Honda Atlas Cars Strategic Management Project

Chapter # 1
INTRODUCTION TO THE COMPANY
INTRODUCTION:
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company
Limited Japan, and the Atlas Group of Companies, Pakistan.
The company was incorporated on November, 1992 and joint venture agreement was
signed on August, 1993. The ground breaking ceremony was held on April 17, 1993 and
within a record time of 11 months, construction and erection of machinery was
completed. The first car rolled off the assembly line on May 26, 1994. Official
inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Leghari.
Mr. Kawamoto, President of Honda Motor Company Limited Japan was also present to
grace the occasion. The company is listed on Karachi, Lahore and Islamabad Stock
Exchanges.
On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and
Islamabad. Since then the Dealerships Network has expanded and now the company
has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare
Parts) Pitstops network in all major cities of Pakistan. Since the commencement of
production in 1994, the company has produced and sold more than 150,000 cars till
Oct, 2008.All dealerships are constructed in accordance with the standards defined by
Honda World over.
Percentage of local parts conforms to the government's policy. Local vendors are
continuously patronized to develop parts locally. The quality of local parts is thoroughly
checked to meet stringent international standards.
We always strive to give outstanding service to our valued customers. In addition to
providing regular service to customers, the company also regularly conducts Service
Campaigns, to facilitate customer's need for service. This has given our customers
absolute confidence in our cars, clearly evident from the ever increasing sale volumes.
It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1
Customer satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet
customer expectations, and to provide good value for money. Currently we are offering
8 different models of Honda CIVIC and CITY cars in wide range of colors with unique
technological and other features.
Slogan:
“THE POWER OF DREAMS”
COMSATS Institute of Information Technology, Lahore Campus.

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Products:
“VISION”
“To be the first preference at every level of car lovers, and be the market leader”
“MISSION”
A dynamic growth oriented company through excellence in quality, dedication to provide
greater fuel efficiency at competitive prices, and service ensuring attractive returns to
equity holders, rewarding associates according to their ability and performance,
fostering a network of engineers and researchers ensuing unique contribution to the
development of the industry, customer safety, satisfaction and protection of the
environment by producing emission friendly green products as a good corporate citizen
fulfilling its social responsibilities in all respects.
COMPETITORS
1. PAK SUZUKI
In pursuance of the terms and conditions of the Joint Venture Agreement executed
between Suzuki Motor Corporation of Japan (SMC) and Pakistan Automobile
Corporation (PACO), Pak Suzuki Motor Company Limited (PSMCL) was incorporated
as a public limited company in August 1983.The new company took over the assets
which included production facilities of Awami Autos Limited. PSMCL started commercial
operations in January 1984 with the primary objective of passenger cars, pickups, vans
and 4x4 vehicles.
The foundation stone laying ceremony of the company’s green field automobile plant at
Bin Qasim was performed by the then prime Minister of Pakistan in early 1989.On
completion of first phase of this plant in early 1990, in-house assembly of all types of
Suzuki engines started. The new plant was completed in 1992, on its completion all
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Suzuki products were transferred to new plant and three box 1300cc Margalla car was
also added to its range of production. In September 1992 the company was privatized
and placed directly under the Japanese Management. At the time of privatization SMC
increased its equity from 25% to 40% subsequently; SMC progressively increased its
equity to 73.09% by December 31, 2001. The Bin Qasim Plant further expanded its
production capacity to 50,000 vehicles per year in July 1994 and 300,000 vehicles had
been manufactured at this plant by December 2003.The most modern automobile
manufacturing plant in the country distinguishes Pak Suzuki from other automobile
plants.
Pak Suzuki always endeavors to go aggressively for the sound development of the
society by increasing motorization industrialization, creating job opportunities thus
improving the people’s living standards with the combined efforts of all the dealers,
vendors and Pak Suzuki employees.
2. INDUS MOTOR COMPANY (IMC)
Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota
Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for
assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan
since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu
Motor Company Ltd. Vehicles in Pakistan through its dealership network.
The company was incorporated in Pakistan as a public limited company in December
1989 and started commercial production in May 1993. The shares of company are
quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota
Tsusho Corporation have 25 % stake in the company equity. The majority shareholder
is the House of Habib. IMC's production facilities are located at Port Bin Qasim
Industrial Zone near Karachi in an area measuring over 105 acres.
Indus Motor Company’s plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured. Heavy investment was made to
build its production facilities based on state of art technologies. To ensure highest level
of productivity world-renowned Toyota Production Systems are implemented. IMC's
Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux
Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of
imported vehicles.

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Chapter # 2
EXTERNAL AUDIT OF THE COMPANY
The External Assessment:

The external audit is to develop a finite lists of opportunities that could benefit a firm and threats
that should be avoided. External forces can be divided into five broad categories;
 Economic forces
 Social, cultural, demographic and environmental forces
 Political forces
 Technological forces
 Competitive forces
Economic forces:
Overall economic conditions are not very sound. The country risk of Pakistan goes to 3
which is alarming situation for Pakistan. Due to mistrust in the Pakistan environment the
foreign direct investment has been declined.
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal
political disputes and low levels of foreign investment. Between 2001-07, however, poverty
levels decreased by 10%, as Islamabad steadily raised development spending. Between 2004-
07, GDP growth in the 5-8% range was spurred by gains in the industrial and service sectors -
despite severe electricity shortfalls - but growth slowed in 2008-09 and unemployment rose.
Global crisis and Pakistan:
a) Pakistan did not face a major setback from the global crisis.
b) The economic hardship by the country has mostly been the result of domestic
issues - internal strife, political instability and poor governance has slowed down
an otherwise a viable economy.
c) Overall economic activity weakened despite growth in agriculture, while declining
imports and slowing domestic demand resulted in lower tax revenue.
Pakistan's Economic growth:
•
The ongoing global economic crisis, negative security developments and
continued power shortages slowed Pakistan’s real GDP growth to 2% for 2008-
09 compared to 5.8% achieved in the prior year.
• The Unemployment rate is going up and up from 13.6% in 2008 to 15.2% in 2009
with the increase of level of poverty that is reducing the buying power of the
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people that is threat for Honda cars
• The GDP growth rate for the year 2008-09 initially projected at 5.5 percent has
now been revised downward to 2.5 percent compared to 5.8 percent of last year.
• The major pressure in the economy has stemmed from inflation.
• The SBP has projected inflation to slow down in the final quarter of FY08-09.
Controlled inflation may usher in lower interest rate and improved liquidity, so
necessary for growth of industry.
• Inflation remains the top concern among the public, jumping from 7.7% in 2007 to
20.8% in 2008, and 14.2% in 2009.
• The performance of the car assemblers remained lackluster during 2009 owing to
the economic meltdown in the country. In the wake of rising steel prices,
appreciation of yen against rupee and imposition of 5% FED in the budget of
2009, the car assemblers passed on the increase in cost to the consumers. This
brought the decrease in demand of the automobiles.
The role of IMF (International Monetary Fund):
• The government agreed to an International Monetary Fund Standby Arrangement

in November 2008 in response to a balance of payments crisis.
• IMF has disbursed the first two tranches of $ 3.1 billion. The World Bank and
ADB have pledged support and an independent overseas support group, Friends
of democratic Pakistan have decided a support of $ 5.28 billion. Eased out
political situation in the country will help in an improvement in business
environment.
Financial position of Pakistan:
• The stock market has exhibited a growth of 36 percent post March 16. Foreign
exchange reserves have crossed US $11 billion. The commodity prices are
reflective of an inherent demand in the economy. A bumper wheat crop is being
projected and it will provide a boost to demand.
• The market value of stocks decreased from 70.26 billion in 2008 to $23.49 billion
2008
$70.26 billion.
• The Pakistani rupee has depreciated since 2008 as a result of political and
economic instability from Rs. 70.64 in 2008 to Rs. 81.21 in 2009.
• The government agreed to an International Monetary Fund Standby Arrangement
in November 2008 in response to a balance of payments crisis.
Political forces
a) The government plays an important role in the operation and manufacturing

products and services in terms of regulations. Following are some of the
factors that could cause Honda Cars to differ materially from the expected
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results.
Instability and political clashes:

b) Now a day’s Pakistani environment is instable due to political clashes among
political parties. Inside country war and drown attacks in north frontier areas.
This political instability has led to uncertain environment in the country, which
is a threat for any business including Honda
Depreciation Allowance:
c) The government reduced the depreciation allowance on used imported
vehicles from 2% to 1% per month during the year. This positive step by the
government provided a much needed relief to the industry and used car imports
slowed to 6,524 units for the year compared 13,145 units for 2007-08. This acted
as a huge opportunity for the overall domestic automobile sector. However, due
to the inability of the of car manufacturers to reduce the sale price of the cars, the
government has given an ultimatum to the automobile manufacturers that they
will increase the depreciation allowance on the used imported vehicles in the
near future.
d) The government has made an attempt to create a competitive
environment in the automobile industry, but this competition gives rise to
declining of sales that the local industry has suffered before and is a great threat
for Honda.
Liberal Policies:
e) According to the analysts, the current policies on used cars in Pakistan
are still extremely liberal when compared to India, Thailand and other countries
and are often misused by importers under transfer of baggage scheme.
Tax imposition and duties:
f) The imposition of additional levies and taxes in the Federal Budget 2008-
09 which included the 5% Federal Excise Duty on cars with engine capacity in
excess of 850cc and application of fixed slabs of withholding tax at the
registration stage.
g) This compounded the situation resulting in a sharp increase in automobile
prices and dampening of demand. Post budget imposition of 35% cash margin
on letters of credit further aggravated the liquidity situation for the auto sector
before it was withdrawn several months later.
Tightened monetary policies:
 High interest rates and reduction in car financing facility offered by banks
further depressed the demand for cars.
 Thus, the industry car sales went down by 50% from 147,441 units sold in
FY08 to 74,180 units in FY09.
 Sales went down mainly in the 800cc and 1000cc categories, which
contribute 60% to the total auto sales. The car sales of Honda Atlas slumped by
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28% from 15,487 units sold in FY08 to 11,144 units in FY09.
 The tightened monetary policies not only hampered the sales of the
company, but also increased the cost of debt that it had taken for the expansion
purpose.
Technological Forces:
• Advances in technology can have a major impact on business success.

