Professional Documents
Culture Documents
2012
GM Sales Manufacturing (AD) Sr. Manager Manufacturing HR&A Table of Contents GM Marketing (PD) Product Development GM Control & Assessment QualityManufacturing (PD) Marketing Sr. Manager QC. Customer Services (AD) GM Marketing (AD) Finance & Accounts GM Finance Industrial Relations Sr. Manager H/A Human Resources Internal Audits
IT
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Preface
Department of Management Sciences, The Islamia University of Bahawalpur is making a valuable contribution in generating such business executives who are serving in various fields throughout this world. The pre-requisite of internship program is to make the students of B.B.A, aware of the practical expertise and to acquaint them with the real management process. A six weeks internship is an important part of this training. For this Program, Department of Management Sciences assigned me to do an internship and I chose to learn in PEL Lahore (Head office). During a span of six weeks of training as intern I thoroughly observed the functions of different departments of PEL (Pak Elektron Limited). As apprentice I analyzed the basic working of PEL and especially its Marketing (AD) department and summarize this in my internship report. This internship report contains all the information about my work experience with Pak Elektron Limited (PEL) which is the leading company in producing electrical equipment and home appliance in Pakistan.
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Executive Summery
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with m/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing wide range of quality electrical equipments and hoe appliance and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship scheme and training programs. I did my internship in Marketing AD department of PEL. I learned a lot during my internship period. How to work individually as well as in groups under relaxed and stressful environment. How to work under someones supervision. How to manage affairs while launching new products. Patience is very important in dealings, as anger can lose your customer. To increase your sales and stay in competition with top brands it is necessary to keep your dealers happy by giving them incentives. During a span of six weeks of training as intern I thoroughly observed the functions of different departments of PEL (Pak Elektron Limited). As apprentice I analyzed the basic working of PEL and especially its Marketing (AD) department and summarize this in my internship report. Under the supervision of Mr. Suhaib Irfan Khan we carried out a research regarding the Home Appliance Brand Perception
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This general aim of this research is to find out the brand perception of home electric appliance, and the perception of the customer about beliefs while purchasing it. i.e., Refrigerator, microwave oven, washing machine, air conditioner, and condenser, etc This internship report contains all the information about my work experience with Pak Elektron Limited (PEL) which is the leading company in producing electrical equipment and home appliance in Pakistan.
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Background of PEL
History
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical equipment and home appliance and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship scheme and training programs. PEL is now technology forerunner and market leader in providing new product and services to meet ever changing and technology intensive needs of its customers. PELs EPC contracting division delivers customs designed and built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum solutions for power utilization to all kinds of industries and commercial customers. PEL aims to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global development in technology and product design. Ever increasing local market share, growing export orders, numerous successful power projects and greater than ever base of satisfied customers are evidence to these aspirations. Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both are equipped with latest technology, state of the art testing facilities and environment friendly production process.
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At the heart of PELs operations is its human resource. PELs employees are its most valuable asset and PEL keeps them very dear.
Group Profile
In 1984, the Saigol migrated from Calcutta and initiated their business in Lyallpur (later named to as Faisalabad), the textile city of Pakistan, under the banner of Kohinoor Industries Limited.
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and efficient Japanese and European machinery, its knitted yarn is renowned in the Far East and Europe for its fine quality. Azam Textile Mills is reputed for its carded and combed yarn, which is quite popular for premier knitting and weaving.
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VISION STATEMENT To excel in providing engineering goods and services through continuous improvement MISSION STATEMENT To provide quality products & services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources To focus on personal development of our employees to meet future challenges To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility
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Corporate Profile
Board of Directors
Mr. M. Naseem Saigol Mr. M. Azam Saigol Mr. Murad Saigol Mr. M. Zeid Yousaf Saigol Mr. M. Abdullah Haroon Saigol Mr. Haroon Ahmed Khan Mr. Syed Zubair Ahmed Shah Mr. Akbar Hassan Khan Ordinance Ms. Tahira Raza Ordinance Mr. Khalid Siddiq Tirmzi Ordinance Mr. M. Khuram Khuwaja Ordinance NBP Nominee U/S 182 of the BOP Nominee U/S 182 of the NBP Nominee U/S 182 of the Managing Director NIT Nominee NBP Nominee U/S 182 of the Chairman/ Chief Executive
Audit Committee
Mr. Azam Saigol Ms. Tahira Raza Mr. Syed Zubair Ahmad Shah Mr. Haroon Ahmad Khan Chairman/Member Member Member Member
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Company Secretary
Mr. M. Omar Farooq
Auditors
M/s Yousaf Adil Saleem & Co. Tohmatsu) Chartered Accountants (A member firm of Deloitee Touche
Legal Advisors
M/s Hassan & Hassan Advocates
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of Companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical equipments and home appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programmers. The company comprises of two divisions:
Power Division
Products manufactured in Power division are Transformers, Energy Meters and Switch gears. Business in this division has suffered badly in previous years due to problems in WAPDA and KESC. The most needed up gradation of WAPDAs distribution pilferage was started by the new management. The energy meter production of single phase and three phases are moving toward an optimum level. Plans for further improvement in productivity and quality of our meters are also in progress. They shares for the supply of distribution transformers to WAPDA have taken a quantum leap recently. Accordingly, PEL is planning to increase our production capacity of transformer plan through the techniques of improved production operations including manpower utilization, product innovation, process reengineering. We are expecting to obtain the production capacity level of 2000 transformer per annum. A breakthrough in the Switch gear business has been already achieved. PEL has successfully supplied a large order of Switch gear from WAPDA against International Tender. Since entire business of Power Division is now being carried out against L/C, international tenders or advance payments, chronic problem of delayed payments has also been resolved. PEL
