EXECUTIVE SUMMARY

This internship report is about Pak Elektron Limited where I completed my internship in
Corporate Sales Department under the Marketing Appliance Division. My working was
in the appliances division of PEL, so the report is more focused on PEL’s appliances
division and an overview of power division is also given in this report.

This report starts from an introduction of the company which includes the group profile
and the history of company. PEL is public limited company under the flag of Saigol
group, one of the top business groups of Pakistan. Saigol group has different
companies in different industries like textiles, sugar, power and electronics. Pak
Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan and
was established in 1956 in technical collaboration with M/s AEG of Germany. In October
1978, the company was taken over by Saigol Group of Companies. In next Vision and
Mission statements of PEL are written in this report. After it I will mention the corporate
profile of PEL which includes the list of Board of Directors. Then there are the details
about PEL’s divisions and their products. PEL consists on two divisions;

1) Appliances Division

2) Power Division
Appliances division has the products of Refrigerators, Air Conditioners, Micro wave
Ovens, Washing Machines Diesel and Petrol Generators and Water dispensers. The
major products of appliances are refrigerators and air conditioners and they have a
variety of models and features. PEL’s water dispensers are newly introduced in the
market.

Power division consists on the products of EPC Contracting, Power Transformers,

Distribution Transformers, Drytype Transformer, Energy Meters, Switchgears and
Transformer services.

After it report will explain the major departments of PEL and the working of these
departments. The major departments are Marketing, Corporate Sales, Corporate
Services, Human Resource Management, Industrial Relation and Administration,
Accounts, Finance etc. Then this report will give you a view of marketing strategy of the

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company and explain the market segmentation, targeting and positioning along with four
Ps of marketing. In next turn report will give u a view of competitive strategy of the
company. Here I also explain Porter’s five forces analysis of the company and BCG
Matrix will also explained. there is Porter’s five forces model for the company. Fives
forces include bargaining power of suppliers, bargaining power of buyers, Threats of
new entrants, Threat of substitutes and Rivalry amongst industry competitors. The
forces of bargaining power of suppliers, Threat of new entrance and threat of substitutes
show a favorable condition for the company but the bargaining power of buyers and
rivalry amongst the industry competitors are unfavorable forces for the company.

In the next portion of report, I will explain about PEL’s macro environment and present
the PEST (Political, Economic, Social, Technological) Analysis. The Economic and
political situation in Pakistan is not satisfactory for the company but in social and
technological environment PEL has certain opportunities. After PEST analysis, report
will give a comprehensive SWOT (Strengths, Weaknesses, Opportunities, Threats)
Analysis of the company.

After it, report will explain you about my duties performed as internee during my
internship at Pak Elektron Limited. This report will also mention about the problem
encountered by me in the company. In next report will give you about my learning
during internship and its future effects on my career. The next report will explain you my
recommendations and the conclusion on the basis of my knowledge and experience in
the company.

The last portion of the report will describe the references, glossary and annexure.

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 INTRODUCTION

Group Profile
In 1948, the Saigols migrated from Calcutta and initiated their business in Lyallpur (later
named to as Faisalabad), the textile city of Pakistan, under the banner of Kohinoor
Industries Limited

Kohinoor Textile Mills

The Saigols set up the first major textile unit - The Kohinoor Textile Mills under the
umbrella of Kohinoor Industries Limited. The Kohinoor Textile Mill has state-of-the-art
quality control from raw material to finished product manufacturing. Its laboratory is top
rated amongst the best laboratories in Pakistan for testing of textile raw materials, other
inputs and yarn.

Initial Capacity:25,000 spindles

Current Capacity: 71,648 spindles

Pak Elektron Limited (PEL)

In 1978, the Saigol Group of Companies purchased major shares of Pak Elektron
Limited. At that juncture, the company was only manufacturing transformers and
switchgears. With the Saigols in management, PEL started expanding its product range
by entering into Air Conditioner manufacturing.

The PEL Group comprises two divisions

1. Appliances Division

2. Power Division

Pak Elektron Limited alone has a turnover of over 180 million US Dollars.

Saritow Spinning Mills & Azam Textile Mills

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In 1987, the Saritow Spinning Mills and Azam Textile Mills were established under the
banner of Saigol Group of Companies. Saritow Spinning Mills is a spinning unit with
25,440 spindles capacity. Facilitated with the most modern and efficient Japanese and
European machinery, its knitted yarn is renowned in the Far East and Europe for its fine
quality. Azam Textile Mills is reputed for its carded and combed yarn, which is quite
popular for premier knitting and weaving.

Kohinoor Power Company Limited

In 1991, the first power unit commissioned in Pakistan, in the Private sector, was
Kohinoor Power Company Limited. Its present production capacity is 15 MW.

Kohinoor Energy Limited

1995, another power unit, Kohinoor Energy Limited, was established. Kohinoor Power
Limited is a 120 MW power plant located on the outskirts of the city of Lahore. This
project has an annual turnover of $80 million.

History
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan.
It was established in 1956 in technical collaboration with M/s AEG of Germany. In
October 1978, the company was taken over by Saigol Group of Companies. Since its
inception, the company has always been contributing towards the advancement and
development of the engineering sector in Pakistan by introducing a range of quality
electrical equipments and home appliances and by producing hundreds of engineers,
skilled workers and technicians through its apprenticeship schemes and training
programs. PEL is now technology forerunner and market leader in providing new
products and services to meet ever changing and technology intensive needs of its
customers. PEL’s EPC contracting division delivers custom designed and built HV and
EHV grid stations, electrification of housing projects, industrial parks and optimum
solutions for power utilization to all kinds of industries and commercial customers. PEL
aims to maintain this competitive edge and at the same time keep striving to improve it
further by continuous R&D, creating new knowledge and adapting to global
developments in technology and product design. Ever increasing local market share,

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growing export orders, numerous successful power projects and greater than ever base
of satisfied customers are evidence to these aspirations.

Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of
Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft
respectively. Both are equipped with latest technology, state of the art testing facilities
and environment friendly production process. At the heart of PEL’s operations is its
human resource. PEL invests heavily on professional development, skill improvement
and well being of its human resource. PEL’s employees are its most valuable asset and
PEL keeps them very dear.

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 Vision
“To excel in providing engineering goods and services through
continuous improvements”

Mission Statement

To provide quality products and services to the complete

satisfaction of our customers and maximize returns for all
stakeholders through optimal use of resources

To focus on personal development of our Human resources to

meet future challenges

To promote good governance, corporate values and a safe

working environment with a strong sense of social responsibility

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CORPORATE PROFILE
BOARD OF DIRECTORS

 Mr. M. Naseem Saigol (Chairman / Chief Executive)

 Mr. M. Azam Saigol
 Mr. Murad Saigol
 Mr. Haroon Ahmad Khan (Managing Director)
 Mr. Homaeer Waheed
 Mr. Muhammad Rafi Khan
 Mr. Gul Nawaz (NIT Nominee)
 Mr. Masood Karim Sheikh (NBP Nominee U/S 182 of the Ordinance)
 Mr. Tajammal H. Bukharee (NBP Nominee U/S 182 of the Ordinance)
 Mr. Wajahat A. Baqai (NBP Nominee U/S 182 of the Ordinance)

ORGANIZATIONAL HIERARCHY of PEL

1. Hierarchy of Pak
Elektron Limited

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PEL’S DIVISION
The company comprises of two divisions:

1. Appliances Division

2. Power Division

APPLIANCES DIVISION

PEL’s Appliances Division is the flag carrier of the Saigol Group. This Division of PEL
consists of home appliances manufacturing.

Milestones

 In 1981, PEL window type air conditioners were introduced in technical

collaboration with General Corporation of Japan.

 In 1986-87, the company started manufacturing of refrigerators in technical

collaboration with M/s IAR-SILTAL of Italy.

 In 1987, PEL deep freezers were also introduced in technical collaboration with
M/s Ariston of Italy.

 In 2006, the Company has started manufacturing of split type air conditioners of
various capacities as the customer choice has shifted from window type to split
type air conditioners. The product has received good response from the market,
which encourages the company to multiply its production in the coming years.

 Today, PEL has become a household name. Its products are not only in great
demand in the local market but the Company has also started exporting its
appliances to foreign markets.

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PRODUCTS OF APPLIANCES DIVISION

Appliances Division has the following products;

Refrigerators

PEL’s refrigerators are available in 6 series of different colors, models, prices and
capacities. The series are as follow

1. Xpression Series

2. Premier Series

3. 6-Series

4. Delux Series

5. Smart Series

6. Mini Series

PEL has 28 different models in the above 6 series in different prices, which gives
customers a wide range to select PEL refrigerator according to their needs. PEL uses
Danfoss compressors and Galaxy doors in all its series except Mini series in which
Reciprocating compressors and PCM doors are used. PEL offers warranty of 5 years
compressor & 1 year parts & service to the customers except Mini series where PEL
offers warranty of 3 years compressor & 1 year parts & service to the customers. The
refrigerators are available from the capacity of 60 to 420 liters.

PEL’s refrigerators are environment friendly and are CFC (chlorofluorocarbons) free,
CFCs are a family of chemicals that contain chlorine, fluorine and carbon. The chlorine
content in these compounds causes the depletion of the ozone layer. The refrigerators
are with the direct cool properties and PEL is using energy saving technology in its
products to save energy and giving benefits to the customers.

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Air Conditioners

The air conditioners are available in three types;

• Split Air Conditioners

• Window Air Conditioners

• Floor Standing Air Conditioners

Split Air Conditioners

PEL presents Cool life Split AC which is a technologically advanced model especially
designed for Pakistani market. This masterpiece from PEL provides maximum cooling
even at very high temperatures while minimizing electricity consumption. The wide
range of models and prices gives customers more choices to select PEL’s product.

The air conditioners are available in the different prices, capacities and models. Split air
conditioners are available in three capacities

 1 ton

 1.5 ton

 2 ton

Features of PEL Split ACs

The key features of PEL’s split air conditioners areas follow;

 Free Installation Kit Compressor Warranty

 Auto restart function

 Environment friendly refrigerant R22

 Anti-rust outdoor unit

 Easy-cleaned panel

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  Self diagnosis and auto-protection

 Two-direction air flow (SLR)

 Independent dehumidification

 Trapeziform Inner groove tube

 Hydrophilic aluminum fin

Window Air Conditioner

PEL presents Cool life Split AC which is a technologically advanced model especially
designed for Pakistani market. This masterpiece from PEL provides maximum cooling
even at very high temperatures while minimizing electricity consumption. The Window
ACs are available in capacity of 1.5 and 2 ton, and with manual and remote control
function.

Features of PEL Window Ac

The following are the key features of PEL window air conditioners;

1. Super quiet operation

2. Maximum dehumidification

3. Best after-sales service

4. Anti-rust cabinet

5. Environment friendly refrigerant

Floor Standing Air Conditioners

PEL presents Cool life Split AC which is a technologically advanced model especially
designed for Pakistani market. This masterpiece from PEL provides maximum cooling
even at very high temperatures while minimizing electricity consumption. The floor
standing air conditioners are available in the three models and capacities;

 FS 600 - 5 Ton

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  FS 480 - 4 Ton

 FS 300 - 2.5 Ton

Features of Floor Standing Air Conditioners

The key features of PEL Floor Standing Air Conditioners are as follow;

 Free Installation Kit Compressor Warranty

 Auto restart function

 Environment friendly refrigerant R22

 Anti-rust outdoor unit

 Easy-cleaned panel

 Self diagnosis and auto-protection

 Two-direction air flow (SLR)

 Independent dehumidification

 Trapeziform Inner groove tube

 Hydrophilic aluminum fin

Microwave Oven

PEL the trustful company name in home appliances all over the country, now introduced
all new models of "PEL Silverline" Microwave Ovens.