• Honda cars has always followed the tradition of introducing new technology and
providing global cars of international quality to its customers, since the launch of
its first model in 1994.
• During the short span of 15 years, your company has introduced 4 new models
of Honda Civic and 4 new models of Honda City –the highest among the other
car makers in Pakistan.
• Many features and specifications were introduced first time in Pakistan. Your
company introduced the 3rd Generation Honda City on January 31, 2009. It has
V-tech Engine, Anti Lock Braking System (ABS) and Euro- 4 emission systems,
which are considered to be the strictest emission standard worldwide.
• The new City has Drive-By-Wire (DBW) control technology for fuel efficiency. It
has also enhanced G-CON collision safety which reduces the impact on
passenger cabin. To maintain the global quality standards, the Company has
invested Rs 2.1 billion on development of local parts, dies and fixtures of Honda
City. However, the new features increased its cost and so the selling price.
• Honda produces cars of highest quality with high specifications of Honda to its
global customers. Honda has the pride of providing the environment - friendly,
Euro IV compliant cars to its customers, which no other maker has in Pakistan.
• On the strength of our confidence in our products, the company with new City
launch effective February 2009, increased warranty of new City to 70,000 Km or
3 years from the date of purchase, whichever comes earlier, increasing Joy of
Buying of new Honda City.
Social, cultural, demographic and environmental forces:
• Effects of the automobiles on societies:

Over the course of the 20th century, the automobile rapidly developed from an
expensive toy for the rich into the standard for passenger transport. The
development of the automobile built upon the transport revolution started by
railways, and like the railways, introduced sweeping changes in infrastructure,
manufacturing and legislation. The wide reaching effects of automobiles on
everyday life have been a subject of much controversy. Proponents on one end
of the spectrum claim the car is a marvel of technology that has brought about
unprecedented prosperity, while opponents on the other end claim it lead to a
mode of urban and suburban planning that discourages walking and human
interaction, uses large amounts of polluting fuel.

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• Economic changes
City Planning: The development of the automobile has caused changes in city
planning, as well as changing the roles of horses and railroads.
Industrial infrastructure: Huge industries devoted only to the automobile were

created. Others were expanded from once trivial insignificance to eminent
importance. Before the internal-combustion engine was developed, gasoline was
a waste product, often discarded. Once the automobile became common, the
production of gasoline blossomed into a matter of such importance that the
governments took action to secure a steady flow of oil. The steel industry was
already established, but the coming of the automobile created huge amounts of
business for it. The chemical, rubber, and petroleum industries were remade to
suit the needs of the automobile and industries sprang up, such as service
stations, motels, and automobile insurance, that were completely reliant upon the
automobile for their livelihood. Infrastructure: Aside from industries, one of the
most visible effects the automobile has had on the world is the huge increase in
the amount of surfaced roads.
• Changes to urban society

Traffic Jam: Another change brought about by the automobile is that modern
urban pedestrians must be more alert than their ancestors. In the past, a
pedestrian had to worry about relatively slow-moving streetcars, or getting kicked
in the face by horses, or stepping in horse dung. With the introduction of the
automobile, a pedestrian has to worry about being hit by automobiles at high
speeds, and breathing noxious exhaust fumes.
• Social status
The automobile signifies much more to many than simply a mode of
transportation. Henri Lefebvre called the automobile "the epitome of
possessions". In the early years, the car served as a mark of distinction above all
others. The automobile rapidly became a symbol of social status, and in some
cases, a fashion item. The automobile, more than any other possessions,
allowed people to show off wealth. Not only was the ownership of an automobile
demonstrative of a certain level of income and prestige (and still is, especially in
poorer nations), it is also highly visible.
• Safety
Automobile accidents caused many deaths and injuries, especially before
automobile safety laws were implemented. To this date, automobiles remain a
major cause of accidental death and injury, not to mention emotional stress.
• Vehicle Air Pollution:

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Air pollution is viewed as a serious problem in many cities in South Asia. Many
city governments say that transport is mainly responsible for air pollution and
have adopted, or are considering adopting technological measures to reduce
vehicle emission. This situation demands selection of appropriate measures in
the sector.
The impact of outdoor air pollution on public health and lost productivity should
be seriously taken as toxicity and ambient concentrations are the most damaging
health impacts. The particulate matter causing serious respiratory illnesses and
premature deaths throughout South Asia, and airborne lead, which retards
intellectual development of children in Pakistan and Sri Lanka is a common
phenomenon, where leaded gasoline is still used.
Competitive forces
Honda faces competition in the international markets from a number of brands such as
• Toyota
• Mitsubishi
• Mercedes
• BMW
However, Honda cars in Pakistan that had started its operations in Pakistan 1994 under a joint
venture with Atlas has been is enjoying the key position in 1300 c.c and above.
The main competitors of Atlas Honda in Pakistan are:
Indus Motors:
Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota
Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for
assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan
since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu
Motor Company Ltd. Vehicles in Pakistan through its dealership network.
The company was incorporated in Pakistan as a public limited company in December

1989 and started commercial production in May 1993. The shares of company are
quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota
Tsusho Corporation have 25 % stake in the company equity. The majority shareholder
is the House of Habib.
IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in
an area measuring over 105 acres.
Indus Motor Company’s plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured.
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Suzuki:
Suzuki is the leading name in small commercial vehicles and passenger cars. Suzuki
commenced its operation by assembling small 800 cc cars. Suzuki has so far a sole
leader in 800cc and 1000cc passenger cars as well as 1000cc jeep Potohar. But the
emergence of so many competitors in the market will definitely trigger a very hard time
to Pak Suzuki. Suzuki has launched Mehran 800cc, Cultus 1000cc, Baleno 1.3 & 1.6 Eli
and Gxi, Bolan van & Ravi pickup 800cc and Potohar jeep. The total production
capacity of Suzuki Motors is about 50000 units and the total actual production in 1999 is
32,805. The sales volume of Suzuki is highest among the competitors with 31,296 cars
as per June 30, 2000. According to Pakistan Association of Automotive Parts and
Accessories Manufacturers (PAAPAM) , Suzuki has achieved the 60 per cent deletion
status in 800cc Mehran car. Localization in other products like 1000cc Khyber 42 per
cent, 1300cc Margalla/Baleno 32 per cent, 800cc pickup 50 per cent 10 passenger
pickup 47 per cent and 1000cc Potohar jeep 40 percent.
Dewan Farooque Motors:
It is the major competitor which has commenced its operation with a wide range of
products in domestic automobile market. Dewan Motors is basically a collaboration with
Hyundai and Kia, two Korean auto manufacturers. The initial response to Dewan's
offering in the market with record company booking of its Santro Plus. It has launched
its Kia classic 1300 cc car with sophisticated features. In future wide range of models
like Kia Shuma 1500-1800cc car, Kia Sportage 2000 cc sports utility are expected to
launch in the market. Dewan has also launched its 1.5 tons Shehzore, the assembly of
Hyundai light commercial vehicle has already started at the Sindh Engineering Plant in
Karachi under contractual agreement.
Daihatsu:
Daihatsu, another new player in the market with its Cuore 850 cc, increased the
competition in the market. Daihatsu and Indus Motor signed an agreement to launch the
Coure in market. The project worth Rs 750 million was developed at Port Qasim
between Daihatsu and Indus Motor to produce Coure. Daihatsu also heated up the
competition in small car segments.
Porter's Five Forces Model:

Michael Porter identified five forces that influence an industry. These forces are: (1)
degree of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5)
supplier power. Like other industries operating under free market, capitalistic systems,
viewing the automotive industry through the lens of Porter’s Five Forces can be helpful
in understanding the forces at play.
THREAT OF NEW ENTRANT:
Although Pakistani Market is dominated by protectionism but because of financial crisis

a lot of Automobile companies have their eyes on South –East Asia as a dumping site

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Honda motors company must gear up for fierce competition. These new Entrants have
sufficient capital and guts to start a price war among the local industry.
Economies of scale:
Economies of scale no doubt reduces the cost of manufacturing but now days
Customers are Saving Oriented Rather Consumption Oriented low price in this period of
recession will not attract customer the best way is to go for fuel efficient cars.
First Mover Advantage:
Honda motors have the First Mover advantage in case of Fuel efficient Cars. Honda
R&D Department already achieved so much in this field depleting oil sources is a major
problem for every country now Toyota is looking for different options such as: Bio Fuels,
Hydro Electric power Cars, Electric powered cars & Cow Dung.
Access to Channel of Distribution and Relationships:
Honda motor has the advantage of customer satisfaction and distribution channels.
Honda motor conducts workshops and seminar for Dealer Staff so that the interaction
with the customers shall be a pleasant one. This Customer care leads to Customer
Loyalty.
THREAT OF SUBSITUTE PRODUCTS
America is the biggest victim of economic Rescission and the biggest car consumption
country is America. American People has taken a Saving Stance now the American car
manufactures have their eyes on India, China, and Pakistan as a dumping sites so
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some time in upcoming years Honda motor can face fierce Competition and have to
step up for the competition because Pakistani people have a lot of options.
BARGANINIG POWER OF BUYERS:
Buyers are price sensitive because products are little differentiated and switching cost is
lower. The buyers hence have greater power to bargain on the finished good, i.e.
vehicle. The switching cost is very low for the customers. However the automobile
industry remains marginally strong due to the large buyers to producer ratio
BARGAINIG POWER OF SUPPLIERS:
Honda motors almost produces 98% of car in Pakistan but Most of the Raw material is
imported through Toyota Japan so Suppliers is the parent company that is why
importing material is not a big issue for Honda.
The automotive industry is a dynamic place. With the forces above at play, and with
history as a guide, it is safe to say that the automotive industry will continue to change,
evolve, and adapt.