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also has had the privilege of getting its equipment approved and certified from well reputed international consultants such as;
Preece, Cardeq and Rider, England Harza Engineering Company, USA Snam Progeti, Italy Societe Duzmezm, France Miner & Miner International Inc. USA Ensa, France
Products of PD
The Power Division of PEL has following products;
EPC Contracting Power Transformer Distribution Transformer Dry type Transformer Energy Meter Switch gear Transformer Services
Appliances Division
Business in appliances division has shown mixed trend but the Company is finally on the right track. Crystal Refrigerator with Aero design and Danfoss compressor with performance certification by Danfoss Germany was launched in the February 1999. This has been received very well in the market and our refrigerator sales have shown an increase of ver 125% since 1999. This thrust is expected to continue in the following year as a result of
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companys innovative approach in product development coupled with an aggressive marketing strategy. Deep Freezer tested and certified by Danfoss Germany and with improved aesthetics has also been well received by the market. We have already been supplying our Deep Freezers to Coca-Cola international and lever Brothers and intend to continue our focus on institutional sales of this product. Sales of window Air-conditioners is almost at the same level of last year but have not reached the desired level with a pressure on prices and exchange rates impact causing increase in losses to the subsidiary PEL Appliances Limited. Main reason of this situation is a huge influx of imported product as a result of change in custom valuation recorders allowing imports at during prices and under invoicing. In addition supply of smuggled air-conditioners also continued even after Governments announcement to impose controls on such activities. This is expected to discontinue after old stocks of smuggled goods are exhausted and fresh supplies are not allowed. The company in order to address the above situation has embarked upon a major plan to improve product quality, widen product range, introduce power efficient models, add competitive features like remote control, added filters etc. And to improve the product a esthetically. After consistent efforts in the recent years PEL have been able to develop a new range of models under the brands name of Energy Saver. The cooling and balancing of this machine is tested and certified by Copeland of USA. This has received a very positive response from the market due to its efficient energy savings, cooling, low noise, compact size, nature friendly features. PEL anticipates that the company will make a breakthrough in the volume of Energy Saver as
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what we have successfully performed in case of Crystal brand Refrigerators. In addition a major exercise is being done to reduce material cost and improve manufacturing process. Technical support and know how is being obtained from international companies and foreign laboratories to achieve this objective.
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Xpression Series
Split Air Conditioners Window Air Conditioners Floor Standing Air Conditioners
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Microwave Oven PEL also introduce model series of PEL Silver line Microwave
Oven. PEL presents 26 different models of oven with different prices, models and capacities.
Washing Machine PELs washing machines are available in different models. The series are as follow;
Water Dispensers PEL also Introduce water dispensers. The main purpose to introduce it is
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Generators From long time Pakistan facing energy crisis, at that time
introduction of PEL Generator is very positive steps toward appliance sector to facilitate their customers. And they are working more to increase their product line, produce quality products, and give value to their customers and become market leader in home appliance.
DEPARTMENTS
Majorly there are six departments in PEL, which are;
Marketing Department Finance Department Production Department Human Resource Department Administration Department Research &Development Department
Chairman Secretariat Chairman Secretariat is headed by the chairman/chief executive officer. The Chairman has his personal staff comprising of a Director Staff, Protocol Officer, Private Secretary, Personal Assistant, who are responsible to assist the Chairman in all the matters. Normally he visits and takes key decision about their company matters.
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MD office Managing Director is one of the key post in any organization, its jobs includes various administrative jobs this person actually developing polices and implement them.
IR & Admin Industrial Relations (IR) is an area where a person deals with labor, laws, statutory. Here this department deals with administration, workers and S1 (S1=supervisors)
Human Resource This department deals executives appraisals, their training, hiring and firing. They traditionally have been referred as personal management or administration.
Gate & Security office As, Security gate officers, also known as security guards, patrol and protect property from theft, invasion, fire and illegal activity. Here PEL give very much restrict and have high security system.
Dispensary This department is established to handle emergency medical treatment of PEL personals and works. There are trained medical officer who can provided first aid in case of emergency. They also conduct seminar time to time and tell workers and engineers about the safety measurement and how to prevent from accidents.
Telephone Exchange This department controls all telephone calls within the organization and outside the organization too. This is very good exchange system.
Carrier
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PEL collaborate with a company named carrier. It is very famous foreign company deals in air conditioner. This department is connected with them and deals all issues related to their project.
Marketing (AD & PD) In this department all the sales and marketing campaign are designed, marketing research is conducted, and competitors information is also studied to make their plans according to them. They are working very hard to make their brand name famous.
Power Projects This department deals all projects related to power. They have good relation with Wapda and other companies.