Now PEL customers can have different models of PEL Microwave Ovens in which they
can enjoy the grilling feature as well. PEL Microwave Ovens are available in different
sizes and inner cavities (steel & painted). Cook, Bake, Roast or Grill with the all new
PEL Microwave. With cutting edge technology and advanced features.

PEL presents 26 different models of ovens with different prices, models and capacities.

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Features of Microwave Oven

 Smart Intelli-menu - Preset cooking menu's

 360 degree cooking system - Cook-Bake-Roast-Grill

 Enersave features - Energy Savings

 5 years Magnetron Warranty - Peace of Mind

Washing Machines

Magic Clean PWM7700

The PEL Semi Automatic Luxury Wash - 7700-N equipped with Japanese technology
has a 100% rust proof plastic body with a big multi pilaster. It can handle heavy loads
and has a quick dry spin.

In addition, it supplements a drain switch that quickly drains out all the excess water. So
treat yourself with the Luxury Wash - washes away heavy loads and dries them up
quickly.

Magic Clean PWM512

The PEL Econo Wash 512 is made from Japanese Technology with 100% rust and
shock proof unbreakable plastic body with the capacity of 10 Kg. It's a top load with a
powerful motor that provides a brighter wash and has a build in energy saver that gives
you excellent energy efficiency. So save the energy with this Econo Wash - consumes
less electricity as it gives more output.

Features of PEL Washing Machines

The key features of PEL washing machines are as follow;

 One year parts & service warranty

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  Japanese technology

 Super large multi pulsator

 Quick dry spin

 Drain switch to drain all excess water

 Semi automatic

 Ability to wash extremely heavy loads

 Low noise & easy operations

 100% rust & shock proof unbreakable plastic body

Water Dispensers

Water dispensers are a welcome addition to PEL range of home appliances. PEL’s
Silverline and Life-Stream water dispensers make life a little easier and fridge space a
bit more plentiful. While Cold water refreshes your mood in burning summer, Hot water
on demand is great in the office for packets of soup, instant coffee and tea.

Features

 Hot & cold water

 Refrigerator

 Separate Freezer

 Compressor Cooling

 Stainless Steel Water Tanks

 Super Quiet Design

 Energy Saving

 CFC Free

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  1 Year Warranty

Generators

PEL presents generators for domestic and commercial use. PEL’s generators are
available in diesel and petrol in four capacities;

 1.1 KVA Generators

 2.5 KVA Generators

 3.3 KVA Generators

 5.2 KVA Generators

POWER DIVISION

PEL was founded in 1956 and has since been serving the Power utilities, industries,
individual customers, housing and commercial projects by providing reliable,
customized and cost effective solutions. Backed by the innovative genius of Saigol
Group, PEL is now technology forerunner and market leader in providing new products
and services to meet ever changing and technology intensive needs of its customers.
PEL’s EPC contracting division delivers custom designed and built HV and EHV grid
stations, electrification of housing projects, industrial parks and optimum solutions for
power utilization to all kinds of industries and commercial customers. PEL aims to
maintain this competitive edge and at the same time keep striving to improve it further
by continuous R&D, creating new knowledge and adapting to global developments in
technology and product design. Ever increasing local market share, growing export
orders, numerous successful power projects and greater than ever base of satisfied
customers are evidence to these aspirations.

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PEL Power Division is one of the major electrical equipment suppliers to WAPDA &
KESC. Since 1956 the company manufactures transformers, energy meters,
switchgears, kiosks, compact stations and shunt capacitor banks. PEL also has had the
privilege of getting its equipment approved and certified from well-reputed international
consultants such as:

 Preece, Cardew and Rider, England

 Harza Engineering Company, USA

 Snam Progeti, Italy

 Societe Dumezm, France

 Miner & Miner International Inc. USA

 Ensa, France

PRODUCTS OF POWER DIVISION

The Power Division of PEL has the following products;

 EPC Contracting

 Power Transformer

 Distribution Transformer

 Drytype Transformer

 Energy Meter

 Switchgear

 Transformer Services

MAJOR DEPARTMENTS OF PEL

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MARKETING AD
Marketing department is main nerve of any organization as far as PEL is concerned. This
department consists on 8 employees and Head of this department reports to Director
Operations. The perceptions and feelings formed about an organization, its products / services,
and its performance is what is known as its “brand.” The Marketing Department is responsible
for creating meaningful messages through words, ideas, images, and names that deliver upon
the promises / benefits an organization wishes to make with its customers.

2. Marketing Process Model

The products marketed and managed in Appliance Division are as follows:

 Refrigerators
 Microwave ovens
 Split and window Air Conditioners
 Water Dispensers
 Washing Machines
 Generators
The primary duty of marketing department is to make an overall marketing plan for each
product and also analyze the current market situations by monitoring the competitors
separately and constructing strategies accordingly. It also performs the function of
advertisement budget allocation for the whole year and to develop promotional plans for
retailers, wholesalers, and end consumers within limited financial budget.

PEL Marketing AD department is a blend of following departments:

 Corporate Sales Department

 Consumer Marketing Department

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  Customer Service Department
 Distribution & Credit Control Department
 Dispatch

CORPORATE SALES DEPARTMENT

Corporate Sales Department is very important department which generates the
revenues for the company. The Head of this department reports directly to Director
Operations. This department consists on employees in which Business Development
Manager, Senior Sales Officer, Area Sales Managers, Sales Officers, Sales
Coordinators and Technical Coordinator.

Director

Operation
BDM

ASM ASM
Sr. S.O S.O S.C S.C
RWP FSD

S.O T.C ASM MUL ASM Khi S.C

S.O
S.O
S.O S.O

S.C

3. Hierarchy of Corporate Sales

Department

First of all company analyze the total market potential. Find out the PEL potential from

the total market potential. Then find out the corporate sales potential. To analyze the

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market potential, they use various resources like overall sales of their company & their

competitors throughout the year. 2nd resource they use the report from the custom

department on the import of compressors or other raw material that help them to

analyze the total market potential.