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External Factor Evaluation Matrix:
An external factor evaluation matrix allows the strategists to summarize and evaluate
economical, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information. The threats and opportunities of Honda Company
have been identified in the PEST analysis and the ratings of the factors (1-4) have been done
from the brain storming and the facts and figures that have affected the company. Following is
the EFE matrix:
External factors Wght Honda Atlas
Opportunities Rating Wgtd.Score
1. People’s awareness about Global Warming 0.05 2 0.10
2. Customer desire for hybrid and fuel efficient vehicles 0.08 3 0.24
3. Increase in technology in automobiles forces customers to 0.1 4 0.40

return to dealer for service
4. Introduction of ethanol fuel in Pakistan 0.02 1 0.02
5. Increase in demand of small vehicles 0.05 3 0.15
Threats
1. Recession in the economy 0.05 1 0.05
2. WTO (World trade Order) opening local markets for global 0.02 1 0.02
competition
3. Entry of reconditions cars 0.13 2 0.26
4. Political instability 0.05 1 0.05
5. Tightening monitoring Policy 0.06 2 0.12
6. Energy crises 0.1 3 0.30
7. Depreciation of rupee against dollar 0.1 4 0.40
8. Increase in Petroleum and steel prices. 0.09 2 0.18
9. Inflation 0.07 2 0.14
10. Declining quality of the infrastructure in the country. 0.03 2 0.06
Total 1 2.49
From the above matrix calculation, we can see that the total weighted score for Honda Motors is
2.49 which is 0.01 points lower than 2.50 i.e. the midpoint a and is below the average. This

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shows that the company is not performing that well due to the bad economic and political
conditions of the country.
Competitive Profile Matrix (CPM):

The competitive profile matrix (CPM) identifies a firm’s major competitors and its particular
strengths and weaknesses in relation to the sample firm’s strategic position
Honda Atlas Indus Motors Pak Suzuki
Critical success factor Weight Rating Score Rating Score Rating Score
Product Quality .14 4 0.56 4 0.56 2 0.28
After Sale Services .10 4 0.40 4 0.40 3 0.30
Price Competitiveness .13 4 0.52 4 0.52 4 0.52
Technology .10 4 0.40 4 0.40 3 0.30
Dealership Network .12 2 0.48 4 0.24 4 0.48
Market Share .10 2 0.20 3 0.30 4 0.40
Spare Parts .12 2 0.36 3 0.24 4 0.48
Environment Friendly .09 4 0.27 3 0.36 2 0.18
Customer Loyalty .10 4 0.40 4 0.40 2 0.2
Total 01 3.32 3.69 3.94
From the above matrix we can observe that the most important factor for the automobile
industry is the product quality, followed by price competitiveness and then the
dealership networks and the availability of the spare parts. Suzuki is the strongest of all
the three companies as it is proven from the matrix and also from its market share in

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Chapter # 3
INTERNAL AUDIT OF THE COMPANY

Pakistan that is the highest among all. Honda is the lowest and the weakest of the
companies.
MARKETING OF HONDA:
Honda Atlas Marketing Objective:
Honda Atlas Pakistan Limited as well established automobile companies in Pakistan
they always keep focus on that mission and vision in the same direction HACPL does
target of goal achievement. The standard of the HACPL according to marketing is very
high. HAPL existence and central point of Honda Atlas to sell dream Car because in
Honda point of view “Power of Dreams” itself attracting the customer for that need to
build unique product.
HACPL marketing objective has been targeting in terms of provide satisfied customer
service, make possible to keep in reach the product, and strive to give outstanding
service to valued customers. In addition to providing regular service to customers, the
company also regularly conducts Service Campaigns, to facilitate customer's need for
service. This has given company customers’ absolute confidence in their cars.
In the constant endeavor of Honda Atlas company to achieve No .1 Customer
satisfactions with respect to loyalty of brand. Honda Atlas Company has been
committed to meet customer expectations, and to provide good value for money.
Honda Atlas Marketing Mix:
Marketing mix elements or 4p’s strategy of marketing is the essence of any business
same like this strategy of marketing mix apply in top listed automobile company overall
the world Honda atlas these key elements of marketing mix make the difference
between Honda atlas and other automobile companies, Honda atlas also comes up with
a strategy to figure out which strategy is best for them given the objectives and
resources. They must also consider the strengths and weaknesses of the company as
well as opportunities and threats. To enhance the aptitude of the companies, a
marketing mix strategy is introduced. The marketing strategy will create lucrative
marketing mixes for defined target markets. Honda atlas has been enhancing their
outcomes and marketing value by implementing the right combination of the four P’s.
Product:
Honda Atlas has competitive edge to other automobile Companies in term of product
quality.
Accord:
Witness the debut of the astonishing new Honda Accord: the outcome of our all-out
pursuit of sedan excellence, successfully uniting all contradictory elements. A bold
exterior presence with a luxury air, yet a sporty youthful feeling. An expansive upper-
class cabin with comfortable travel space for five adults and panoramic visibility. A
larger body with sportier performance than ever before and powerful I-VTEC engines
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designed for high fuel economy. A renowned global car with all advanced Honda
technologies for driving command, plus eco-performance for increased recyclability.
And, Honda's world-leading safety protection, which even extends to pedestrians and
those in other vehicles. Experience its overall quality, riding comfort, and details for
yourself, and you'll know why the new Accord represents a distinct "status upgrade" for
the sedan.
Civic:
What moves you? What drives you? What excites you? Honda seeks the pinnacle of
technology in pursuit of answers. Now, we present a bold way to stir the body and soul,
designed to quicken the pulse at first glimpse, and stimulate the senses with each and
every encounter. The sporty new Honda Civic possesses rare spirit, and so do you.
See, touch, feel, drive and discover.
City:
See it coming, like an arrow. Striking good looks, cutting-edge design, sharply focused
tension. See it shoot straight ahead. What is it? Discover the compact sedan
breakthrough with strength to open a new era and outlast fleeting trends. Sleek styling
and strong performance, with swift, gutsy response to the driver's pedal action. Class-
leading* spaciousness and relaxing ride for outstanding comfort. Imagine the pride of
driving and owning this distinctive new-generation standard. Get ahead in the new City.
People will be watching.
CR-V:
Dynamic styling appeal. Elevated SUV outlook. Premium driving refinement. And an
exhilarating yet stable feeling. The new Honda CR-V has all you want, and more. A
spacious cabin and utilities, due to packaging innovation. Plus superb i-VTEC response,
quietness, and safety. Discover delightful CR-V driving. Now, all roads are exciting.
Price:
BRAND MODEL PRICES
CR-V 2.4 Litre Rs: 5,299,000
CIVIC I-VETIC MANUAL Rs: 1,619,000
I-VETIC AUTOMATIC Rs: 1,739,000
VTI-ORIAL MANUAL Rs: 1,794,000
VTI-ORIAL AUTOMATIC Rs: 1,869,000
ACCORD I-VTEC Rs: 5,699,000
CITY MANUAL Rs: 1,249,000
AUTOMATIC Rs: 1,379,000
Promotion:
Honda Atlas (Pakistan) always strives to give outstanding service to valued customers.
In addition to providing regular service to customers, HONDA also regularly conducts
Service Campaigns, to facilitate customer's need for service. This has given to
customers’ absolute confidence in Honda cars. Honda also participates in promotion of

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that product. Honda Atlas has a rapidly and quickly promote products more than its
competitors.
Place / Physical Distribution:
Honda Atlas Network of dealership has expanded and now company has twenty one 3S
(Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pit shops
network in all major cities of Pakistan.
LOCATION 3S DEALERS 2S DEALERS
KARACHI 6 4
HYDERABAD 1 -
LAHORE 4 7
ISLAMABAD 1 1
RAWALPINDI 1 2
MULTAN 1 1
FAISALABAD 2 2
SARGODHA 1 1
GUJRANWALA 1 -
SIALKOT 1 -
MIRPUR 1 -
PESHAWAR 1 -
ABBOTTABAD - 1
BAHAWALPUR - 1
BUREWALA - 1
AZAD KASHMIR - 1
GUJRAT - 1
MARDAN - 1
OKARA - 1
RAHIM YAR KHAN - 1
SAHIWAL - 1
SUKKUR - 1
VEHARI - 1
Total 21 30
Marketing Operations/ Function of Marketing Department:
Marketing operation functions is the very essential tool and it is excellent essence of
any business same as this strategy imply by Honda Atlas Company to its authorized
Dealer. It is dealing with brand loyalty of Honda products my concern exists between
dealers and customers. Honda Atlas also depends on 3S but also facilitating with
separately 2S as well (Service and Spare Parts). This offer of facilities Honda Atlas
Motor compares to the Total Quality Management style of Honda Atlas Itself. These 3S
and 2S always monitor by Honda Atlas itself that what’s going on in which Direction?
These 3S and 2s has been facilitating through Dealers. Let we discuss these three
elements simultaneously:
Sales:
17
The HACPL’s Sales Deals by its authorized Dealers. The dealers engaged in providing
facilities the customer to buy Honda Brand(s). Honda Atlas Company has given
dealership authority approximately sixteen Dealers (cars) all over Pakistan. All of the
sales strategies followed by Honda Atlas Itself and it are directly involve and time by
time Honda Atlas keep attached with each sector, do analysis the sales, performance of
the dealers most importantly after sales, customer satisfaction report. Sales facilities
part of Honda Atlas is to facilitate its loyal customer and overcome customer’s
ambiguity, buying conflict and provide them maximum information before purchase.
Honda Atlas is also very conscious in sales as well as Customers Satisfaction.
All the authorized dealerships in Pakistan are a source of customer satisfaction. The
after sales are supported by the immaculate service and the availability of spares at
competitive prices for every car sold. To facilitate the customers for any assistance they
require, Honda Atlas has a separate department, called Customer Relations, at the
head office. This department is supported by the subsequent Customer Relations
Officers at all dealerships. The purpose of Customer Relations Department and
Customer Relations Officers is to enable our customers in getting any sort of help
required by them.
Services
The product sold is not means that close the window for customer now, it is beyond that
further after sales customer has largely engaged to deal in service and Spare parts
aspect. HACPL is a customer service conscious company, for which it is always looking
for avenues to develop further relations with the customers who have already
purchased the Product. Honda Atlas considers purchase of any product as the
beginning of relations with customers. To prolong this relationship and encourage the
customers to keeps on coming to the dealers, providing customer service the reason for
this facility is to stress on the importance of periodic maintenance. Periodic
maintenance is essential for every existing if this is performed regularly as per the
maintenance schedule the car is trouble free and life of car increases by many years.
For these free services the labor is not charged, where as the customer has to pay for
only the consumable like engine oil, oil filter, etc.
HACPL is providing regular trainings to the dealers' technicians. The trainings cover all
aspects of the cars and related Products including the periodic maintenance,
diagnostics, trouble shooting and repairs according to HONDA standards. From this we
want to facilitate the customers in maintaining their cars in top-most condition and
enjoying the comfort and performance of the luxury vehicles they own. It is our
endeavor to have uniform service standards made available at all dealerships in
accordance with the international Honda standards. We consider the properly
maintained vehicles not only to be a source of satisfaction to our customers; they also
increase the sale value of their car.
Spare Parts:

18
The Spare parts element is heavily concern and involved with brand loyalty of Honda
cars because cost of spare parts also consider when customer want to buy the car,
customers are also price conscious, availability of spare parts and as well as quality of
spare parts. Honda spare parts are expensive because they have to import those form
Malaysia.
Honda Atlas always follow those strategies which they can gain customer most attention
to its brands. Honda Atlas always make possible to be genuine and look genuine.
Honda attract its customer in under the statement that “Buy Honda genuine parts from
Honda dealers and enjoy 6 month's Honda Warranty, the Honda warranty can vary
product to product and contribute to the country’s economy and enjoy the satisfaction of
using 100% genuine Honda Parts. But if customers buy the parts from open market;
most probably is that customer may be buying smuggled parts and thus committing a
moral crime and robbing your country from precious revenue, customer may unable to
claim but if customer buy from Honda authorized Dealer so the part will be 100%
genuine, customer has no need to buy from open market, the trust between customer
and Honda Dealers become long lasting etc. It is the Honda Atlas’ aim to be No.1 in
customer satisfaction in all three S, Sales, Service and Spare Parts and two S in the
same time.
PRODUCTIONS/ OPERATIONS:
Process Design:
Honda Atlas Cars (Pakistan Ltd. has a separate production department which is headed
by Vice President (Production). A Japanese person is currently working on this seat.
The production department has a number of sections such as:
 Vendor Section
 Engine Section
 Welding Section
 Maintenance Section
 Paint
 Vehicle quality control.
These along with some other sections are arranged in four groups, each one headed
by a Gm. For Example, there is one GM for welding, paint and maintenance.