Internal Audits This department internally audits all accounts in PEL. The company internal auditors try to find out faults, fraud and corruption and inspect that workers and company are following IFRS or not.
Commercial This department deals all issues related to Excise, Taxes & duties, etc. Moreover it also looks after bounded wear house. As most of raw material they purchases is from abroad. So commercial department controls all issues related to excise, duties and taxes.
QHSE This department focuses on Quality, Health, Safety, and Environment. This department works very efficiently and makes PEL culture friendly.
CMD
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It is department, where they offer loans to their employees and selected government peoples. They also give appliance products at factory rate to their employees.
Finance This department, develop financials for their executives. Annual report for company is also developed by this department.
Accounts This department manages all accounts. i.e., Accounts payables, Account receivable, inventory, pay roll, etc.
Information Technology This era is of IT, without giving importance to IT no organization can succeed. They are working very hard to improve al system. After updating MIS system, Oracle they become more efficient and effective.
Buying Buying is one of the most important department, it purchase all raw material which is used in production process.
Stores This is very important department all the purchase items firstly go to store department from their other department issue it.
Civil They deal the maintenance of machinery and factory maintenance. Manufacturing (PD & AD) All the manufacturing concerns aspects are controlled by this department.
Maintenance
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The main purpose of this department is to ensure quality and maintenance of machinery.
EMP Energy Meter Power, is one of the mega project of PEL, where production of EMP is executed and all matters related to it are control.
Switch Gair Switch Gair department is also like EMP department, where switch gair are produced and other aspects related to it are solved and worked.
CSD It is department where they offer loans to employees and selected government servants.
Imports All imported materials are controlled by import department. They also have all knowledge about their important importers and the products they imported.
Exports This department controls and deals all exports to other countries, i.e., Bangladesh, Afghanistan and few other countries of Africa.
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Trend Analysis
Vertical Analysis
31-Dec11 EQUITY AND LIABILITIES SHARE CAPITAL & RESERVES Authorized capital Issued, subscribed and paid up capital Reserves Un-appropriated profits 2,500,000 2,500,00 9.79 10.5 0 6 1,668,264 1,668,26 6.53 7.04 0 164,134 164,134 0.64 0.69 31-Dec10 201 0 201 1
SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT NON CURRENT LIABILITIES Long-term financing secured Liabilities against assets subject to finance lease Deferred taxation Deferred income CURRENT LIABILITIES Trade and other payables
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9 Interest / mark-up accrued on loans and other payables Short-term borrowings Current portion of: - long-term financing - liabilities against assets subject to finance lease 1,106,375 1,138,02 4.46 4.67 6 38,393 96,185 0.38 0.16 823,896 380,197 1.49 3.48
9,622,413 9,005,97 35.2 40.6 4 8 3 CONTINGENCIES AND COMMITMENTS 23,682,6 12 25,530, 139 100 100
ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets 14,089,18 13,434,7 52.6 59.4 5 09 2 9 314,874 14,404,0 59 Long term investments Long-term deposits CURRENT ASSETS Stores, spares and loose tools 109,582 108,405 0.42 0.46 4,495 54,636 457,744 1.79 1.33 13,892, 453 54. 42 60. 82
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Stock-in-trade Trade debts unsecured Advances Trade deposits and short-term prepayments Other receivables Other financial assets Sales tax refundable Income tax refundable Cash and bank balances Total Current Assets -
4,136.28 5,652,08 22.1 0.02 9 4 3,774,283 3,924,77 15.3 15.9 2 7 4 625,559 227,555 17,241 7,491 680,611 2.67 2.64 247,266 0.97 0.96 45,869 0.18 0.07 26,810 0.11 0.03 169,589 0.66 198,105 123,324 9,219,42 2 23,682,6 12 349,560 1.37 0.84 343,753 1.35 0.52 11,548, 724 25,530, 139 45. 24 100 38. 93 100 .00
Interpretation: In vertical analysis total assets and total liabilities are presented as base, and all other items of balance sheet are presented as following items of these basis. In vertical analysis also Company performance is good. Although the increment or decreasing trend is not so expressive in vertical analysis, but it can be easily analyse that overall performance of Company is good, although
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total liabilities are increasing but total assets also increasing which can overcome the effect of liabilities.
