigma Defender 441 761 626 342 807 1201 1066 1,4

13 Toyota hilux 4823 4520 4282 4413 2897 2012 1534 2,0

01 Toal Sale 57384 34758 38399 54819 50822 52024 35212 49258

Pak Suzuki Limited (manufacturing Suzuki Autos):

of 58

ProductSales in Units

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09 2007-8

Suzuki Cultus 13837 14682 13308 13693 11428 12658 9198 27,563

Suzuki WagonR 5246 1621 0 0 0 0 0 0

Suzuki Alto 0 0 0 16288 11932 10794 6550 19,097Suzuki Mehran 29886 29509 32407 35131 24119 22513 13421 35,526Suzuki Bolan 23582 14088 12941 22540 13311 11439 8664 17,209

Suzuki Potohar 0 0 0 0 0 0

35 Suzuki Ravi 22815 12419 10734 17015 14601 13211 11900 11,8

57 Total Sales 95366 72319 69390 10466

7 75391 70615 49733 111287

of 58

Dewan Farooq Motors Limited (manufaturer of Hyundai Autos):


2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-8

Hyundai Santro 50 152 0 0 0 244 404 2,227

Hyundai Shehzore 10 680 0 0 203 1127 1883 6,848

Total Sales 60 832 0 0 203 1371 2287 9075

Hino Pak Motors Limited (manufacturers of Hino Autos):


2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09 2007-8

of 58

Hino Bus 475 496 410 490 409 517 523 926Hino Truck 1510 1055 842 1163 1338 2037 1724 2,652

Total Sales 1985 1551 1252 1653 1747 2554 2247 3578

Master Motors Limited (manufacturer of Master Autos):


2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-8

Master 811 650 583 693 736 505 362 619Master 12 5 4 23 0 19 1 7Master 80 16 26 44 45 128 42 515Total Sales 903 671 613 760 781 652 405 1141

of 58

Competitive Profile Matrix:

The following competitive profile method provides is for passenger car:

Critical Success Factors

WeightNissanRating Score

Toyota Rating Score

Honda Rating Score

SuzukiRating Score

Comments

Relevant Market Share

.20 1 .20 4 .80 3 .60 4 .80

Inventory System .10 3 .30 4 .40 3 .30 3 .30Financial Position .10 4 .40 3 .30 4 .40 3 .30Product Quality .10 2 .20 4 .40 4 .40 2 .20

Consumer Loyalty

.10 2 .20 4 .40 4 .40 3 .30

Sales Distribution .05 3 .15 3 .15 2 .10 4 .20Organization .10 4 .40 4 .40 3 .15 3 .30

of 58

StructureProduction Capacity

.10 4 .40 3 .30 2 .20 4 .40

E-Commerce .05 2 .10 3 .15 2 .10 2 .10Price

Competitive.10 2 .20 2 .20 2 .20 3 .30

Total 1.00 2.55

3.5 2.85 3.2

The following competitive profile method provides is for LCV, Trucks & Buses:

Critical Success Factors

WeightNissanRating Score

HinoRating Score

MasterRating Score

Hyundai Rating Score

Comments

Relevant Market Share

.20 4 .80 4 .80 2 .40 3 .60

Inventory System

.10 3 .30 4 .40 3 .30 3 .30

Financial Position

.10 4 .40 3 .30 3 .30 3 .30

Product Quality .10 3 .30 4 .40 3 .30 3 .30Consumer

Loyalty.10 3 .30 4 .40 3 .30 3 .30

Sales Distribution

.05 3 .15 3 .15 3 .15 3 .15

Organization Structure

.10 4 .40 4 .40 3 .30 3 .30

Production Capacity

.10 4 .40 3 .30 2 .20 2 .20

E-Commerce .05 2 .10 2 .10 2 .10 2 .10Price

Competitive.10 3 .30 3 .30 2 .20 2 .20

Total 1.00 3.45

3.55 2.55

2.75

Rating Criteria:4 = Major Strength3= Minor Strength2= Minor Weakness1= Major Weakness

of 58

Internal Environment (IFAS):Corporate Structure:

Corporate Culture:

of 58

The GNL possess a cooperative culture where the every individual who has an association with the company has right to express their views and put suggestions for the improvement irrespective of his / her designation. This culture has helped them when they developed new venture with the dongfeng.

In contrast to the bureaucratic style of working their executive has adopted the culture of autocratic where everyone can be a part of decision making and freely put their views regarding product improvement and for the enhancement of organizational efficiency.