19
Plant Capacity
Currently the plant has the capacity of 35 vehicles per day which is lower than that of
Toyota. As for as the production level is concerned, it varies from time to time. It was
15 cars per day when I visited the factory. This shows that the plant is being
underutilized. There may be several reasons for this under-utilization such as:
 Weak economic condition of the country.
 Problems with cotton crop.
 High price of Honda Cars.
 Decrease in purchase of cars by large companies.
 Presence of Toyota
 Decrease in the purchasing power of potential customers.
Machinery:
A brief list of machinery used in HACPL is given below:
 Boilers
 Compressors
 Water treatment plant
 Ovens (for backing the body of cars)
 Spot welding guns.
 Two-post lifts

20
 G-SWAT/ B-S / S Side Slip / Shower testers
Important Parts:
Various parts of engine
 Brakes
 Seats
 Lights
 Cooling System
 Tyres
 Rims
 Fuel tank
Production Process:
In order to fulfill requirements of widely diversified needs of the market, HACPL has
developed its production facilities from a dedicated engineering set up to a highly
flexible and wide range production system comprising of following activities Shown in
chart.
Production Procedure
1. The production procedure starts from welding. This is done with the help of
special machines. In this way the basic frame is manufactured and is transferred
to panting section.
2. The painting section is equipped with modern machinery. Here, the process
starts with wiping, cleaning and degreasing of frame which is followed by
Phosphating and ED coating. Now the frame is backed in special ovens. After
backing, following coat are applied:
 Base coat
 Final coat
 Clear coat (for shining)
3. After painting, the frame is shifted to assembly line. Here ornamental
parts such as lights are fixed followed by heavy parts like engine, tyres seats,
wind shield, etc. The procedures at assembly line can be understood by figures
mentioned earlier.
4. After passing through assembly line, the car moves to "vehicle quality
department". Here, different tests are applied. Currently, HACPL is using three
QAEs (Quality Assurance Equipment) which are mentioned below:
21
 "G-SWAT" ( Geometrical Static Wheel Alignment tester) for alignment.
 "B-S testor" for testing breaking force and speed meter.
 "S-S testor" for testing side slip:
After applying these test, the car is driven and a 1-km "test course". Here the noise and
performance of car a different road conditions are tested. Finally, a "shower test" is
applied to find leakages if any.
5. In this final stage, pre delivery inspection (PDI) is made and a sticker is
attached. Now, the car is ready for shipment.
Quality Control
A lot of importance is given to “quality control" in HACPL. The personal of HACPL is
highly qualified in this regard.
When purchase material arrives, thorough checking of that material is made. If any
deficiency is found then it is reported. If the deficiencies are beyond the acceptable
level then the material is returned to supplier according to terms & conditions of the
contract. However, the chances of such happenings are very less because HACPL has
very tight purchasing policy and it has no compromise on quality.
Similarly, the finished product is tested before delivering it to the customers in order to
assure the quality standards. On the whole, the quality control / quality assurance
personnel are continuously engaged in improving quality to need the requirements of
each customer individually and the market as a whole.
HACPL is successfully using "Kaizen" system for quality control. Employees are
encouraged to improve quality and reduce cost. Every month, about 20-25 prizes are
given on showing good performance.
HACPL is ISO 9002 certified. It was the winner of "Best Quality Award for Asia" in
1996, 1997 & 1998.
PLANNING AND DEVELOPMENT:
Currently, Honda Atlas Cars (Pakistan) Limited is not in a position to make major
changes in its cars. Only minor changes can be made here and decisions about these
changes are made at the top level. Marketing & Production people play an important
role in this regard.
Research & Development Department:
The role of research and development is to introduce innovative ways to achieve the
objectives especially through production facilities. Unfortunately, there is no research
and development department in HACPL. This function is performed by Honda Motor
Company, Japan. All major changes in models of Honda cars are introduced there.
Employees of HACPL are sent to Japan, where they are trained according to new
conditions. Later on, these changes are introduced in the models offered in Pakistan.
Deletion Program:
22
“Deletion is to replace the imported parts of vehicles with the parts either manufactured
in house or purchased through local vender industries.”
Honda Atlas Cars (Pakistan) Limited is perusing a realistic and progressive deletion
program for indigenization of assemblies, parts and components. This dynamics
program is being implemented through in-house assemblies and manufacturing
operations, and is being supplemented by vendor development.
HACPL is almost same as that of its major competitor, i.e. the manufacturer of Toyota
Cars. Efforts are being made by top management to increase this percentage.
Achievement of Objectives through Operations:
The production department of HACPL is playing a vital role in achieving the overall
objectives of the company through efficient utilization of resources.
• HACPL is achieving production efficiency through:

 Evaluation & improvement of quality control.
 Training of production employees.
 Modernization of plant and machinery.
• Similarly cost minimization objective is being achieved through:

 Deletion program
 Avoiding poor quality products, which are a loss for the company. As
mentioned earlier, HACPL is achieving excellent quality levels through giving
training to personal plus proper use of technology.
Inventory:
Inventory is a stock of any things held to meet future demand. Inventory is created when
the rate of receipts exceeds the rate of disbursements. It is depleted when
disbursement exceeds receipts.
There are three types of inventory:
 Raw material inventory
 W.I.P. inventory
 Finished goods inventory
The basic objective of any firm is to minimize total inventory cost (ordering & carrying).
The same is the case in Honda Atlas Cars (Pakistan) Limited. In HACPL, the whole
inventory system is computerized. Following are the advantages of this computerized
system.
 Updating records.
 Providing management reports.
23
 Automating the recording process.
 Re-computing decision parameters.
In HACPL, the inventory basis and audit reports are prepared.
Reason for P-System:
1. Administration of the system is convenient because replenishments are made at fixed
intervals; Employees can set aside a day or part of a day regularly to concentrate on
this particular task.
2. Order for multiple items from the same supplier may be combined into a single
purchase order. This approach may result in a price break from the supplier and saves
the buyer some paperwork, thereby reducing ordering costs, suppliers also may prefer
combined orders because all items in the order may be shipped at the same time,
reducing transportation costs and increasing vehicle utilization.
3. The inventory position, IP, needs to be known only when a service is made.
Safety Stock
HACPL maintains a safety stock of 2 to 3 months. The reason for maintaining a safety
stock is as follow:
 To protect against shortage that occur due to suppliers.
 To protect smooth and continuous operations.
In HACPL, the inventory is held in the following forms:-
 Inventory of imported parts.
 Inventory of local parts.
In order to avoid stock out, they have more safety stock of imported parts as compared
to that of local parts.
Shortage of Inputs
There are special warehouse for the purpose. Both imported and local parts are stored
here. The boxes of parts are placed at approximate distance and forklifts can easily
move within the warehouse. The results in convenient movement of parts from
warehouse to assembly line etc.
Storage of Output (Cars)
There is no proper warehouse for parking of cars moving out of assembly line. A place
has been assigned for this purpose but there is no roof over it. Actually these can are
serviced when they arrive at the showrooms of dealers so management of HACPL does
not feel any need of having a covered place for these cars.
Aggregate Planning
Aggregate planning is a statement of production rates, work force level and inventory
holding based on estimates of customer requirements and capacity limitation.

24
Production Plans
The production plans are prepared for three months based on the customer’s orders
and uncertainty in demand,
Work Force Level

In HACPL, work force schedules are arranged on the basis of production plan. If
demand is high, then extra workers can be hired on contract basis or the existing
permanent employees can be employed in extra work to meet the targets.
When I visited the factory of HACPL, the daily production was 15 cars. For this reason,
there was a single shift except for maintenance department.
Material Management
Material management concerns short-range decisions about supplies, inventories,
production level, staffing patterns, schedules & distribution is as follows:
Purchasing:
Purchasing in the management of the acquisition process, which includes deciding
which supplies to use, negotiating contract and deciding whether to buy locally or
centrally. Purchasing must satisfy the firm’s supply needs and support the firm’s
production capabilities.
In HACPL, the whole action can be described under following headings.
HACPL imports materials from the parent Honda Motor Co, Japan in the CKD (complete
Knocked Disk) form. HACPL also purchases materials from the Local Vendors
Supplier Selection:
HACPL prefer those suppliers who fulfill the following requirements:
 Provide best quality material at low cost.
 Shorter Lead Times
 Provide material to production plant of HACPL. (I.e. provide material at
destination).
 On time delivery
These are the reasons which forces HACPL to go for local contracting.
Procedure for Returning Of Low Quality Material:
HACPL has its own quality standards regarding materials. HACPL has not any habit of
accepting Low Quality Raw Material at low rates. HACPL returns the low quality
materials to the supplier according to the terms and conditions of the contract.
Supplier Relations:
HACPL, Vendor Development is mainly entitled with the responsibility of establishing
working relationship with all the agencies (Vendors) involved in Supply if materials.
Similarly HACPL has formal relationships with the local vendors.
Distributors:
To store the finished products, (Honda Civic & Honda City), HACPL uses both

25
FORWARD, BACKWARD placement.
HACPL has a country-wise network of Sales Dealers who are actively engaged in
promoting the image of HACPL and its cars. The details of HACPL’s dealers have been
mentioned earlier.
Transportation Mode:
HACPL has a habit of using only one mode if transportation (i.e. Highway) for the both
inputs and outputs. The logic behind this mode is low cast and flexibility of shipping to
almost any location in Pakistan.
Currently, HACPL has no transportation fleet of its own. Nearly five transportation
companies are performing this function on contract basis. NLC is also included in these
companies.
Total Quality Management: (T.Q.M.)
T.Q.M. stresses three principles:
 Customer Satisfaction
 Employee Involvement
 Continuous Improvement
Attaining quality in all areas of a business is a difficult task. It is necessary for an
organization to provide its customers with best or even consistent quality products in
order to survive in the environment. The success of any business depends upon how
accurately the company perceives the expectations of Customers plus its ability to
bridge the gap between consumer expectations & operating capabilities. In HACPL the
concept of T.Q.M. is more common. This can be explained as follow:
Customer Satisfaction:
HACPL’s employees try at their level best in satisfying the customers & hence stepping
forwards the objective of the company. The contribution of Marketing & Production
department is very important in this regard. These departments continuously go for the
ways to improve the features of existing HACPL’s products and hence satisfying the
customers.
Employee Involvement:
HACPL’s management considers its employees a great asset. The employees along
with sales dealers are part of the large “Honda Family” and they form an integral part of
policies and decisions that help shape the future of the company.
The management of HACPL considers the proposals/Suggestions of its employees up
to a great extent. It appreciates the employees in this regard through Monetary or Non
Monetary benefits. Management of HACPL put great emphasis on creating and
maintaining an enterprise environment in the company that maximizes the interest and
motivations of its employees which is very vital to enhance labor productivity and
efficiency.
Training of Personnel:
26
HACPL puts great emphasis on training and development of employees to help them
realize their full potential. Employees from all departments especially form production;
finance and marketing attend training courses in their respective fields. This has greatly
contributed in improving employee’s performance and efficiency at all level.
Continuous Improvement:
The Management of HACPL has a view of continuous improvement in order for the
better Utilization of resources and improving Honda brand image in the market. HACPL
is trying at its level best to introduce and implement better quality control procedures,
redesigning the production process, automating the whole plant etc. Employee’s
involvement is playing vital role in this regard.
RESEARCH & DEVELOPMENT DEPARTMENT:

The role of research and development is to introduce innovative ways to achieve the
objectives especially through production facilities. Unfortunately, there is no research
and development department in HACPL. This function is performed by Honda Motor
Company, Japan. All major changes in models of Honda cars are introduced there.
Employees of HACPL are sent to Japan, where they are trained according to new
conditions. Later on, these changes are introduced in the models offered in Pakistan.
IFE Matrix:
Key internal factors Weight Rating Weighted score
STRENGHTS
Brand Image 0.05 4 0.2
Advance Technology .1 4 0.4
Customer Loyalty 0.06 4 0.24
Strong R&D 0.08 4 0.32
Greater Fuel Efficiency 0.08 4 0.32
Environment Friendly Cars 0.05 4 0.20
Safety 0.03 4 0.12
Smoother Drive 0.02 4 0.08
TQM 0.06 4 0.24
Global Models 0.03 3 0.09
WEAKNESS
Dealership Network 0.1 1 0.1
Costly Spare Parts 0.07 1 0.07
Limited Product Line 0.04 2 0.08
Lack Of Utilization Of Capacity 0.06 1 0.06
Shortage Of Trained Technicians Due To Complex 0.03 2 0.06
Sensor Technology
High Cost Of Production 0.04 1 0.04

27
Maintenance Cost 0.05 1 0.05
Resale Value 0.05 2 0.10
TOTAL 1 2.77
Stage 2 The Matching Stage

The strategy is defined as the match an organization makes between its internal
resources and skills and the opportunities created by its external factors. The matching
strategy formulation framework consists of five techniques that be used in any
sequence:
 The SWOT matrix
 The SPACE matrix
 The BCG matrix
 The IE matrix
 Grand strategy matrix.
These tools rely upon information derived from input stage to match the external
opportunities and threats with internal strengths and weaknesses.
In this project, we will be using only the SWOT matrix for the determination of the
alternative strategies.
The SWOT matrix
A scan of the internal and external environment is an important part of the strategic
planning process. Environmental factors internal to the firm usually can be classified as
strengths (S) or weaknesses (W), and those external to the firm can be classified as
opportunities (O) or threats (T). Such an analysis of the strategic environment is
referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources
and capabilities to the competitive environment in which it operates. As such, it is
instrumental in strategy formulation and selection. The following diagram shows how a
SWOT analysis fits into an environmental scan:

28
29
STRENGHTS WEAKNESS
1. Brand image 1. Dealership Network

2. Offering Global models 2. Resale value
3. Smoother drive as compare to 3. Maintenance cost
its competitors 4. Costly Spare parts
4. Timely new models 5. Limited product line
5. Decentralized environment 6. Shortage of trained
SWOT Analysis 6. Advance Technology
7. Safety
technicians due to Complex
sensor technology
of HONDA Atlas 8. Environment Friendly
9. Customer loyalty
7. Lack of utilization of
capacity
10. Highly loyal, committed and 8. Market share and
Cars motivated employees profitability
11. Greater fuel efficiency 9. High cost production.
12. TQM
13. Friendly working environment
14. Advertisement
15. Strong human resource
16. Reliability
17. CSR
18. Strong R & D
OPPURTUNITY SO STRATEGY WO STRATEGY
6. People’s awareness about 1. Promotion of products on the 1. Increase the dealership

Global Warming bases of environmental networks all over the
7. Customer desire for hybrid friendliness and fuel efficiency. country. (W1,W6, O3)
and fuel efficient vehicles (S1, O1), (S2, O2, O4) 2. Availability of trained
8. Increase in technology in 2. Greater focus on the production technical staff at 2 S and 3
automobiles forces of eco - friendly cars. (S6,S8, S dealers. (W6, O3).
customers to return to O2) 3. Introduction of flexible fuel
dealer for service 3. Availability of trained technical vehicle and going for
9. Introduction of ethanol fuel staff at 2 S and 3 S dealers. product diversification(W5,
in Pakistan ( S15, O3 ) O4, O5)
10. Increase in demand of small
vehicles
THREATS ST STRATEGY WT STRATEGY
11. Recession in the economy 1. Utilize research and 1. Localization of supplies and
12. WTO (World trade Order) development to minimize spare raw material (W9, W4, T1,
opening local markets for parts price.(S18, T1) T7).
global competition 2. Downsizing ( W9, W8, T1)
13. Entry of reconditions cars 3. Strict employee policies to
14. Political instability contain overhead and
15. Tightening monitoring unfavorable economic
Policy conditions
16. Energy crises 4. Mass Production
17. Depreciation of rupee 5. Influence and coordinate
against dollar government institutes to
18. Increase in Petroleum and ensure consistent power
steel prices. supply and minimum break
19. Inflation down time. (T6,W7)
20. Declining quality of the
infrastructure in the country.

30
Stage 3 The Decision Stage
QSPM (Quantitative Strategic Planning Matrix):

In order to reach a decision based on objectivity and priority based analysis, one of the
most frequently used techniques is the QSPM. This technique enables us to measure
the attractiveness of feasible alternative actions. QSPM objectively indicates which
alternative strategies are the best
QSPM uses input from stage 1 and matching results from stage 2 analyses to decide
among alternative strategies. Like other strategy formulation analytical tools, QSMP
requires good intuitive judgment.
In the stage 3 of Honda Atlas Cars, there were three alternative strategies that we found
very attractive. The data collected from the external and internal audit, and the matching
done from the opportunities, threats, weaknesses and strengths brought us to
consensus of selecting these alternative strategies. We selected three strategies in
total;
1. Increase in the number of Dealership network
2. Product Diversification
3. Attaining economies of scale
The increase in the number of dealership network was chosen because; Honda had a
smallest dealership network against his competitors Indus motors and Pak Suzuki.
Honda is unable to access a number of potential customers due to a small dealer ship
network.
The next alternative strategy that was built with a consensus was to do product
diversification. Honda has a small market share as compared to Indus motors and Pak
Suzuki. One of the major reasons was the product diversification by its competitors. If
Honda is able to do product diversification, it can increase its sales; capture the market
share on the bases of strong brand image and customer loyalty.
Attaining the economies of scales was another highly preferred alternative strategy that
could help the company to increase its income and improve its performance. Honda has
done expansion of its company, but it has not been using its plants up to its required
optimal capacity. Due to this the company is facing high cost as well. So if the company
mass produces the cars and use the plants to its maximum capacity, it will be able to

31
decrease the cost. The only variables affecting this strategy are the marketing
promotions done by the company, and sale of the manufactured cars.

32
Alternative strategies Increase in Product Economy
the number diversificat of scale
of ion
Dealership
network
External factors Wght
AS TAS AS TAS AS TAS
Opportunities
11. People’s awareness about Global 0.05 1 0.05 4 0.20 2 0.10
Warming
12. Customer desire for hybrid and fuel 0.08 3 0.24 4 0.32 2 0.16
efficient vehicles
13. Increase in technology in 0.1 4 0.40 3 0.30 1 0.10
automobiles forces customers to
return to dealer for service
14. Introduction of ethanol fuel in 0.02 3 0.06 4 0.08 2 0.04
Pakistan
15. Increase in demand of small 0.05 3 0.15 4 0.20 2 0.10
vehicles
Threats
21. Recession in the economy 0.05 2 0.10 3 0.15 1 0.05
22. WTO (World trade Order) opening 0.02 2 0.04 4 0.08 3 0.06
local markets for global competition
23. Entry of reconditions cars 0.13 -- -- -- -- --
24. Political instability 0.05 -- -- -- -- --
25. Tightening monitoring Policy 0.06 4 0.24 3 0.18 2 0.12
26. Energy crises 0.1 4 0.40 2 0.20 1 0.10
27. Depreciation of rupee against dollar 0.1 3 0.30 4 0.40 2 0.20
28. Increase in Petroleum and steel 0.09 1 0.09 3 0.27 4 0.36
prices.
29. Inflation 0.07 2 0.14 4 0.28 3 0.21
30. Declining quality of the 0.03 -- -- -- -- -- --
infrastructure in the country.
Total 1
STRENGHTS
1. Brand image 0.1 4 0.40 3 0.30 2 0.20
2. Advance technology 0.1 2 0.20 4 0.40 3 0.30
3. Safety 0.08 1 0.08 4 0.32 2 0.16
4. Environmental friendly 0.07 1 0.07 4 0.28 2 0.14
5. Customer loyalty 0.06 4 0.24 3 0.18 2 0.12
6. Strong R&D 0.1 1 0.10 4 0.40 3 0.30
7. Fuel efficiency 0.09 1 0.09 4 0.36 2 0.18
8. Total quality management 0.05 3 0.15 4 0.20 2 0.10
9. Timely new models 0.06 4 0.24 3 0.24 1 0.06
WEAKNESS
1. Dealership network 0.08 4 0.32 2 0.16 3 0.24
2. Costly spare parts 0.05 1 0.05 3 0.15 4 0.20
COMSATS
3. Market shareInstitute of Information
and profitability Technology,
0.08 3 Lahore
0.24 4 Campus
0.32 2. 0.16
33 Limited product line
4. 0.03 1 0.03 4 0.12 2 0.06
5. Shortage of trained technicians due 0.05 3 0.15 2 0.10 1 0.05
to Complex sensor technology
TOTAL 1 4.57 6.19 3.87
Conclusion:
 The weights taken for the following factors were taken from the EFE matrix and
IFE matrix.
 The rating was done on the bases of intuition, brainstorming and consensus at
the end among the group members.
 After the comparison of above mentioned strategies and their total attractiveness
score it is more appropriate and feasible for an organization to follow the product
diversification strategy.
 In this context, the company will ha to put new production plants in order to
produce new cars. This will include the arrangement of heavy budget and
extensive marketing of the new products. Since the monetary policies of the
country are tight at present, the company should arrange the capital in form of
equity by floating the shares in the market or wait for the interest rates to fall
down as the economic and inflationary situation of the country stables.
 The products will contain product line of small cars i.e. 800 c.c. and below.
Ratio Analysis:
Gross Profit Margin Ratio:
Company Honda Indus motors Suzuki Industrial average
Year
2004 8.1 11.96 9.9 9.98
2005 1.7 9.80 10.1 7.2
2006 4.6 11.77 11.8 9.39
2007 1.0 11.37 9.4 7.25
2008 4.3 9.29 1.5 5.03
Analysis:

34
The gross profit margin measures the gross profit relative to sales. From the above
calculations we see that there is a decline in the gross profits of the entire industry. In
the years 2004 and 2005 the automotive industry showed double digit growth. This
trend was accelerating for the last four continuous years. However, in the 2005 the
growths begin to show momentum after the announcement of further decrease in the
reduction of the import duties on different vehicles. More than five years old cars were
now finding their way into the country on the bases of transfer of residence and gift
schemes. This resulted in the slowdown of growth of the automobile industry from 23%
to just 9% in the year 2007. Then unfortunately, there occurred a series of events in
Pakistan that was a bad news for all the industries including the automobile industry.
There was political unrest in the country along with the national security issues.
Furthermore the in the economic environment resulting from the rising interest rate,
limited credit availability for auto financing, depreciation of the Pak Rupee against all the
major currencies, unprecedented rise in the prices of oil, steel and other inputs caused
severe volatility in the market place, leading to high inflation and loss of consumer
confidence. Furthermore in the budget 2007-08 the government had imposed higher
levies and taxes which resulted in further increase in automobile prices to the customers
and dampened the demand.
From the above table we can see that Indus motors and Suzuki motors were above the
industrial average in 2004. The reason for this is the large sale units of both the
companies as compared to Honda atlas cars. However in 2005, Honda Atlas motors
substantial decrease in the gross profit margin ratio by 79%. Although the company’s
sales increased by 77 % as compared to the previous year, but the decrease in gross
profit was mainly due to provision for custom duty on certain CKD components, which
were subject to increase in salaries and wages, by Rs 34.7 million due to increase in
manpower for starting double shift, and increased royalty by Rs 134.2 million. These
were the developmental costs that the company had to bear. On the other hand Indus
motors and Suzuki were able to increase their sales maintaining the proportion of cost
of goods sold. In 2006, the company however showed an improved gross profit margin
of 4.6% against 1.7 % of last year, but still the gross profit margin of the company was
relatively lower than its competitors. The Indus motors and the Suzuki motors had sales
turnover of 35,236,535 and 47,187,945 respectively as compared to just 25,638,698 of
Honda. In the year 2007 the company again showed a decrease by 78 % in its gross
profit margin. The reason for this decrease was the liberalized policies of the
government to import cars. This caused the sales to decrease by 72 % as compared to
2006. The reason for this decrease was that Honda had to increase its products market
price in order to cover the cost of production; however Indus motors and Suzuki had
decreased their prices in order to compete with the imported cars. Moreover Indus
motors and Suzuki had a large range of different products to offer to their customers.
Honda was adversely affected by the increase in the interest rates, and high inflation in
the country. In year 2008, in spite of the expansion plan completed and the increase in
capacity, the company was able to increase its gross profit margin ratio just by 4.3%.
The reason for this was the economic instability in the country. High inflation rates and
35
tight auto leasing policies affected the sales of the company. However, this increase in
inflation made the consumers move towards the small vehicles such as Mehran of
Suzuki and Cuore of Indus motors. However Indus motors was the only company that
was able to keep its gross profit margin ratio above the industrial average.
Operating profit margin ratio:
Year
2004 6.4 10.06 8.7 8.38
2005 .5 8.34 9.9 6.24
2006 3.5 11.56 10.7 8.59
2007 -1.1 10.83 8.4 6.04
2008 2 8.5 2.5 4.33
Analysis
The operating profit ratio tells us about the about the performance of the company, that
how much it has earned before the payment of taxes. In fig we can see that there has
been a downward trend in the automobile industry after 2006. This downward trend in
the industry was due to the imposition of the liberal government policies for the import of
new and used cars in the budget of 2005 -06. The growth of the automobile industry
further decreased from 23% to just 9% in the year 2007. Then unfortunately, there
occurred a series of events in Pakistan that was a bad news for all the industries
including the automobile industry. There was political unrest in the country along with
the national security issues. Furthermore the instability the economic environment
resulting from the rising interest rate, limited credit availability for auto financing,
depreciation of the Pak Rupee against all the major currencies, unprecedented rise in
the prices of oil, steel and other
inputs caused severe volatility in
the market place, leading to high
inflation and loss of consumer
confidence. Further more in the
budget 2008-09 the government
had imposed higher levies and
taxes which resulted in further
increase in automobile prices to the
customers and dampened the
demand.
From the above calculated ratios we see that Honda has been always falling behind its
major market competitors in the operating profit margin ratio. In 2004 the operating
margin ratio of Honda atlas cars was quite low then its two competitors. This was due to
the increase in cost of goods sold by 188 % as compared to the previous year. The ratio
further declined to just 0.5 % in year 2005. This substantial decline was due to the
expansion of the paint shop which was considered as bottle neck for the company.

36
Although, the sales of the company increased by 77 % as compared to the previous
year but, along with it there was an increase in the cost of goods sold by 90 %. In 2006
the operating profit margin showed a trend towards improvement by bringing its
operating profit margin ratio to 3.5 %. Although this ratio was substantially low as
compared to the competitors, but the Honda was under going further expansion
processes which made it cost of goods sold to increase by 50% as compared to the
previous year. Unfortunately, in 2007 there were changes in the government policies to
further reduce the import rates and allow the entry of cars older than 5 years. This
caused a bump for the local automotive industries which caused the reduction in the
growth of automobile sector. Although Indus motors and Suzuki motors showed a
decrease in the operating ratio but they were able to manage to maintain their sales
volume. However Honda atlas cars faced the challenges of increase in depreciation due
to capacity expansion project along with the decrease in the sales reducing the
operating profit to negative digits. In 2008 the worsening economic situation of Pakistan
and the lost confidence of the consumers caused further decline in the automobile
sector. Indus motors, managed to further increase its sales by 6% even in these
conditions by lowering its price of the automobiles. Suzuki motors was unable to further
lower its price causing to lose sales by 21%. Honda that was already in financial hiccup,
paying loans to the lenders, the economic and political instability brought the sales
down by 13% putting Honda motors almost into the position as same as Suzuki motors
according to their operating margin ratios.
Net profit margin:

Year
2004 4.4 6.54 5.7 5.55
2005 1 5.38 6.3 4.23
2006 2.8 7.52 7 5.77
2007 -1.6 7.03 5.5 3.64
2008 .5 5.53 1.6 2.54
Analysis:
The net profit margin tells us about the about the performance of the company, that how
much it has earned before the payment of taxes. The profit margin tells you how much
profit a company makes for every Rs. 1 it generates in revenue or sales. In fig we can
see that there has been a downward trend in the automobile industry after 2006. This
downward trend in the industry was due to the imposition of the liberal government
policies for the import of new and used cars in the budget of 2005 -06. The growth of
the automobile industry further decreased from 23% to just 9% in the year 2007. Then
unfortunately, there occurred a series of events in Pakistan that was a bad news for all
the industries including the automobile industry. There was political unrest in the country
along with the national security issues. Furthermore the instability the economic
environment resulting from the rising interest rate, limited credit availability for auto
37
financing, depreciation of the Pak Rupee against all the major currencies,
unprecedented rise in the prices of oil, steel and other inputs caused severe volatility in
the market place, leading to high inflation and loss of consumer confidence. Further
more in the budget 2008-09 the government had imposed higher levies and taxes which
resulted in further increase in automobile prices to the customers and dampened the
demand.
From the above calculated ratios we see that Honda atlas cars as compared to its
competitors have always been lagging behind in the net profit margin. Its net profit
margin ratio for all the years has been below the industrial average as well. In the year
2005 the company’s net profit margin showed a decline of 3.4% and its figure reached
to just 1%. This decrease was due to the expansion of the paint shop that made the
cost of goods sold increase by 90%, Administration and distribution expenses increased
by 24 %, and the finance charges increased by 160 % as compared to previous year.
Indus motors on the other showed a decline of 1.2 % as compared to the previous year
due to the increase in finance costs by 58%. Suzuki showed higher net profit margin
ratio as compared to previous years with only a minor increase in the finance charges
by 7 % as compared to Honda and Indus motors. In 2006 Honda managed to move its
profit margins up by 1.8 %. However, Indus motors and Suzuki increased their net profit
margins by 2.14% and 0.7% respectively. In 2007 however Honda atlas cars showed
net loss of 1.7%, whereas its competitors showed a small decline in their ratios
comparatively. In 2007 there were changes in the government policies to further reduce
the import rates and allow the entry of cars older than 5 years. This caused a bump for
the local automotive industries which caused the reduction in the growth of automobile
sector. Honda atlas cars faced the challenges of increase in depreciation due to
capacity expansion project along with the decrease in the sales reducing the operating
profit to negative digits. There was an increase in financial cost as well due to the long
term borrowing to support capacity expansion in all Rs. 755.7 million against Rs. 185.7
million in the same period last year. In the year 2008, Honda Atlas Motors was able to
decrease its other expenses by 92 %, and finance cost decreased by 23%. The sales of
the company went down due to the economic and political instability of the country. This
unrest brought down the profit margins of the competitor companies as well.
Return on equity:
Year
2004 22.5 39.1 28.96 30.18
2005 8.1 33.2 33.63 24.98
2006 30 42.3 35.27 35.86
2007 -10.3 34.1 22.04 15.28
2008 2.6 24.3 4.4 10.43