After analyzing the market potential they set the sales target for a year with mutual
understanding, with set target, sales officers go in the field & get order from customers.
They use different inquiry tools to access their customers like they visit market
institutions, use the old references, they also find out their customers through
advertisers & tenders, fax, e mail and are forwarded to Business Development
Manager. When sales officers visit their customers they demand some pre-qualification
steps including some certificates,

1. Name , postal and registration office address

2. Legal status of firm
3. Full particulars, organizational set-up along with firm’s brochure
4. Financial soundness certificate, Annual Report,
5. Details of plant and machinery installed
6. Details of similar projects completed
7. Certificates of Income tax and Sales tax registration
8. Pakistan Engineering Council certificates
9. Company Status,
10. Company Profile.

After the pre-qualification Company sent quotation to the customer prepared on

standard F-MKT-01A signed by BDM that include Assessable price, sale tax, extra sale
tax, excise duty, price per unit and their terms and conditions.
Terms & Conditions:

1 Offer validation
2 Delivery Time:
3 Payment Terms:
4 Warranty:

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 5 Installation Charges:
6 Sales Tax registration Number
7 National Tax Number
On the basis of quotation company and customer negotiate with each other on the
prices. The company has a technical and financial capability to met customer
requirement. This may require consultation with General Manager Manufacturing. After
revised quotation finally customer issues purchase order.

After issuing the purchase order by the customer, customer makes pre-delivery
inspection or inspection at site in which he will check the availability of stock. After the
inspection customer issues the inspection note and it is the proof that inspection has
made. After the issuance of inspection note company issue the order form, check the
availability of stock, if stock is available then order form approved by manager
Distribution and Credit Control department. Against this order form, delivery order is
issued from dispatched department after that delivery order approved by manager
distribution and credit control. In case of free delivery dispatched department issues the
goods received note and give it to the driver of vehicle, which gives receiving from the
customer. After that,

• Execution of Installation
• Awarding of Installation
• Installation forward to authorized installer of PEL Corporate Services Department
• Supervision of Installation
• Supervision of installation is done by PEL authorized technical teams

After the delivery, sales coordinator prepare the invoice of installation that includes
product model, quantity, rate per unit, gross sales values, discounts, net sales values,
sales tax, special excise duty, extra sales tax and net to customer. And then prepare the
supply invoice annexure and bill that includes the total amount customer paid. Following
documents are attached with that invoice,

• Covering letter
• GRN
• Inspection note

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Then maintain the record in concerned files therefore Earnest money, bank guarantee
and demand draft etc. after the record keeping sent request to the account department
to issue CDR against warranty.

Mostly sales are done on credit basis so after sending the invoices to the customers
they follow up them to make payments. Continuous visit are made to customer for
removal of objection and collection of payments

Corporate sales department received the payment from customers against this payment
they made payment confirmation report and then depositing it to the Distribution and
Credit Control department where this department makes their entry into the system.
With the help of that data Distribution department feed into the system Corporate Sales
department generate different reports. To keep the record up to date sales coordinators
prepare consignee status on weekly bases and aging reports.

The department has its sales officers in different cities of Pakistan and they are
responsible for communicating with customer parties, sells products, installation and to
make collections of credit sales. This department prepares different reports regarding
sales and collection. Corporate Sales Department deals with the business parties or
organizations rather than individual customers.

Customer Service Department (CSD)

CSD is a customer service department under the Marketing AD Head. Where after
sales services are provided to satisfy customers having problem in their appliances.
PEL is well known for their customer care services.

Distribution and Credit Control Department (D&CC)

Distribution and credit control department has 48 employees and it is a merger of two
departments;

 Distribution
 Credit Control
The distribution includes the activities to distribute company’s products from the factory
to the stores in Lahore and different cities of Pakistan. The head of this department

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reports General Manager Marketing AD as well as General Manager Finance. The basic
function of credit control is to do sales accounting of Corporate Sales department and
maintains ledgers. This department is responsible for check and balance of dealers, and
allocates credit limitations for dealers and Corporate Sales department. It plays a role of
bridge between Corporate Sales Department and Accounts Department. This
department not only motivates the dealers but also check their activities. It also checks
their credit limit because dealers have awarded different credit limits according to their
potential of sales. Whenever any dealer’s credit crosses its limits they stop the supply
and first they try to motivate dealer to clear his credit then they restart his supply. These
all things happed because much of PEL’s sale is on credit.

Dispatch

Dispatch is another department under the Marketing AD Head. In this department all the
data regarding products sending out from the factory is maintained. This department
sends daily dispatch report to Corporate Sales which help to identify the orders and
their status.

CONSUMER MARKETING DEPARTMENT (CMD)

This department is basically under the marketing AD department. At the start this
department did not exist in the hierarchy but with the passage of time and with the
success of easy installment scheme, this department came into being. The reason is
that in the start this department’s target market was Lahore and its workforce had only 8
persons and now after 2 years of its establishment it has covers major cities of Pakistan
and it has workforce of 45 and they are recruiting more to cover these areas fully.

There are many regional offices in major cities for example in Multan, Shawl, Karachi,
Hydria, Faisalabad, Gujranwala, Hattar, Rawalpindi, Sialkot, Bahawalpur, Sukkur,
Sargoda and AJK (Azad Jammu Kashmir) and the head-office is in the factory that is
Consumer Marketing Department.

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HUMAN RESOURCE DEPARTMENT

Human Resource Department is the most important and key department of every organization.
It not only deals with the employees of the organization but also help in management of the
affairs of the company.

HR Department’s activities are spread over the whole organization. The following areas come
under direct supervision of HR department at PEL.