Corporate Resources:

Marketing:

Presently GHNL has not been carrying out any rigorous marketing camping for its products but their marketing department responsible to closely work with the sales team and help them out to achieve their defined targets and closely get the feedback from the customers to improve its customer service after sales and will get response from them for the future improvement of the product / vehicles.

Present Performance of Ghandhara Nissan Limited:The foolwoing table shows the yrar wise sales pogress of the GHNL.


2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-8

Nissan Bus 0 6 0 6 0 30 0 54Nissan Truck 852 378 226 224 487 519 551 1,166Dongfeng Bus 0 0 0 0 0 2 8 18Dongfeng Truck 0 0 0 0 0 0 4 -Total Sales 852 384 226 230 487 551 563 1238

of 58

Have a Glance over the performance of Ghandhar Industries Limited a sister concern of the Ghandhara Nissan Limited:

Isuzu


2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

2007-8

Isuzu Bus 938 580 297 314 381 559 495 913Isuzu Truck 82 70 96 90 106 89 135 201Total Sales 1020 650 393 404 487 648 630 1114

of 58

Finance:

Presently GNL is not in very sound financial position but fair enough to accelerate for the attainment of its higher goals. They already paid dividends to the shareholders at the end of last fiscal year. Cash flows are positive and relevant financial ratios reflect sound financial status of the company and will allow them to expand it vertically.

Research & Development:

Currently GNL has not allocated heavy budget for its R&D activities, they are receiving technical assistance form Nissan Global. And the new products and the amendments in the present products are made in coordination of the Nissan Global.

Operations & Logistics:

Company has well versed infrastructure for its automotive products but unable to capitalize in term of production. From past decade they are working under capacity.

Human Resource Management:

Currently human Resource has been considered as casual resource for the organization instead of developing them as competitive advantage.

Information System:

Information system plays very vital role for the organization success and GNL is in process to optimize the efficiency and accuracy of its information system through synchronizing its subsidiary.

Summary of Internal Factors:

Factors Weight Rating Weight ScoreStrengths:

Competent top management with diversified experience of industries.

Ability to integrate vertically in the market through utilizing existing infrastructure.

.10

.10

.10

4

4

4

.40

.40

.40

of 58

Sound financial position of the company.

Successfully expanded through new joint venture.

Ability to grow in diversified auto products range.

.10

.10

3

4

.30

.40

Weaknesses: Past introduced vehicles

are unable to capture the market.

Unable to achieve economies of scale

Unable to clearly define long term goals mostly focusing on short term objectives.

Lack of ownership among the employees.

Unable to apply economy of scope to minimize cost.

Lack of Research & development

.10

.10

.10

.05

.10

.05

1

1

1

2

2

1

.10

.10

.10

.10

.20

.05

Total 1.00 2.65

Rating Criteria:

1= Major Weakness2 = Minor Weakness3= Minor Strength4= Major Strength

Analysis Strategic Factors (SFAS)

Key Internal and External Strategic Factors (SWOT):

TOWS Analysis:

of 58

Internal Factors

External Factors

Strengths1. Competent top

management with diversified experience of industries.

2. Ability to integrate vertically in the market through utilizing existing infrastructure.

3. Sound financial position of the company.

4. Successfully expanded through new joint venture.

5. Ability to grow in diversified auto products range.

Weaknesses1. Past introduced

vehicles are unable to capture the market.

2. Unable to achieve economies of scale

3. Unable to clearly define long term goals mostly focusing on short term objectives.

4. Lack of ownership among the employees.

5. Unable to apply economy of scope to minimize cost.

6. Lack of Research & development

Opportunities1. Large Market

segment with potential purchasing ability

2. Sustainable growth of economy

3. Consistency of political government

4. Strict import policy of the government

5. Stability of the region

6. Cost effective and fuel efficient vehicle is required by the customers.

SO Strategies The management

of GNL must utilize its diversified experience to expand Nissan products through effectively utilizing the favorable conditions for the auto industry. (S1, O1, O2, O3, O4,O5)

Through clever planning GNL can produce fuel efficient vehicles for the customers. (S5, O6)

WO strategies Through offering

new products with distinctive features can help the GNL to capture mega market share. (W1, O1)

Existing economic conditions will help the GNL to achieve economies of scale. (W2, O2,)

The consistency of political governments and their policies will help the GNL to develop and achieve their long term goals. (W3, O3, O4)

of 58

The GNL must invest more on R& D to produce cost effective and fuel efficient vehicles for the customers. (W6, O6)

Threats1. Unavailability of

Highly Skilled manpower

2. Expensive Raw Material

3. New entrant in same industry.

4. Strong competitors existing in the market with global image which can counterfeit the strategies

ST Strategies The raw material

can be minimized through achieving vertical integration. (S2, T2)