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Horizontal Analysis
31-Dec11 (Rupees in thousand s) EQUITY AND LIABILITIES SHARE CAPITAL & RESERVES Authorized capital Issued, subscribed and paid up capital Reserves Un-appropriated profits 5 6 7 7 2,500,00 0 1,668,26 4 164,134 1,665,64 9 3,498,04 7 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT NON CURRENT LIABILITIES Long-term financing secured Liabilities against assets subject to finance lease Deferred taxation 9 10 11 4,548,85 2 21,841 1,973,35 4,954,33 3 14,776 2,751,51 -8.18 47.81 8 3,962,04 0 2,500,00 0 1,668,26 0 164,134 2,733,58 2 4,565,98 0 4,162,62 6 0.00 0.00 0.00 39.07 23.39 -4.82 31-Dec10 2010
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0 Deferred income CURRENT LIABILITIES Trade and other payables Interest / mark-up accrued on loans and other payables Short-term borrowings Current portion of: - long-term financing - liabilities against assets subject to finance lease 9 10 1,106,37 5 38,393 9,622,41 3 CONTINGENCIES AND COMMITMENTS 16 23,682,6 12 31-Dec11 ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets 17 18 14,089,1 85 314,874 13 14 15 1,478,88 9 823,896 6,174,86 0 12 56,069
5 74,935
28.28 25.18
25,530,1 39 31-Dec10
-7.24 0.90
13,434,7 09 457,744
4.87 -
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31.21 14,404, 059 Long term investments Long-term deposits CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts unsecured Advances Trade deposits and short-term prepayments Other receivables Other financial assets Sales tax refundable Income tax refundable Cash and bank balances Total Current Assets 28 26 27 21 22 23 24 25 109,582 4,136.28 3,774,28 3 625,559 227,555 17,241 7,491 198,105 123,324 9,219,4 108,405 5,652,08 9 3,924,77 2 680,611 247,266 45,869 26,810 169,589 349,560 343,753 11,548, 1.09 99.93 -3.83 -8.09 -7.97 62.41 72.06 43.33 64.12 19 20 4,495 54,636 13,892, 453 13,447 75,515 3.68 66.57 27.65
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22 23,682,6 12
724 25,530,1 39
20.17 -7.24
Interpretation: In the above horizontal analysis , 2009 is the base year and 2010 and 2011 is using as following years, in which PELs overall performance is very good. But last year 2011 they facing loss, although total assets of PEL are increasing, however investment trend is little bit decreasing. Assets side is showing a good trend of PEL. On liability side also a good picture is depicting, but an increment in bills payable is showing an inverse effect. Current account of PEL is increasing. Other liabilities which include many short term liabilities are also increasing, so the net result on liability side is increasing trend in total liabilities.
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Ratio Analysis
Income Statement
Note Year ended December 31, 2011 (Rupees in Thousands) Revenue Sales-tax and discount Revenue net Cost of sales Gross profit Other operating income 32 31 29 30 13,547,832 2,310,594 11,237,238 10,388,689 848,549 36,032 884,581 Distribution cost Administrative expenses Other operating expenses Finance cost 33 34 35 36 692,835 682,815 13,890 1,413,055 2,802,595 (Loss)/ Profit before taxation Provision for 37
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19,895,448 2,372,792 17,522,656 13,814,754 3,707,902 50,936 3,758,838 1,057,011 751,075 65,934 1,623,611 3,497,630 261,208 72,184
-1,918,014 -649,495
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taxation (Loss)/ Profit for the year Other comprehensive income Total comprehensive (Loss)/ income for the year -1,268,519 189,024
-1,268,519
189,024
Rupees
1.24 1.19
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Current ratio:
Current ratio= current assets/current liabilities Table A Year 2010 2011 Current assets 11548724 9219422 Current liabilities 9005974 9622413 Current ratio 1:28 0.96:1
Interpretation: The current ratio is one of the most common ratio analyses which I used to measure of the solvency of firm and its ability to pay short term obligations. As shown in the table in 2010 the PEL has 1:28 ration which means that if it has 1 rupee it has to pay 28 paisa as liability that is nominal ratio.
Debt ratio:
Debt ratio= Total liabilities/ Total asset *100 Table B Year 2010 2011 Total liabilities 16,801,533 2 16,222,525 25530139 63.54% Total assets 2368261 Debt ratio 70. 94%
Interpretation: The debt ratio measures the proportion of assets financed by the outsiders money. The higher the ratio the greater the amount of other peoples money
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being used to generate the revenue. The company has almost same ratio in the two years that shows its assets are financed up to 71% by the credit money that is not a good sign because it reduces the confidence of investors and this is acceptable up to 64% only. This ratio shows that company has taken so many loans to run its affairs.
Interpretation: The operating profit margin shows the percentage of each rupee remain as profit after the deduction of costs and all expenses except interest and taxes. The 6.53% shows that PEL is earning minimal. The higher the ratio better the firm is earning. But the ratio is very low, which is not a good sign.
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Interpretation: The net profit margin shows the percentage of each rupee remain as profit after the deduction of costs and all expenses including interest and taxes. Higher net profit margin is preferable. PEL faces loss last year.
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Return on Assets:
Return on Assets=Net Profit/Total Assets* 100 Table E Year Net profit Total assets ROA 2010 2011 189,024 -1268519 23682612 25,530,139
0.79% -4.96%
Interpretation
This ratio measures the effectiveness of management that how it uses the available assets to generate revenue. Higher the ratio better is the position. In cases of PEL there is decline from 0.79 %to -4.96% in the FY of 2011 which indicates the bad performance of PEL.