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Analysis:
A business that has a high return on equity is more likely to be one that is capable of
generating cash internally. For the most part, the higher a company's return on equity
compared to its industry, the better.
In the fig 3.4 we can see the upward trend of the industry up till the year 2006. However it
begins to fall after that due to the liberalized policies of the government to import cars
resulting in the slowdown of growth. Moreover the economic and political conditions of
Pakistan made the automobile industry growth reduce to 3.9 %.
From the above calculated ratios we see that Honda atlas cars have always been below
the industrial average. In the year 2004 we see that Honda atlas cars earned 22 % on the
investment made by the share holders. But Indus motors and Suzuki motors in
comparison earned 39 % and 29 % against the investment made by the equity holders
respectively. Although the share holder equity of both the competitors was higher (87%
and 17%; Indus motors and Suzuki motors respectively) as compared to the Honda atlas
cars, but still the net income earned by Indus and Suzuki motors was up by 260 % and
243 % respectively. Similar was the case in the year 2005 as well in which Honda’s net
profit decreased by 60%, which brought decrease in the returns of share holders to 8%.
In 2006, Honda cars managed to boost its sales by 55% which brought net income of
705,294,000, which was 330 % higher than previous year income. In 2007, the company
suffered loss in the business, hence showing the negative return in equity. But in 2008
the company again managed to show positive returns, but the return on equity was lower
than its competitors because of the equity injected by it in 2007 to carry on the expansion
plans. Moreover the sales of the company were also lowered by 14% due to the
economic and political instability of the country, bringing the decrease in the profit
margins as well.
Honda in 2004 had a net profit margin of rupees 408,500,000, hence giving the return
on equity of 22 %. This return
declined by 14% due to the increase
in the cost of goods sold which
affected the net profit as well. In
2006, the company managed to
increase the return on equity by
22%, by increasing its sales by 55%
and decreasing its cost of goods
sold by 3 %. In 2007 the company
showed a negative return on equity.
This was due to the loss that the
company had to bear due to the
reduction in sales due to the high price of the automobile, bringing the decrease in its
demand. Moreover, the company had equity of worth PKR 294,000,000 as well. The

39
company showed net profit PKR 75,010,000, hence putting the return on equity back to
positive digits.
Dividend payout ratio:

Year
2004 43.7 48.02 4 31.9
2005 ---- 52.94 12 21.65
2006 41.7 35.61 8 28.44
2007 ---- 37.21 15 17.4
2008 ---- 36.03 13 16.34
Analysis:
It is the percentage of earnings paid to shareholders in dividends. In the fig 3.7 we can
see the upward trend of the industry up till the year 2006. However it begins to fall after
that due to the liberalized policies of the government to import cars resulting in the
slowdown of growth. Moreover the economic and political conditions of Pakistan made
the automobile industry growth reduce to 3.9 %.
From the above calculated ratios we see that in contrast to Honda atlas motors Indus
and Suzuki motors gave out dividends to the share holders every year, even during the
economic and political instability. However Honda atlas motors have to retain its
earnings during the years 2005, 2007 and 2008 due to the financial setbacks the
company had to bear. This was
because the company was
undergoing expansion and the
same time the automobile industry
was facing harsh government
policies along with the economic
and political instability.
Return on Assets

Year
2004 8.19 13.02 12.14 11.12
2005 1.72 12.08 13.9 9.23
2006 6.72 18.36 15.96 13.68
2007 -3.03 17.44 12.48 8.96
2008 .99 15.58 3.27 6.61
Analysis:

40
An indicator of how profitable a company is relative to its total assets. ROA gives an
idea as to how efficient management is at using its assets to generate earnings.
In fig 3.3 we can see that there has been a downward trend in the automobile industry
after 2006. This downward trend in the industry was due to the imposition of the liberal
government policies for the import of new and used cars in the budget of 2005-06. The
growth of the automobile industry further decreased from 23% to just 9% in the year
2007. Then unfortunately, there occurred a series of events in Pakistan that was a bad
news for all the industries including the
automobile industry. There was political
unrest in the country along with the
national security issues. Furthermore the
instability the economic environment
resulting from the rising interest rate,
limited credit availability for auto
financing, depreciation of the Pak Rupee
against all the major currencies,
unprecedented rise in the prices of oil,
steel and other inputs caused severe
volatility in the market place, leading to
high inflation and loss of consumer
confidence. Further more in the budget
2008-09 the government had imposed higher levies and taxes which resulted in further
increase in automobile prices to the customers and dampened the demand.
From the above calculations we can see that Honda atlas motors has been facing
difficulties to manage its assets to generate earnings as compared to its competitors.
Indus and Suzuki motors have high returns on assets because they have higher sales
and lower costs and expenses as compared to Honda motors, hence letting them enjoy
higher returns. Honda on the other hand has lower sales than its competitors along with
higher costs and expenses.
The only years that has lead to higher return on assets is 2004 and 2006. It was not
only because of higher sales but also due to the lower cost and expenses in the
respective years. In 2005 the company had undergone expansion plans that raised its
costs and financial expenses. In 2007 the growth of the economy had slowed down due
to which the sales of the company fell. In 2008 the country’s condition was very
unstable that had affected the over all growth of the industry.
Debt to Equity Ratio

Company Honda Toyota Suzuki Industrial
Year
2004 2.62 2.06 1.45 2.04
41
2005 4.63 1.73 1.40 2.58
2006 2.39 1.53 1.08 1.67
2007 2.40 0.95 .52 1.29
2008 1.11 0.46 .20 .59
The above tables shows that from 2004-2008 we see a zig zag trend that some times
the ratio increased extraordinary and then suddenly decreased this will confused the
investor that what will happen next but while analyzing the we came to know that why
there is zig zag in the graph of Honda motors while its competitors are going toward a
decreasing trend which creates a cousin for the company to get debt on easy terms, but
in case of Honda where it is increased in 2005 is due to the expansion so they have
done their expansion from debt and open the doors for outsiders to financed there
assets.
The company started capacity expansion in 2005,
when the demand for our cars among others was 2008
growing. But soon after our kick-off of Rs 3.5 billion
capacity expansion project, the government
2007
liberalized the car import policy and stalled the
growth momentum resulting in a gradual decline of Honda
2006 Indus
the industry. The drop in sales and pressure on suzuki
cash-flow forced the company to borrow from the Industry
2005
banks.
The Board of Directors decided to inject fresh equity
to finance capacity expansion project and approved 2004
the issue of 100% right shares at par value of Rs 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
10/- each in July 2007. The process was completed
in early December 2007 and the proceeds were used for repayment of long term loans.
The paid up capital of the company has now increased to Rs 1,428 million against Rs
714 million a year earlier.
Now the company has injects some equity which make the debtor little bit comfortable
that there debt is little bit more secure. This will make the company as well as its
debtors happy.
Earnings per Share:

Year
2004 9.7 29.15 28.6 22.48
2005 3.9 34.93 41.4 26.74
2006 16.8 33.7 41.4 30.63
2007 -2.1 18.89 33.7 16.83
2008 0.6 18.74 7.6 8.98

42
Analysis:
Earnings per share are generally considered to be the single most important variable in
determining a share's price. It is also a major component used to calculate the price-to-
earnings valuation ratio. In the fig 3.5 we can see the upward trend of the industry up till
the year 2006. However it begins to fall after that due to the liberalized policies of the
government to import cars resulting in the slowdown of growth. Moreover the economic
and political conditions of Pakistan made the automobile industry growth reduce to 3.9
%.
From the above calculated ratios we see that Honda atlas cars have always been below
the industrial average. The reason for its low earnings per ratio was the low net income
during the fiscal years as compared to
its competitors, Indus and Suzuki
motors.
In 2005, Honda atlas showed decline in
the earning per share by 60%. It was
due to the decline in the net profit
margin by 3.4 %. However, earning per
share ratio increased to 16.8, since its
net profit increased by 1.8%. The year
2007, the company showed a loss of
PKR 264,450,000. In 2008 the
company made a profit, hence showing
a positive EPS of 0.6.
Bird’s eye view of Financial Analysis:

The auto industry is going through a phase of consolidation. After registering an
average growth rate of 40 percent from 2003 to 2006, the industry growth decelerated
to 9 percent in 2007 and a marginal growth of 2.8 percent in 2008. Over the last couple
of years, the auto policy has experienced many twists. The liberal policy to import re-
conditioned cars affected the growth rate. However, the terms of imports were tightened
last year.
43
The company sales were Rs 14,715 million during the year under review against
Rs.17,055 million achieved last year. The cost of goods sold was 14,088 million against
Rs.16,882 million in the last year. The gross profit has improved to Rs. 627.5 million
compared to a gross profit of Rs. 172.9 million last year. The gross profit margin has
improved substantially to 4.3 percent of sales against 1.0 percent of sales for last year.
Last couple of months have seen rupee under extreme pressure against major
currencies of the world.
In the above ratios we can see that company has not performed well as compare to its
competitors and industry. There was political unrest in the country along with the
national security issues. Furthermore the in the economic environment resulting from
the rising interest rate, limited credit availability for auto financing, depreciation of the
Pak Rupee against all the major currencies, unprecedented rise in the prices of oil, steel
and other inputs caused severe volatility in the market place, leading to high inflation
and loss of consumer confidence. Furthermore in the budget 2007-08 the government
had imposed higher levies and taxes which resulted in further increase in automobile
prices to the customers and dampened the demand. These all are the factors that’s
affects the company performance very badly. When we see that its competitors are not
affected badly as HACL. The basic reasons are that HACL is basically dependant on
imports that’s its 70% of raw material is imported from Malaysia so when dollar
appreciates against rupees it will hurt the company operations, while it competitor
Suzuki is getting its whole parts from local vendors. The company has limited numbers
of product where as Indus Motors (Toyota), and Pak Suzuki has greater product line.
The Honda position is not so much good so they have to take some corrective actions
by changing their strategies.
Recommendations & Corrective Actions:

• HACL has to increase its 3S Dealership network, in order to increase its sale
points.
• HACL should go for related diversification, that they have to launch different type
of models in contrast with Pakistani economy, they have to produce 1000cc and
below cars, Introduction of flexible fuel vehicle. In order to increase their market
share and profitability.
• HACL should go for local vendors and reduce the size of imports as imports are
major burden on the company as Pakistani rupee is continuously depreciating
against Dollar and other major currencies.