 Hiring and firing of employees

 Training and development
 Compensation system

FINANCE DEPARTMENT

Finance Management is the lifeblood of any company. If this area of corporate

activities is improperly handled, a company may lead insolvency despite having all
the resources and opportunities. Therefore proper financial management is vital for
every business concern and PEL is not lacking behind over here. Functions of
Finance department are:

 Preparation of budget, appropriation of accounts, re-appropriations, surrender

and savings.
 Control of expenditure and ways & means position.
 Audit
 Treasury administration
 Administration of Taxes i.e. Sales Tax, Entertainment Tax, Luxury Tax and Entry
Tax etc.
 Resource mobilization through loans, Institutional Finance, Small Savings, Credit
and Investment and public debt.
 Financial concurrence and advice.
 Compilation of Codes, Rules and procedures concerning financial transactions
and having bearing on State finance and their implementation.
 Safety and investment of funds from consolidated funds, contingency fund and
public account.

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  Contract, recovery and refund of revenue etc.
 Arrange monetary resources / funds at favorable prices and at proper time.
 Allocate resources / funds throughout the organization.
 Deal with banks, investment firms, modarabas, government departments of
Appliance and power division calculate and keep employees salaries record.
 Carry out final auditing of financial records prepared by Accounts department of
Appliances and power division.

INDUSTRIAL RELATION & ADMINSTRATION (IR & A)

Key responsibilities of this department are:

 Maintenance of Attendance
 Check the material in & out from the factory
 Maintenance of factory
 Provide assistance to all departments regarding material
 Security and fire fighting
 Gate supervision
 Telephone exchange
 Fair price shops
 Canteen supervision
 Dispensary and health care
 Time clerks etc.

PROCUREMENT
PEL has state of the art methods of production and they also outsource the products
and raw material not only from Pakistan but also from foreign countries. So for this
purpose PEL has two different departments for procurement, which are:

 Local Procurement
 Foreign Procurement

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Local Procurement
Local Procurement department is responsible for all the raw materials that are required
for making various products in the factory. It includes from nails to large metal sheets.
At the start of each financial year they receive a major plan from the management,
which highlights all the raw material required for each product. Dates and maximum
time limit for raw material requirement is also mention in this major plan.

Now procurement team makes small benchmarks and milestones from the major raw
material required plan in order to ease them for remembering the required time limit and
also reminds finance department to arrange finance for such purchases.

Foreign Procurement
Responsibilities and duties are same as Local procurement but they vary in the
dimension that, they have to arrange the raw material from abroad. They also receive
same plan as local procurement for the whole financial year and develop milestones to
carry out the plan execution properly.

The skill of this department is to purchase the raw material in the optimum cost that best
satisfy the need of production department and also to finance department in quality as
well as in monetary terms respectively.

INFORMATION TECHNOLOGY
IT department’s key responsibilities are as follows:
 Troubleshooting and problems facing in computers.
 Installing and deletion of soft wares.
 Right protection and issuance.
 Developed and maintain internal network.
 Developed and maintain domain of each person.
 Create and enhance internal software’s running currently.
 Hardware and all software issues.

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PRODUCTION
Production department’s key responsibility is to develop and create products that are
required for the specific department. They also receive a major plan for the whole
financial year that indicates the number and models of each brand and the deadline
time for each lot. PEL’s production department is comprised of different units according
to the products.

ACCOUNTS DEPARTMENT
The Accounts Department looks after the financial matters. Accounts department
different functions described as below;

This particular department has the responsibility to prepare and keep an up to date
record of following:

 Financial keep of daily, including the income statement and balance sheet.
 Book keeping of daily monetary transactions.
 Production maintenance reports
 Cost data on labor, materials and overheads.
 Remittances and loans
 Expense reimbursement
 Tax statement
 Financial deals with the banks, leasing companies, modaraba companies,
and other government agencies through Finance Center.
The Accounts department maintains record of all its expenses through vouchers.
Generally the following types of vouchers are used for this purpose.

 Cash payment vouchers for cash transactions recording.

 Purchase vouchers
 Bank payment vouchers
 Journal vouchers for general expenses.

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MARKETING STRATEGY OF PEL
Target consumers are at the centre of the marketing strategy. The company identifies
the total market, divides it into smaller segments, selects the most promising segments
and focuses on serving them. To make success in today’s competitive marketplace,
companies need to be customer centered. PEL understands the importance of
customers and that is why it has a customer-driven marketing strategy.

Market Segmentation
PEL‘s Marketing Department is responsible for identifying the attractive segments and
to target the best of them. As PEL does mass marketing so it is good for company. It
designs a marketing mix using mechanisms under its control: product, price, place and
promotion. The company engages in marketing analysis, planning, implementation and
control to find the best marketing mix and to take action. The company uses these
activities to enable it to watch and adapt to the marketing environment. PEL does
segmentation of the market according geographic and demographic variables like rural
and semi-urban areas and income level of the customer.

Market Targeting
Market targeting involves evaluating each market segment's attractiveness and
selecting one or more segments to enter. PEL’s target markets are customers from
lower middle, middle and upper middle income level and PEL also targets rural and sub
urban areas markets. PEL targets these markets because it has differential advantages
of economical and durable products over its competitors; where it can generate the
greatest customer value and sustain it over time.

Market Positioning
PEL positions itself as an electronic company offering durable products of best
performance at economical rates. PEL plans positions durability and low prices that
distinguish its products from competing brands like Mitsubishi, Sabro etc. and give it the
greatest strategic advantage in its target markets.

MARKETING MIX
Marketing mix consists on four P’s, which are;

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Product

Price

Place

Promotion

Product

The products of PEL are durable, good quality, latest designs with after sales services.
PEL offers several models of its refrigerator and air conditioners and dozens of optional
features. The products of PEL come fully serviced and with a comprehensive warranty
that is as much a part of the product.

Price

Price is only element in the marketing mix which generates revenues for the company.
PEL calculates suggested retail prices that its dealers charge from the consumers. The
prices of PEL’s products are reasonable and attract middle class consumers in the
market. PEL is adopting pricing approaches to bring it into line with changing economic
conditions and consumer price perception. PEL has adopted good-value pricing
strategy—offering just the right combination of quality and good service at a fair price.