SWOT ANALYSIS
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The strengths, weaknesses, opportunities and threats of PEL are discussed below:
Strengths
PEL has the following strengths and is in more competitive position in these areas than its competitors. Following are the main strong points of PEL:
Strong brand image Strong dealer network Strong quality, sale and service Market leader in WRAC Number 2 in refrigerators in Pakistan Strong grip in home appliances Strong Management Distribution of Authority Strong research and development department Free customer service
Strong Brand Image PEL has created the strong brand image in the mind of the customers through higher quality and low price. The customers of the PEL always prefer to buy the PEL home appliances like WRAC split AC and refrigerators whenever they wanted to buy. PEL is a popular company in Pakistan and everyone knows about the PEL products and its brand. Thats why PEL selling of WRAC are very high in the market than the competitors selling. Strong Dealer Network It is also the plus point for the PEL that it has also developed the strong dealer network in the market. The dealers are always trying to sell the PEL appliance to the customers because they know there are high margin in the
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PEL products. They can get more money after selling the PEL products. The management of PEL also provides more incentives to their dealers than their competitors. Dealers are very conscious about the PEL products and always guide the customer in buying the PEL appliances and tell them the more qualities of PEL products than others products. Strong Quality, Sale and Service PEL is also in a strong position that it provides the superior quality to your customers. It makes sense in the mind of the customers that PEL products are better in quality than the other companies products. PEL also provides the after sale service to their customers which delight the customers satisfaction. It is another way to advertise the products because when customer is highly satisfied then he tells the other ten persons that they should buy the PEL products. It is the free publicity of PEL products that PEL Company gains. Market leader in WRAC (Window Room Air Conditioner) It is another strong point that PEL is a market leader in WRAC. The window room air conditioner is more demanded by the customers than its competitors air conditioners because it has more durability in operating systems and cools the room in few minutes. PEL always strives to provide the innovative features in WRAC. PEL air conditioner is cheaper and has a higher quality than others WRAC. Thats why customers always purchase the PEL window air conditioner. Number 2 in Refrigerators in Pakistan After the Dawlance refrigerators, PEL has a second position in refrigerators market. PEL always continuously strives to pursue the strategies adopted by the competitors. As a consequence the price war starts among the
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companies so each company reduces the prices and tries to increase the sales of its refrigerators. PEL is also making efforts for the quality improvements than its competitor Dawlance. Strong Grip in Home Appliance So PEL is one of the companies, which is having a strong grip in the home appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point for the company. PEL is penetrating the market by introducing the new home appliance like Split Air conditioner and always trying to get the maximum shares in the home appliance market. Strong Management It is another plus point that PEL has a strong management. Its employees are more competent and fully skill and knowledge. They always cooperate the top management in achieving the goals that are assigned to them. Employees are well aware about the company objectives and so they are committed to the development of company. Distribution of Authority Top management of PEL delegates the power to the subordinates for achieving the marketing objectives in a specified time period. So every manager has an authority that use in achieving the Goals. He can easily handle the complaints of customers and try to satisfy them. So it is a strong point for the PEL because there is decentralization of powers. Strong Research and Development Department PEL has a strong research and development department that is continuously trying to develop new features for the products. R&D department spends
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huge amount of money for the development of product. R&D makes research for introducing the new product and asks the customers what they want extra in our products. For this purpose they hire the highly qualified employees in R&D department. That is another strong position of PEL. Good Customer Service PEL provides free customer service for one year to its customers. So the customers always buy the PEL products due to its free service and it becomes loyal customer for the PEL. PEL always provides help to their customers for repairing the WRAC, Refrigerators and other items. PEL always make efforts to satisfy the customers. Public Limited Company Although PEL is owned by the SAIGOL GROUP but its shares can be purchased and sold in stock exchange market. So everyone who is interested in purchasing the shares of PEL he can purchase. It is also called public limited company. So people are more interested in buying the PEL products.
Weaknesses
Like other companies PEL has some weaknesses in operating the business. If PEL overcome on these weaknesses then it can become a market leader in the home appliance. PEL lose some competitive edge in the following points:
Lack of effective advertisement System variations Lack of Product range Less Utilization of capacity Financial Problems
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Lack of Effective Advertisement It is a second major weakness of PEL that it they dont make effective advertisement campaign. That creates hurdle in selling the products and customers cannot know the changes, which are made in products by the company time to time. Company is not in a position that it made advertising of all their products on a wide range because of its high cash requirement towards the production side. Due to this problem company always make efforts to develop strong relationships with dealers. System Variations It is also the main weakness of PEL that there are rapidly a change in polices of selling the products. Thats creates problems for the selling team how to sell the products to the dealers because the top management requires the urgent amount of money. So selling team sells the products sometimes on hard cash that will reduce the prices of products that gives the benefits to the dealers and creates problems for the management. Lack of Product Range PEL has introduced more products of consumer items but there are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Due to lack of product Range, Company cannot earn more profit because consumers have high demand of these products and they say that if company is investing in these products then we can keep all PEL items and we never need to keep others company products.
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Less Utilization of Capacity Due to lack of finance a company cannot utilize all its resources on its full capacity. It increases the cost of products per unit that decreases the profit margin of each consumer item. Sometimes company cannot allocate the resources according to the requirements of production department thats becomes the problem for the complete utilization of resources. For the company it is also the main point of weakness. Financial Problems Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that create the problem of cash flow because when the stocks are not sold and the production is in process for 24 hours a day than the company faces such problems. So company aggressively researches the sources of cash and stresses the dealers to sell the PELs products to the end consumers. Company sometimes sells their products on advance bases to the dealers and gives them high margin of profit. Thats why a company is facing the financial problems and company never pays attention on the alternative resources that will help in reducing the stocks. That is a customer demand and due to this it is the main weakness of company.