44
• HACL should have to utilize their assets properly as their half of the assets were
not utilizing and they became a burden for the company so they have to utilize
those assets in order to increase efficiency.
• The company has to change its capital structure, in order to reduce its cost of
capital as cost of debt is more as compare to cost of equity so they have to inject
fresh new equity in order to gain the lender trust.
• Influence and coordinate government institutes to ensure consistent power

supply and minimum break down time.
• Availability of trained technical staff at 2 S and 3 S dealers. In order to increase

efficiency and effectiveness, and make customer more satisfied.
• To increase operating efficiency the HACL should have to Strict employee

policies to contain overhead and unfavorable economic conditions

45
APPENDIX
Interview analysis
According to research, brand loyalty of Toyota Corolla and Honda City are existing between
customers’ perception and fulfillment of perception, the fulfillment of perception is the
46
responsibility or obligation of associative companies. Regarding this I have taken an interview
session with Mr. Syed Nadeem Ahmed, Manager Sales marketing of Indus Motors’ authorized
dealer (Toyota Southern Motors). And second interview was taken from Honda Atlas
Company’s Dealer Tariq Mohi-ud-din Butt, General Manager of Honda City sales motors.
Interview from IMC Dealer
Q1. Tell something about yourself?
A. My name Mr. Syed Nadeem Ahmed Manager Sales marketing of Southern Motors (IMC).
Q2. Tell me about your organization?
A. We have dealership of Indus Motors Company which we have been dealing Toyota vehicles
range comprises of TOYOTA COROLLA, CAMRY, COURE and HILUX They are having
capacity of 225,000 units. We have good growth since last 5 to6 years now there is a decline in
sales. There are some reasons behind it, the main reason is the increase of interest rate, control of
SBP monetary policy. Now the sales are stagnant after so many years of good growth. Anyways
the highest level of sales in 1300cc cars is Toyota Corolla and in 850cc car is Coure is top of the
list.
Q3. What most of buyers require or demand to you about Toyota

Corolla?
A. According to requirements of customers they perceive that money in term of benefits like
superior quality, reliability, performance and its cost. We assure to provide them Toyota Corolla
in customers point of view because Indus Motors Company is very conscious to provide its
product at the level of brand loyalty for its customers.
Q4. How much of you spent your time on customer to briefing about the Toyota Corolla?
Regarding Toyota Corolla, this 1300cc brand has well worth and well known overall in Pakistan.
Mostly we do not need to briefing about Toyota Corolla, customers just came to dealer and
purchase its loyal Toyota Corolla car in either cases they have word-of-mouth information and
personal experience. Off course, we just provide information regarding new addition or
technological enhancement in the car.
47
Q5. From year 2005, the ban was lifted from imported cars. So the sales of Suzuki cars got
affected?
A. Not changed because the main reason was that we cannot produce more as well as we
continued our other imported car i.e. PRADO.
Q6. There is a concern about the quality of Toyota Corolla cars. What do you say about it?
A. I’ll not accept it with as far as any car is concern of Toyota. The reason is that our customers
are very sensitive. Our customers are middle and upper class persons who are very conscious
about that vehicle. So for our vehicle segment they are very much focused and mostly customers
are well known about the Toyota Corolla related concern. If you talk about quality our record is
world over. But sometimes something happens .We have market share of around 62% so lots of
people are talking obviously! The car comes to the dealer and is being repaired there and
customer doesn’t know what happens with it.
Q7. How do you maintain Brand loyalty of Toyota Corolla?
This is really critical part of our customers because if any customer get clue regarding its
satisfaction so the result will go opponent to us for that we have to very careful to deal and
maintain our Brand (Toyota Corolla) positioning in customers mind. For that instance, we
provide them 3S (Sales, Service and Spare Parts) very effectively and efficiently. Our aim is to
get close more and more to customer.
Q8. How do you compare that Toyota Corolla is better than Honda City?
Usually customers are not well aware regarding identify difference between Toyota Corolla and
Honda City for that instance, we also provide them technical specification information which
customer may come to understand easily.
Q9. For improve/maintain brand loyalty of Toyota Corolla, what does Indus Motors
Company?

48
Indus Motors Company has a mission to provide quality brand and customer satisfaction. For
that IMC directly involved in every aspect and monitor all activities that engaged with the
customer, the monitoring system is very straightforward and fair in which they does not
compromise in any situation. We periodically asked to our customers and encourage them to feel
free complaint, and appreciating those suggestion and comments.
Interview from HACPL Dealer
Q1. Tell something about yourself?
A. My name is Tariq Mohi-ud-din Butt and I am General Manager of Honda City sales motors.
Q2. About HACPL?
A. The Honda Atlas Company Pakistan limited (HACPL) is third largest automobile company in
Pakistan and we are authorized dealer of it. Which we are dealing wide range of Honda brands
that comprises of HONDA CITY, CIVIC, ACCORD and CR-V. They are having capacity of
150000 units. HACPL deal in other wide range of product line which we have good growth since
last 25 years and in car category 8 to 10 years, in automobile market we also affected in
recession to go through decline in sales where there are some reasons behind it, the main reason
is the increase of interest rate, control of SBP monetary policy. Anyways the highest level of
sales of Indus Motors Company in 1300cc cars is Honda City and Honda Civic are top of the list.
Q3. What most of buyers require or demand to you about Honda City?
A. our customers are economically very curious, majority of customers perceived about Honda
City is reliability, performance quality and they are highly demanding economically affordable
with respect to fuel consumption so Honda City fulfilling those need in term of our customers’
expectation. We have an honor that Honda City is successfully perceived our customers’
requirement and assure to provide them Honda City in customers point of view.
Q4. How much of you spent your time on customer to briefing about the Honda City?
Our customers are very sensible about Honda City, this 1300cc brand has provide them briefing
and information itself and we makes it possible to provide them information with presence of

49
Honda City because our perception is that, the customers’ believed at eye witness so we do not
need to give much briefing as customers’ perceive themselves.
Q5. From year 2005, the ban was lifted from imported cars. So the sales of Honda City cars
got affected?
A. it is not much affected by ban’s lifted from imported cars because we also imported cars in
which our most famous brand introduced i.e. Honda Accord, CR-V.
Q6. There is a concern about the quality of Honda City cars. What do you say about it?
A. I will not accept it because some time something or anything could be happen but for
instance, most of the time we surveyed about Honda City’s reputation in the market and our
surveyed report tell us that those customers’ who do not have experience about Honda City they
just go through word of mouth but our experienced customers are much loyal to quality of Honda
City. Our customers are middle and upper class persons who are very conscious about that
vehicle.
Q7. How do you maintain Brand loyalty of Honda City?
One of the issues about brand loyalty is maintain brand position in customers’ mind in which we
provide them more and more satisfaction. We follow just in time strategy and provide 3S and 2S
services to facilitate our customers. Because before buying, customers may think about sales
location, appropriate location of service and availability of Spare Parts. For our customers we
facilitate them with additional Service and spare parts which our customers may easily reach
those target requirement.
Q8. How do you compare that Honda City is better than Toyota Corolla?
As I told you in last question that our customer are highly appreciated Honda City because of its
fuel consumption and more over this, some of technical specification are makes difference that
which factors Honda City is better than Toyota Corolla. in technical aspect, usually customers
are not well aware and they do not have sufficient technical information about Honda City
which they identify difference and betterment of Honda City.

50
Q9. For improvement/ maintain brand loyalty of Honda City, what does Indus Motors
Company do?
HACPL is very conscious about its customer, in brand loyalty aspect, company makes it possible
as those slogan “Power of Dreams” for achievement brand loyalty (Honda City). In this instance,
Honda Atlas Company directly involved and all its authorized dealers follow its standard. We
maintain our brand loyalty through given more importance to our customer because we are not
selling the Honda car, instead that, we focused on develop and maintain long term customer
relationship.
Analysis:
Mr. Mazhar Ghauri of Indus Motors Company and Mr. Jamil of Honda Atlas Company are very
experienced candidates and they have over 15 years experience in respective companies. They
provided very handful information for me. Although they did not speak against associated
companies, but they tried to prove those point. According to associated persons, the sale actually
has gone up mainly due to the fact of brand positioning in customers’ mind as they perceived if
any of factor that incurred in affected sales that reason surely economy has been shattered and
the de valuation of currency had increased the prices of cars. They inclined that the quality of the
cars are going up as he told us that the vendor’ are the same and the quality of parts are been
standardized and maintained. They said more about associated 1300cc cars (Toyota Corolla and
Honda City) that it is having the expected result as they still have achieved the goals of it. Due to
time constrained they might have provided a great knowledge more. But still, those interviews
provided good information regarding brand loyalty.

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Honda Atlas Cars Strategic Management Project

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Honda Atlas Cars Strategic Management Project

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Chapter # 1

INTRODUCTION TO THE COMPANY

“THE POWER OF DREAMS”

COMSATS Institute of Information Technology, Lahore Campus.

COMSATS Institute of Information Technology, Lahore Campus.

EXTERNAL AUDIT OF THE COMPANY

The External Assessment:

Global crisis and Pakistan:

Pakistan's Economic growth:

The role of IMF (International Monetary Fund):

• The government agreed to an International Monetary Fund Standby Arrangement

Financial position of Pakistan:

a) The government plays an important role in the operation and manufacturing

Instability and political clashes:

Tightened monetary policies:

• Advances in technology can have a major impact on business success.

Social, cultural, demographic and environmental forces:

• Effects of the automobiles on societies:

COMSATS Institute of Information Technology, Lahore Campus.

Industrial infrastructure: Huge industries devoted only to the automobile were

• Changes to urban society

• Vehicle Air Pollution:

COMSATS Institute of Information Technology, Lahore Campus.

The main competitors of Atlas Honda in Pakistan are:

The company was incorporated in Pakistan as a public limited company in December

Porter's Five Forces Model:

Although Pakistani Market is dominated by protectionism but because of financial crisis

COMSATS Institute of Information Technology, Lahore Campus.

First Mover Advantage:

Access to Channel of Distribution and Relationships:

THREAT OF SUBSITUTE PRODUCTS

BARGANINIG POWER OF BUYERS:

BARGAINIG POWER OF SUPPLIERS:

COMSATS Institute of Information Technology, Lahore Campus.

External factors Wght Honda Atlas

Opportunities Rating Wgtd.Score

1. People’s awareness about Global Warming 0.05 2 0.10

3. Increase in technology in automobiles forces customers to 0.1 4 0.40

5. Increase in demand of small vehicles 0.05 3 0.15

1. Recession in the economy 0.05 1 0.05

4. Political instability 0.05 1 0.05

5. Tightening monitoring Policy 0.06 2 0.12

6. Energy crises 0.1 3 0.30

7. Depreciation of rupee against dollar 0.1 4 0.40

8. Increase in Petroleum and steel prices. 0.09 2 0.18

9. Inflation 0.07 2 0.14

10. Declining quality of the infrastructure in the country. 0.03 2 0.06

COMSATS Institute of Information Technology, Lahore Campus.

Competitive Profile Matrix (CPM):

Honda Atlas Indus Motors Pak Suzuki

Product Quality .14 4 0.56 4 0.56 2 0.28

After Sale Services .10 4 0.40 4 0.40 3 0.30

Price Competitiveness .13 4 0.52 4 0.52 4 0.52

Technology .10 4 0.40 4 0.40 3 0.30

Dealership Network .12 2 0.48 4 0.24 4 0.48

Market Share .10 2 0.20 3 0.30 4 0.40

Spare Parts .12 2 0.36 3 0.24 4 0.48

Environment Friendly .09 4 0.27 3 0.36 2 0.18

Customer Loyalty .10 4 0.40 4 0.40 2 0.2

Total 01 3.32 3.69 3.94

COMSATS Institute of Information Technology, Lahore Campus.

INTERNAL AUDIT OF THE COMPANY