GNL sound financial allows them to invest on Human Resource Development to avoid scarcity of Skilled Human in future. (S3, T1)

Through creating more joint ventures the threats of new entrant can be eliminate or minimized. (S4,T3)

GNL can cope with the existing competitors through producing diversified auto products for the market. (S5, T4)

WT Strategies Investment on

Human Resource Development will help the organization to get over the skill redundancy and will enable them to produce quality vehicles according to the customer requirements. (W1, T1)

Through achieving economies of scale they can minimize overall production cost of vehicles. (W2, T2)

GNL must focus on Long term plan which will help them to minimize new entrants’ threat in the industry. (W3, T3)

GNL can create a synergy among the employees, production and Research & Development to minimized competitor’s influence on the market. (W4,

of 58

W5, W6, T4)

SPACE (Strategic Position and Action Evaluation) Matrix:

Financial Position RatingReturn on investment 5Leverage 5Liquidity 4Working Capital 5Cash Flow 5Inventory Turnover 5Earnings Per Share 4Price Earnings Ratio 5

Total 38

Industry Position RatingMarket Share 3Product Quality 4Product Life Cycle 3Customer Loyalty 3Capacity Utilization 3Technological Know -how 5Control Over Suppliers & Distributors 5

Total 29.0

Stability Position RatingTechnological Changes -2Rate of Inflation -2Demand variability -4Price Range of Competing products -5Barriers to entry into market -5Competitive Pressure -1Price Elasticity of Demand -2Risk involved in Business -3

Total -24

Competitive Position RatingGrowth potential -1Profit Potential -2Financial Stability -2Extent Leveraged -3Resource Utilization -6Ease of Entry into market -1

of 58

Productivity, Capacity utilization -2Total -17

Rating Criteria: For Financial Position (FP)and Industry Position(IP):

+1 (Worst) to +7 (Best) For Stability Position (SP) and Competitive (Position):

-1 (Best) to -7 (Worst)

Conclusion:FP Average = 38/8 = 4.75IP Average = 29/7 = 4.14SP Average= -24/8 =- 3.00CP Average= -17/7 = -2.42

Directional Vector Coordinates:x-axis = -2.4 + (4.14) = +1.74y-axis = -3.0 + (4.75) = +1.75

Conclusion:The GHNL must pursue the following Aggressive Strategies:

Backward, Forward, Horizontal integration Market Penetration Market Development Product Development Diversification Retrenchment

of 58

According to space matrix score the GHNL

must adopt the aggressive strategy to

achieve its vision.

FP (+7)

(-7)CP IP (+7)

SP (-7)

BCG Matrix:

Sales progress of GNL product category wise:

Ghandhara Nissan Limited

Product Category

Sales in Units2014-15 2013-14 2012-13 2011-12 2010-11

of 58

Conservative

Market PenetrationMarket DevelopmentProduct DevelopmentRelated diversification

Aggressive

Backward Forward horizontal integrationMarket PenetrationProduct developmentDiversification (Related and unrelated)

Defensive

RetrenchmentDivestitureLiquidation

Competitive

Backward, Forward, horizontal IntegrationMarket PenetrationMarket DevelopmentProduct Development

Nissan Bus Bus - 6 - 6 -

Relative Market Share 0% 0.185% - 0.251% -

Nissan Truck Truck 852 378 226 224 487

Relative Market Share 21% 14% 12% 9% 17%

Sales Revenue 5,445,392,000

2,619,910,000

1,852,238,000

1,388,002,000

2,650,068,000

Net Profit 508,867,000 173,930,000 138,385,000 (85,968,000) 7,097,000

Auto Industry Growth Rate:

Growth trend of Auto Industry In Pakistan:

Year 2014 2013 2012

Growth Rate -2.6 -12.8 3.4

Relative Market Share Position

of 58

Nissan’s Buses presently existing in

this Category

High MediumLow

1.0 0.5 0.0

High 20.0

Industry Sales Growth Medium 0.0

Low -20.0

Internal External (IE) Matrix:

X-axis = Weighted Average Score of IFE = 2.65Y-axis = Weighted Average Score of EFE = 3.55

Total IFE Weighted Score

Strong Average Weak

of 58

II

Stars

I

Question Marks

III

Cash Cows

IV

Dogs

Nissan’s Trucks presently existing in this category

3.0 to 4.0 2.0 to 2.9 1.0 to 1.9

4.0 3.0 2.0 1.0

High 3.0 to 4.0

Medium 2.0 to 2.99

Total EFE Weighted Score

2.0

Low 1.0 to 1.9

1.0

Total EFE Weighted Score

Conclusion:

IE matrix suggests Grow and Build Strategy comprises on following: Backward, Forward, or Horizontal Integration Market Penetration Market Development Product Development

Grand Strategy:

Sales Progress of GNL:

Following is the overall summary of GNL progress year wise:

Particulars Sales in Units / Amount in Rupees2014-15 2013-14 2012-13 2011-12 2010-11

Total Sales 852 384 226 230 487

of 58

II IIII

IV V

VII

VI

VIII IX

Sales Growth in % 121.88% 69.91% -1.74% -53% -14.11%

Sales Revenue 5,445,392,000

2,619,910,000

1,852,238,000

1,388,002,000

2,650,068,000

Sales Revenue Growth in % 107.85% 41.45% 33.45% -47.62% 10.30%

Net Profit / Loss 508,867,000 173,930,000 138,385,000 (85,968,000) 7,097,000

Profit / Loss Growth in % 192.57% 25.69% 260.97% -1311% 107.98%

Auto Industry Progress:

Auto Industry growth rate in Pakistan:

Year Growth Rate

Percent Contribution in Large Scales Manufacturing

2014 -2.6 -3.42013 -12.8 -19.92012 3.4 17

of 58

Rapid Market Growth

Weak StrongCompetitive CompetitivePosition Position

Slow Market Growth

Quadrant IMarket DevelopmentMarket PenetrationProduct DevelopmentForward IntegrationBackward IntegrationHorizontal IntegrationRelated Diversification

Quadrant IIMarket DevelopmentMarket PenetrationProduct DevelopmentHorizontal IntegrationDivesture Liquidation

Strategic Alternatives and Recommended Strategy:

Strategic Alternatives:

GHNL can choose one of the following strategies to increase its market share and to penetrate in to the market fully.

1) Reintroduce its Passenger Cars:

of 58

Quadrant IV

Related DiversificationUnrelated DiversificationJoint Ventures

Quadrant IIIRetrenchmentRelated DiversificationUnrelated DiversificationDivestureLiquidation

GNL’s own progress and related market growth bring it to

this quadrant.

GHNL must have to come back with a differentiated auto product in the passenger car market to become a leader in automotive product manufacturing in Pakistan.

2) Acquisition of Existing Brand to Increase its Market Share in HCV & LCV:

GNL can also increase its market share in HCV and LCV through acquiring the existing brand in the Market. It will help them increase its market with minimum time frame.

3) Export of LCV & HCV:

of 58

Beside serving and operating in the current market GNL can choose to increase its products sale through exporting their existing products to other markets.

Quantitative Strategic Planning Matrix:

Reintroducing Passenger Cars

Acquisition of existing Brand to increase market share in LCV and HCV

Export of LCV , HCV

Key Factors Weight

AS TAS AS TAS AS TAS

Opportunities: Large Market segment with potential

purchasing ability Sustainable growth of economy Consistency of political government Strict import policy of the government Stability of the region Cost effective and fuel efficient vehicle

is required by the customerThreats:

Unavailability of Highly Skilled manpower

Expensive Raw Material New entrant in same industry. Strong competitors existing in the

market with global image which can counterfeit the strategies

.20

.05

.05

.05

.05

.10

.10

.15

.10

.15

4

33434

3

324

.80

.15

.15

.20

.15

.40

.30

.45

.20

.60

2

43332

2

343

.40

.20

.15

.15

.15

.20

.20

.45

.40

.45

1

33434

3

42-

.20

.15

.15

.20

.15

.40

.30

.60

.20-

Sub Total 1.00 3.4 2.6 2.35

of 58

Strengths: Competent top management with

diversified experience of industries. Ability to integrate vertically in the

market through utilizing existing infrastructure.

Sound financial position of the company.

Successfully expanded through new joint venture.

Ability to grow in diversified auto products range.

Weaknesses: Past introduced vehicles are unable to

capture the market. Unable to achieve economies of scale Unable to clearly define long term goals

mostly focusing on short term objectives.

Lack of ownership among the employees.

Unable to apply economy of scope to minimize cost.

Lack of Research & development

.10

.10

.10

.10

.10

.10

.10

.10

.05

.10

.05

3

4

4-

-

4

3

3

21

4

.30

.40

.40-

-

.40

.30

.30

.10

.10

.20

3

2

44

2

4

3

3

34

2

.30

.20

.40

.40

.20

4

3

42

4

.40

.30

.40

.20

.40

.40

.30

.30

.15

.40

.10

2

3

2

33

2

.20

.30

.20

.15

.30

.10

Sub Total 1.00 2.5 3.15 2.95Total 5.9 5.75 5.30

Rating Criteria:1= Not Attractive2= Somewhat Attractive3= Reasonably Attractive4= Highly Attractive

Recommended Strategy:

The score of the QSPM model reveals that the GNHL must develop strategy to reintroduce the passenger cars to increase its market share. But it is not necessary that the GNL must choose one strategy at one time. They can choose to drive one or more strategy to achieve its vision. It all depends upon the management commitment and the availability of financial resources and the consistency of the political and economical stability of the economy of the market.