Opportunities
For the PEL there are more opportunities for expansion the business. If PEL realize that opportunities then it will be more fruitful and profitable for the company. Even if company does not take advantage of these opportunities then it will lose its competitive position and high profit. Its competitors will give PEL tough time to pursuing the opportunities that are adopted by them. Following are the opportunities for the PEL.
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Exploration of Market in Pakistan PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL introduce its products in all cities of Pakistan but there are so many places that have the capacity to absorb the PELs products. These places are tribal areas in NWFP and northern areas of Punjab and NWFP, central area of SIND. If company introduces their products in these areas then it can get a large amount of profit and increase its market shares. Increase in Product Range It is the main opportunity for the PEL that it can increase its product range that will be a more profitable for the company. There are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Due to lack of product Range, Company cannot earn more profit because consumers have high demand of these products. If PEL does not take this opportunity then it will lose high margin of profit and market share. It will reduce the fixed cost and increase the efficiency of the employees. Export Opportunity PEL Company has also the opportunity to export their products in other international countries like UAE, SAUDI ARABIA, and other Arabic and African countries. It will not only reduce the dependence on one market but also increase the market shares and profits. It will also help the company to
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spread the fixed cost on all of its production that will reduce the total cost and company will enjoy the high profit. Increase in Production Line Company can also increase its production line at the maximum level that will increase the efficiency of the employees and also will reduce the total cost. Sometimes company cannot allocate the resources according to the requirements of production department thats becomes the problem for the complete utilization of resources. Company should look the market conditions then it will produce their products.
Threats
PEL Company in such a competitive era has many threats as well. These threats are for the present situations and future. Company should make its policies and strategies according to these threats. So following are the main threats for the PEL:
Strong competition Chinas product introduction in the market Price war Slow growth rate in Pakistan Instability of government Tax department World Trade Organization Investors
Strong Competition There is very strong competition for the home appliance in the market. So every company tries to come in the number 1 position for achieving the
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maximum shares in the market. Every company adopts different strategies for selling of the products. It reduces the profit margin of each company and increase the bargaining power of the buyers who will demand higher quality of products and lower cost. That is the main threat for the PEL Company. Chinas Product Chinas products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. An even china product not well in quality but it is comparatively in low prices than the consumers home appliance that are manufactured by the indigenous company. China products stress the indigenous companies to lower the quality and prices that will not be profitable in the long run. Price War Due to stiff competition in home appliance market, which cause price war. So every company reduces the prices of its products to increase the sales. It will not only reduce the profit margin of the company but also reduce the quality of products. So price war is the main threats for all the companies, which are operating in these products. Slow Growth Rate in Pakistan There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the company. It becomes the burden for the company that how to sell these stocks. Its main reason is that purchasing power of the buyer is very low and it has no income to buy the expensive the home appliance. It is also becoming a main threat for all the companies.
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Instability of Government The rapid changes in governments will become threats for the companies because every government adopts its own policies for the industries. So it increases the uncertainty for the investors who want to invest heavy amount in their new projects. Thats become the major threat for the companies and decreases the profitability. Due to fear of politically instability companies will also not invest the heavy amounts. Tax Department Tax department is another major threat for the companies that will restrain the business expansion. There is more complicated tax procedure for the companies, which are interested to increase the investment in their businesses. A tax department also asks the company from where it receives the money and where this money will spend. Due to fear of heavy taxes companies would not like to invest the heavy amount. World trade Organization World trade organization will give the permission in 2005 to each company of home appliance to export their products after paying fewer duties or duty free products. That will increase the pressures for the indigenous companies to reduce the prices and increase the quality. It will increase the competition among the foreign companies and indigenous companies. But our companies also run under uncertainty conditions. This will decrease the morale of indigenous companies. Investors There are few people who have big investments and they are importing the Chinese product by their own Brand name. This is a very big threat for the
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company and company is trying to create some attraction for the investors to demotivate the investors.
Project
Introduction
Under the supervision of Mr. Suhaib Irfan Khan, 2 internees from Marketing Advertising department namely Shaheer Rizvi, Muhammad Ammar carried out a research regarding the Home Appliance Brand Perception
Aims of research
General aim This general aim of this research is to find out the brand perception of home electric appliance, and the perception of the customer about beliefs while purchasing it. i.e., Refrigerator, microwave oven, washing machine, air conditioner, and condenser, etc Specific aims The research conducted aimed at finding out:
Which brand customers like more in home appliance How did they get to know about their favorite brand? How much they appeal from advertisement What type of advertisement appeal the customers How they rank the brand How much sale person view affects Product
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Scope of research
Home Appliance Brand Perception questioner (ATBEQ) is adopted as a measurement scale. Sample size of 53 people was taken from all over Pakistan through phone calls and personal interviews.