Place

Place includes company activities that make the product available to target customers.
PEL has a strong network of dealers throughout the country. PEL has indirect marketing
channel in customer market and contain one intermediary level of retailers. In the
business market it has a direct marketing channel which includes no intermediary,
because PEL’s Corporate Sales department directly sells products to business
customers. PEL partners with a large number of dealers who sell the PEL’s different
products. PEL selects its dealers carefully and supports them strongly. The dealers
keep an inventory of PEL products, demonstrate them to potential buyers, negotiate
prices, close sales and service the products after the sale.

Promotion

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Promotion means activities that communicate the merits of the product and persuade
target customers to buy it. PEL has lack of advertising through print media due to the
financial restrictions. PEL involved in a “Push Strategy” which involves pushing the
product through marketing channel to final consumer. It was directing its marketing
activities toward channel members to induce them to carry the products and to promote
them to final consumers. But now PEL is practicing both Pull and Push promotion mix
strategies but still Push Strategy is more focused.

PEL’S LIFE CYCLE

Maturity

Declin
e

Sta
rt

Grow
th

Maturity

Indus
try

Sta
rt
Declin
Grow e
th

5. PEL & Industry Life Cycle

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The analysis of PEL shows that the company is in its growth stage, as company is
expanding its production capacity and making strategic alliances with other companies.
The industry of electrical products is in decline stage as industry is showing negative
growth.

PEL Orientation Toward Marketplace

PEL has Production as well as Product orientation towards marketplace, as it is

focusing on procedures to achieve high production efficiency, low costs, and mass
distribution. On the other hand company also focusing on making superior products and
improving them over time. Company’s perception is that customers will prefer the
products with most quality performance, or innovative features and which are widely
available and with a fair price.

COMPETITIVE STRATEGY
• The competitive strategy of PEL is that it has a wide range of products and at relative
low prices.
• PEL focuses on cost leadership strategy in its power division appliances. The prices of
its power division appliances are high but they are of very high quality. PEL has a
competitive advantage of its brand name.
• PEL has high quality products both in appliances and power division because most of
the raw materials are imported from different countries and these raw materials are of
very high quality.
• The strategic alliance with LG will also decrease its competition

6. Market Share of Air

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PORTER’S FIVE FORCES MODEL

The Porter’s five forces model of PEL can be exhibit as below;

Low Threat of
new entrants

(Favorable)

High Rivalry
High Amongst Low
Bargaining Industry Bargaining
Power of Rivals Power of
Buyers Suppliers
(Unfavorabl
(Unfavorable e) (Favorable)

Low Threat of
Substitutes

(Favorable)

7. Porter’s five forces model of PEL

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Bargaining Power of Suppliers

Bargaining power of the suppliers is low because of availability of a number of Chinese

brands in the market

Bargaining Power of Buyers

The Bargaining Power of Suppliers is high because;

 They have choice of different brands in the market

 They have choice of different models and features

 They have choice of products in different prices

Threats of Substitutes

 The Gas generators and UPS are the substitute of PEL’s Diesel and Petrol
generators.

 The major substitutes of air conditioners are

o Room air coolers

o Electric Fans

Room air coolers can be divided into branded and non-branded air coolers. In the
branded air coolers, major players are National, Super Asia and Atlas.

 The room air coolers are available at low prices starting from Rs. 5000

 The room air coolers cause increase in humidity which cause rusting

 The room air coolers create noise when they switch on.

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  The size room air coolers are big which is not preferred by the customers.

 Although room air cooler is cost effective but due to increase in

temperature people prefer to install split units.

Electric Fans also very cost effective and its major companies are GFC Fans, Younas
fans, Royal Fans, Parwaz Fans, Pak Fans. The features are as follow;

 Economical to use

 Remote control feature

 Affordable

 Warranted

Although the features are very attractive but still fans are not the perfect substitute of air
conditioners in the extreme hot summer season in Pakistan.

From above analysis it is clear that air conditioners are facing a weak threat of
substitute.

Threat of New Entrants

PEL has low level of threat of new entrants in the industry as he electronic industry has
different barriers to entry. For example

 Requires huge capital to get entry in the industry

 High manufacturing cost

 High advertisement cost

 Establishment of dealership network

 High cost of raw materials

Rivalry among Competitors

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There is intense competition within the industry to capture the market in terms of share
of market (SOM). The companies are introducing products with new and advance
technology to attract and capture the customers. They are using advertisement and
technology as a weapon to increase market share in the related markets.

BCG Matrix

PEL divides its Strategic Business Units (SBUs) into the following divisions;

 Appliances Division

 Power Division

 Telecommunication Division

High Market Share Low

High

Appliances
Division
Growth Rate

Low Power Division Telecommunicatio

n

8. BCG Matrix of PEL

• The appliances division is considered as the “Star” as its market share as well as
growth rate is high.

• The power division is considered as the “Cash Cow” for the company as its
growth rate is relative low but it has a great market share.

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 • The telecommunication division is considered as “Dog” because company
seemed it as not profitable and hence now company is not investing in this
division.

• PEL has no “Question Mark” in its BCG Matrix.

BUSINESS PROCESS ANALYSIS

As Pak Elektron Limited is a manufacturing organization so the business process of the

company starts from purchasing of raw material. The Procurement Department is
responsible for the purchase of the raw material. The company purchases raw material
from local as well as from foreign markets. The company analyzes the material
requirement and selects the market which gives the company high quality material in a
favorable credit terms and price. Before purchasing the manager of procurement
department gets permission from Finance department, which allocate the budget for
procurement according to the needs and forecast of production. The forecast of
Production is decided by the Marketing as well as Production department. Marketing
Department forecasts the market demand by analyzing the economic, political, social
and technological indicators of the target market. This forecast is very critical for the
company as a wrong forecast can lead to shortage or surplus of the product. As for the
year 2007-08, the company forecasted a low demand for home appliances due to
economic meltdown but during the year shortage of products happened in the market.

The raw material is stored in the raw material stores where from the concerned
departments demand the material when needed. The Production Manager issues a
material requisition voucher to the store and also feeds its entries in the web system of
the company. After receiving this voucher the store issues the material to the
department and also does the entries in the network system which also maintains the
inventory of material.