It is better for the GNL to focus on different strategies for its different products for passenger car they can opt reintroduce their products with a distinction or differentiation from the existing competitors’ products. They have to produce the passenger cars with unique features and characteristics

of 58

which cannot be easily available in others. If it is not possible to offer the passenger cars below the competitors’ price then it must not be more than their products. They must focus to produce the passenger cars in all the categories from 600 cc to more than 1300 cc.

For their LCV and HCV products they can choose one of the strategy or the both strategy to increase their revenues as their LCV and HCV are the cash cows for the GNL so they can earn more revenue through exporting them and they can increase their market influence through acquiring the existing brand.

Long Term Plan: Capture 25% auto market share in Pakistan in all four wheel

categories.

Medium Term Plan: Rejuvenate Nissan as the first choice in auto solution.

Short Term Plan: Revamp operational process to achieve economies of scale.

Implementation:Programs:

To drive their strategies in right direction they must develop following programs:

Research & Development:

GNL must increase its Research & development budgets to produce new kind of automotive products to meet the market requirements.

They must create a “concept future car” for the customers. It can be done through continuously seeking responses from the customers and the potential customers.

Total Quality Management:

Without quality products it is impossible to create a positive image of the GNL products in car markets. To achieve this GNL management must develop a quality conscious culture within the organization. They must implement the concept that:

“Quality is everyone’s responsibility”

of 58

Within the organization the concept must be enforce in a way that everyone will become quality conscious. It is not only up to the quality department to make sure the quality policy will be implemented; all the departments and their respective employees must be fully adhere with quality concept and make sure that it must be implemented.

Marketing:

The marketing Strategy must be focus to develop the brand image of the GNL products that Nissan will become the first and the foremost choice of every customer in auto products. Whenever they think to buy the auto products, they compel to think about the Nissan, first.

The Marketing strategies will be device separately for passenger cars and for LCV & HCV auto products (Trucks & Buses). Market can be segmented in three broader categories:

Individuals and Families Industrial and Business Entities Government Markets

Finance:

Strong financial controls will be implemented to improve the efficiency and reduce the cost of products. It can be done through allocating budgets to each department with a great care, and evaluate their performance in accordance with the allocated budgets.

To achieve the desired results the dividends must be hold for 3 to 5 years to reinvest in the future activities and ask the shareholders to enjoy the increasing market price of the GHNL shares.

Information System:

Information is one of the key resources for any organization. The uninterrupted and accurate flow of information will allow them to the management to make effective decisions at all level. To develop and effective information system within the organization GNL must adopt ERP system to integrate its all departments and resources.

Human Resource Management:

of 58

Human Resource is one of the vital resources for the organizations to achieve their vision or to translate their vision in to reality. GNL must nurture the following concept for its human resources:

“We produce perfect vehicles because our employees are perfect” To implement this concept the all Human Resource related policies and procedures must be revaluated and if necessary must revise.

The concept of HR business partner can also be adopted to effectively utilize this resource. For this the management must introduce the employee stock option for the employees.

Budgets:

The Research and Development budgets must be increase up to 100%. Market budgets must be increase up to 50%, with a view to increase

the company operated showrooms all over the market, and effectively manage the after sale service of the products.

Procedures:

For the effective implementation of GNL strategies, the SOP for the each process and work will be developed for every department.

The standards and parameters for each process must be define and it will make sure that no work will be carry out in contradict of GNL’s define standards and procedures.

Evaluation and Control:

To achieve the desired goals and to rejuvenate the Nissan passenger cars products in to the market following landmarks must be achieve by the GNL and compromise on desired results:

10% growth must be achieved by GNL in term of sales of auto products.

The manufacturing cost must be reduced by 10% and it must be make sure that no unnecessary penny will be spent or wasted.

Number of complaints regarding the products must be reduced 10% and struggling to bring it up to 0.

of 58

Operational output must be increased by 10% until and unless the economies of scale and economies of scope will be achieved.

Continuous improvement policy must be adopted to fully penetrate into the passenger car market.

of 58

Semester project (strategic managment 70415)

Automotive

Transcript of Semester project (strategic managment 70415)