Limitations
Time constraint for carrying out the research Research could not be carried out all over Pakistan properly Unwillingness of customers to cooperate Not a good support from company Lack of finance and budget
Methodology
The research was carried out using both Primary and Secondary resources. Primary research methods such as questionnaires, personal interviews, telephonic interviews, observations and focus groups were used. In addition to that, we also made use of Secondary resources such as the internet, search engines and different competitors websites, different surveys report to explore about brand perception in home appliance. (Questionnaire is in annexure A)
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Results of Research
Findings of our survey are as follows;
Gender
Male Female
36
68% 17 32%
About 53 respondent respond us out of them 68% are male and 32% are females. The reason to include this question is to check the pattern of purchasing between male customers and females. Age
18-25
43
81% Page 51
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5 6% 4%
9%
Majority of respondent are lying from 18-25 and just 4% of them are above 42. The reason to know age of respondent is that, we want to know the trends to purchase home appliance on basis of age.
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Occupation
4 8 0
8% 2 15% 0% 39 0 74% 0% 4%
During our survey we filled out questionnaire from different peoples, from them some are house wife, business man, students and others. It is very good experience for us to interact with versatile nature of person. Your monthly income
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35
66% 11 3 3 21% 6% 6%
The purpose to know about the monthly income of people is that we can find out the relation of budget while purchasing home appliance, and also keen to know people prefer quality or price.
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International Brand
34
64%
From the help of this question, we try to find out the trend of purchasing that, customers prefer local brands or international brand. Normally customer prefer international brand. From this survey we come to know that about 34% people prefer International Brand.
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appliance
Haier PEL Dawlance Orient Other 12 4 25 6 6 23% 8% 47% 11% 11%
From this question, we find out the favorite brand of the peoples. According to this survey Dawlance is market leader having 47% liking and on number second is Heier having 23% liking and very strange PEL has just 8% liking.
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53%
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From this we find out the way customer make the image about their brand. And results show about 53% people of customers prefer and take decision on basis of personal use. Select the name of home
appliance company; in which you are really inspire with their commercial advertisement
Haier PEL Dawlance Orient Other 15 5 19 12 2 28% 9% 36% 23% 4%
From this question we find the impact of television ad of different brands. Most of the people like Dawlance, after this they prefer PEL. Dawlance ad campaigns have about 36% liking.
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Which type of advertisement is appealing according to your mind setup? Environmental + Corporate ad Computer graphic + Funny ad Product based ad Hygiene + Product based ad Other 13 12 12 15 1 25% 23% 23% 28% 2%
Most of the people like hygiene and product base advertisement. So, company must prefer this type of ad.
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8 5 11 22 5
People rank importance to mximum product range, they belive that a good brand have maximum product range.
2 3 2 2 42
4% 6% 4% 4% 79%
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People believe that quality of product is the most important thing in any brand.
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You rank the brand on basis of - Price Least Important Somewhat Important Neutral Important Most Important 6 2 4 20 19 11% 4% 8% 38% 36% People also give importance to
price, so from that we can say that most of people are price conscious. You rank the brand on basis of - After sale service
Least Important
2% 15%
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Somewhat Important 8
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5 19 18
9% 36% 34%
After sale service is one of the important factor people like in their brand.
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You rank the brand on basis of - Designing (External Appearance) Least Important Somewhat Important Neutral Important Most Important 2 3 11 18 17 4% 6% 21% 34% 32%
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- Features (Internal Appearance) Least Important Somewhat Important Neutral Important Most Important 2 6 2 20 21 4% 11% 4% 38% 40%
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7 12 11
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13 8
25% 15%
While purchasing home appliances, how much rank you give to followings: - Brand Name
5 4 2 23 17
9% 8% 4% 43% 32%
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While purchasing home appliances, how much rank you give to followings: - Advertisement
4 13 12 20 2
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While purchasing home appliances, how much rank you give to followings: - Sale person view
7 11 13 16 4
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While purchasing home appliances, how much rank you give to followings: - Quality
1 0 3 7 40
2% 0% 6% 13% 75%
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While purchasing home appliances, how much rank you give to followings: - Price
2 1 2 21 25
4% 2% 4% 40% 47%
While purchasing home appliances, how much rank you give to followings: - After sale service
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0 3 8 23 17
While purchasing home appliances, how much rank you give to followings: - Designing (External Appearance)
4 1 8 21 17
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While purchasing home appliances, how much rank you give to followings: - Features (Internal Appearance)
3 3
6% 6%
4 18 23
8% 34% 43%
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I start this survey from 29th July, 2012 to 1st August, 2012. We do telephonic calls, one to one interviews, and social network to compile this survey. This general aim of this research is to find out the brand perception of home electric appliance, and the perception of the customer about beliefs while purchasing it. i.e., Refrigerator, microwave oven, washing machine, air conditioner, and condenser, etc Dawlance is most favorite brand people like the most. Normally people prefer personal experience while they preference any brand. Advertisement is one of the most important factor people appeals. And people like product base advertisement Home Appliance Brand Perception questioner (ATBEQ) is adopted as a measurement scale. Sample size of 53 people was taken from all over Pakistan through phone calls and personal interviews.