9. Business Process

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The raw material is processed in the production departments of different products and
controlled by their divisions. This raw material is put into the process where the quality
control inspection is occurred at every stage of production, and defected units are
separated from the good units. The quality checked products are packed and then sent
to the finished goods stores in the factory. The finished goods store departments
maintain the inventory of the finished goods and issue a units receiving note to
production department as a proof. On the other hand units received are entered in the
system of network of the company.

The Sales department receives orders from the customers and confirmed the orders if
stock are available in the factory. The units from finished goods store are sent to the
customers by the dispatch department after receiving request from the Sales
department.

DIVISION OF LABOUR

In Pak Elektron Limited (PEL), two types of employees hired

1. Permanent Workers
2. Temporary Workers
Temporary workers are employed for about 6 months, and when the season
concludes the temporary workers are laid off. Temporary workers are employed as
helpers and assigned those jobs where skills are not required.

PEST ANALYSIS

POLITICAL ENVIRONMENT

 Pakistan is facing the situation of great political instability and uncertainty since
last couple of years. According to the Economist.com survey Pakistan is at the
11th number of top most vulnerable countries of the world. Due to this problem
business activities in Pakistan are severely affected. The Foreign Direct
Investment also decreased dramatically due to current insecurity.

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  There are very few incentives to the manufacturers in Pakistan by the
government as compare to upcoming giants like China. The cost of
manufacturing is very high due to the electricity rates and other overheads. So
most of the time manufacturer hesitates to do manufacturing in Pakistan and
prefer to import finished goods or only assemble goods in Pakistan.

 The government decided to increase the minimum wage rate of workers from
Rs.4500 to Rs. 6000 which increase the cost of production and inflation. It is
heard that it will be increased more in future.

ECONOMIC ENVIRONMENT

 Due to the global economic crises, Pakistan’s economy is also facing a lot of
problems. Although Pakistan’s economy is not directly hit by the crises yet the
economic situation is severe in Pakistan.
 To resolve the power sector issues, removing subsidies and concurrent transfer
of international oil price changes is also likely to risk a further slowdown in
economic activities, at least in the near future.
 In Pakistan there is a strong black economy due to the circulation of black money
from illegal businesses like smuggling.
 Unemployment rate has been increased from 5.6% to 7.4% in Pakistan
 Inflation Rate is above 20% in Pakistan
 Economists are expecting a better condition for Pakistan economy due to the
loan from IMF.
 In the financial year 2008-09 the GDP growth rate was 2.0 percent in 2008-09 as
against 4.1 percent last year and growth target of 4.5 percent.
 Overall manufacturing posted a negative growth of 3.3 percent during the current
fiscal year against the target of 6.1 percent and 4.8 percent of last year. Large-
scale manufacturing witnessed a across the board decline of 7.7 percent during
ongoing fiscal year against the growth rate of 5.2 percent last year. The massive
contraction is because of acute energy outages, a weak security environment
and political disruption in March 2009.

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  Deep freezer and refrigerator manufacturing showed a negative growth of 17.7 %
and 12.2 %
 Per capita income in dollar term rose from $1042 last year to $1046 in 2008-09,
thereby showing marginal increase of 0.3 percent
 Private sector investment was decelerating steadily since 2004-05 and its ratio to
GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09
 Public sector investment to GDP ratio which has been depicting a consistent
increase from 4.0 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9
percent in 2008-09.
 The consumers in Pakistan are spending most of their income on food and basic
needs of life.

SOCIAL ENVIRONMENT

 Now a days people are becoming more price conscious due to inflation and
crises in Pakistan. Their primary focus is on food and daily use goods and thus
people have lessened their interest in electronic goods.
 Now consumers prefer the Split Air Conditioners over Window Air Conditioners
because Split ACs are considered as energy savers. That is why Window ACs
are almost obsolete because of high energy consumption and Split ACs are
becoming more popular because of low electricity bills.
 In countries like Pakistan the usage of Air Conditioners is great because of
extended summer season of nearly 8 months. In Pakistan Air Conditioners are
used by upper and middle class.
 The companies are becoming more socially responsible these days as they have
introduced CFC free refrigerants, anti bacterial and anti dust filters.
 The people in Pakistan have started considering Split Air Conditioners as a
status symbol and feel disgraced if split units are not installed in every room of
their houses. That is why people purchase home appliances on installments from
the dealers.

TECHNOLOGICAL ENVIRONMENT

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  With the introduction of Split Air Conditioners, it made the air conditioning more
affordable and easy to install and maintain.
 The efficiency of air conditioner depends upon its outer unit. The bigger is the
outer units the more efficient will its inner unit. So companies are introducing big
outer units to get more efficiency.
 In split Air Conditioners the rotator compressors are used which are soundless
and do not heat up in extreme hot situation.
 In the international market, the non CFC (Chloro-floro Carbons) are shifting in air
conditioning industry and all major companies are using non CFC gases in their
products. CFC gases are harmful for the environment and cause depletion of
ozone layer, due to which the danger of global warming is happening. From
2005, no CFC gases product can be sold or bought in the international market.
So to remain in the international market it is necessary for the Pakistani
companies to adopt new technology of non-CFC gases.
 Companies are introducing refrigerators with cool bank which remain working for
5 hours even after switch off
 The multinational companies are using information technology to coordinate and
communicate within companies as well as with external parties. The electronic
inventory management systems are used to reduce the cost of handling the
inventory and orders.

SWOT ANALYSIS
The strengths, weaknesses, opportunities and threats of PEL are discussed below:

STRENGTHS

PEL has the following strengths and is in more competitive position in these areas
than its competitors. Following are the main strong points of PEL;

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Strong Brand Image
PEL has created the strong brand image in the mind of the customers through
higher quality and low price. The customers of the PEL always prefer to buy the
PEL home appliances like WRAC split AC and refrigerators whenever they wanted
to buy. PEL is a popular company in Pakistan and every one knows about the PEL
products and its brand. That’s why PEL selling of WRAC are very high in the
market than the competitors selling.