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PEL have to focus on advertisement They have to increase their product line
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Conclusion
Strong brand name has very good impression in consumers mind and they usually prefer to purchase the same brand which they believe that is awesome. As now a day consumers demand is for Haier & Dawlance refrigerator. People have strong faith in these brand names. All other factors like price, advertisement, word of mouth and even dealers are secondary importance in this regard. I believe that PEL is focusing more on Push Strategy & Dealers network rather than Pull Strategy to create consumer demands in the market. PEL is not targeting through effective advertising, coordinating marketing efforts and using advanced interactive communication tools. This is true that new technologies and formats create new ways for marketers to reach & analyze consumers interactively, but still majority of consumers in Pakistan is being affected by traditional media Television, Magazines and Newspapers. Although PEL is doing some advertising efforts but problem is that there is no creativity in ads. No doubt PEL is making excellent products, but unfortunately PEL is not realizing creative advertising is also important part of their Marketing success. As I observed, recent media campaign done with the famous model Hadiqa Kyani, which was too much criticized as it seems to be the modeling shoots of Hadiqa for promoting its new albums instead of company products. They also take Sharukh Khan in their ad but there ads are not creative, they have to focus on creativity. Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group
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of Companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical equipments and home appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programmers. The company comprises of two divisions:
Majorly PEL have following department; Marketing Department, Finance Department, Production Department, Human Resource Department, Administration Department, Research & Development Department
Internship Activities
I have performed these duties during my internship program (June 5 to August 20, 2012). All doings and activities are check by my supervisor, Mr. Kashif Jafri (Marketing Manager) and his team members Mr. Junaid Iftikhar and Mr. Irfan Bashir (Brand Managers), Mr. Suhaib Irfan (Marketing Executive) and Mr. Tanveer Ahmed (Marketing Executive) whom I report to.
Making a report on the up gradation of price comparison on different products with the changes in the prices of competitors. Feeding the data of warranty cards of various appliances from all over Pakistan and making a database of new customers along with their addresses, phone numbers and model sold.
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Organizing the factory display centre by replacing the old products with the new products on the visit of LG CEO. Making gate pass (returnable and non-returnable) for the clerical staff so they can take various appliances out of the factory for marketing purposes and then bring them back if the gate pass is returnable.
Sending advertising material (posters, stickers, wobblers, buntings, banners etc) and letters or notification to all area sale offices of PEL in Pakistan as per instruction of Mr. Tanveer Ahmad.
Randomly calling existing customers in different areas of Pakistan and asking them if they were satisfied with the product they purchased, and then make a customer satisfaction report.
I have also performed the duties of dispatch at Lahore for the launch of LG in Karachi. Preparation of monthly report Sales Plan vs. Actual Production. Making list of price comparisons of different brands to PEL. I have surveyed in the market and check the response of the market after the new scheme of free generators with the purchasing of Splits. I have also surveyed in the market to know the prices and products of our competitors. I have handled all the affairs related to our MKTG (AD) store.
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found no fear in his team which make their efficiency up to mark. I never faced any major conflict or was under stress while working under his management. Mr. Junaid Iftikhar (Brand Manager) has never created stress while taking work for me, but did say a few words when he was not happy or when the work done was not up to his standards, and when he appreciated my work he always gave a pat on my back saying good by showing his thumb impression. Overall its not easy for me to name the whole team over and over again but all of Mr. Kashif Jafris team made my vision broader. Thanks to them, for making me learn from the activities and from the environment.
How to work individually as well as in groups under relaxed and stressful environment. How to work under someones supervision. How to manage affairs while launching new products. Patience is very important in dealings, as anger can lose your customer. To increase your sales and stay in competition with top brands it is necessary to keep your dealers happy by giving them incentives. How to coordinate with the other sales areas of PEL via telephone/fax. How to deal with your customers complaints in such a way to satisfy them. How to manage promotional materials. How to manage TIME for multiple tasks at simultaneous Hour. How to manage a communication among different departments.
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How to manage things for display center for executives. How empowerment plays important role in the progress of the company
Recommendations
After careful observation of competitive market conditions, I would recommend some remedies for PEL in order to cope with future threats.
Effective Advertising
PEL should also consider the importance of Advertisement for its microwaves and washing machines and water dispensers, which can play an important role in increasing awareness, customer preferences and in maximizing market share. They could also use some promotional tools like organizing shows, schemes, gifts and so on.
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Gender Male Female Age 18-25 25-32 33-41 42-above Occupation House wife Business man Employed Unemployed Student Other: Your monthly income lies in Zero - 25,000 25,000 - 50,000 50,000 - 75,000 75,000 - Above Are you really willing to opt. Local Brand International Brand Your favorite Brand in home appliance Haier PEL Dawlance Orient Other:
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How did you get to know about your favorite brand? Dealer Word of mouth Advertisement Internet Personal experience Other: Select the name of home appliance company; in which you are really inspire with their commercial advertisement Haier PEL Dawlance Orient Other: Which type of advertisement is appealing according to your mind setup Environmental + Corporate ad Computer graphic + Funny ad Product based ad Hygiene + Product based ad Other:
Somewhat Important
Neutral
Importan t
Most Important
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Least Importat Quality Price After sale service Designing (External Appearance) Features (Internal Appearance) Advertisement Sale person view
Somewhat Important
Neutral
Importan t
Most Important
While purchasing home appliances, how much rank you give to followings:
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Least Importa nt Brand Name Advertisemen t Sale person view Quality Price After sale service Designing (External Appearance) Features (Internal Appearance)
Somewh at Important
Neutr al
Importa nt
Most Importa nt
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