Strong Dealer Network

It is also the plus point for the PEL that it has also developed the strong dealer
network in the market. PEL has its dealers in 22 major cities of Pakistan like
Karachi Lahore, Quetta, Peshawar, Rawalpindi, Hyderabad, Multan, Gujrat etc. The
dealers are always trying to sell the PEL appliance to the customers because they
know there are high margin in the PEL products. They can get more money after
selling the PEL products. The PEL also provides more incentives to their dealers
than their competitors. Dealers are very conscious about the PEL products and
always guide the customer in buying the PEL appliances and tell them the more
qualities of PEL products than others products.

Strong Quality, Sales and Services

PEL has Country-wide Customer Care Centers in 21 major cities of Pakistan which
enable customers to access PEL customer care centers easily. PEL is also in a
strong position that it provides the superior quality to its customers. It makes sense
in the mind of the customers that PEL products are better in quality than the other
companies’ products. PEL also provides the after sale service to their customers
which delight the customers satisfaction. It is another way to advertise the products
because when customer is highly satisfied then he tells the other ten persons that
they should buy the PEL products. It is very good publicity of PEL products that
PEL Company gains.

ISO Certified Company

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PEL was 16th company in Pakistan which got ISO 9002 Certification in 1997. The
international standard practices in PEL have been upgraded as per the
revised ISO 9001 standards and its scope of application is expanding ever
since and top management is committed to make PEL a total quality
management (TQM) company.

Market leader in WRAC (Window Room Air Conditioner)

It is another strong point that PEL is a market leader in WRAC. The window room
air conditioner is more demanded by the customers than its competitor’s air
conditioners because it has more durability in operating systems and cools the
room in few minutes. PEL always strives to provide the innovative features in
WRAC. PEL air conditioner is cheaper and has a higher quality than others WRAC.
That’s why customers always purchase the PEL window air conditioner.

Monopoly in Power market

PEL has the largest market share in power market in Pakistan and has a monopoly
in market. PEL is one of the major electrical equipment suppliers to Water and
Power Development Authority (WAPDA) and Karachi Electric Supply Corporation
(KESC), which are the largest power utilities in Pakistan. Backed by the innovative
genius of Saigol Group, PEL is now technology forerunner and market leader in
providing new products and services to meet ever changing and technology
intensive needs of its customers. PEL aims to maintain this competitive edge and
at the same time keep striving to improve it further by continuous R&D, creating
new knowledge and adapting to global developments in technology and product
design.

Number 2 in Appliances Market in Pakistan

Pak Elektron Limited has a second position in appliances market in Pakistan after
Dawlance. PEL always continuously strives to pursue the strategies adopted by the
competitors. PEL is also making efforts for the technological improvements and

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better customer services to become market leader in appliances market in
Pakistan.

Strategic Alliance with LG

The strategic alliance with LG has increased the strength of PEL. As LG is a major
player in international appliances market, it will give PEL the advantage of
technology and increase market share.

Contract with Government of Punjab

PEL has the contract with Government of Punjab for providing and installation of air
conditioners in the premises of Service and General Administration Department of
Punjab. This remains PEL busy in operations even in the current crises of low
demand in market.

Customer Loyalty
As PEL is a pioneer of electronic manufacturer in Pakistan and in the market since
last 5 to 6 decades. So it has a strong customer loyalty and people are using PEL’s
products generation to generation. As PEL is satisfying the needs of customers
with economic and durable products, the loyalty of its customers is ever increasing.

Strong Grip in Home Appliance

So PEL is one of the companies, which is having a strong grip in the home
appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point for
the company. PEL is penetrating the market by introducing the new home
appliance like Split Air conditioners and Water Dispensers and always trying to get
the maximum shares in the home appliance market.

Strong Research and Development Department

PEL has a strong research and development department that is continuously trying
to develop new features for the products. R&D department spends huge amount of
money for the development of product. R&D makes research for introducing the

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new product and asks the customers what they want extra in our products. For this
purpose they hire the highly qualified employees in R&D department. That is
another strong position of PEL.

Free Customer Service

PEL provides free customer service for one year to its customers. So the
customers always buy the PEL products due to its free service and it becomes loyal
customer for the PEL. PEL always provides help to their customers for repairing the
WRAC, Refrigerators and other items. PEL always make efforts to satisfy the
customers.

Public Limited Company

Although PEL is owned by the SAIGOL GROUP but its shares can be purchased
and sold in stock exchange market. So every one who is interested in purchasing
the shares of PEL he can purchase. It is also called public limited company. So
people are more interested in buying the PEL products.

WEAKNESSES
Like other companies PEL has some weaknesses in operating the business. If PEL
overcome on these weaknesses then it can become a market leader in the home
appliance. PEL loose some competitive edge in the following points:

Financial Problems
Sometimes PEL faces the financial problems because its stocks are so much piled
up in the stores that create the problem of cash flow because when the stocks are
not sold and the production is in process for 24 hours a day than the company
faces such problems. So company aggressively researches the sources of cash
and stresses the dealers to sell the PEL’s products to the end consumers.
Company sometimes sells their products on advance bases to the dealers and
gives them high margin of profit. That’s why a company is facing the financial
problems and company never pays attention on the alternative resources that will

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help in reducing the stocks. That is a customer demand and due to this it is the
main weakness of company.

Low Satisfaction Level of Employees

The most useful and important assets for any company are its employees; if they
are satisfied they will give their best performance and which will be fruitful for both
employees as well as for the company. It is very big weakness of PEL that its
employees are not satisfied and thus not giving their best performance. Middle and
lower level of employees have not any sense of involvement in decision making for
the company, as PEL has not given them empowerment to take their decisions for
the company.

Lack of Advertisement
It is a second major weakness of PEL that it has lack of advertisement on TV and
other media. That creates hurdle in selling the products and customers cannot
know the changes, which are made in products by the company time to time.
Company is not in a position that it made advertising of all their products on a wide
range because of its high cash requirement towards the production side. Due to
this problem company always make efforts to develop strong relationships with
dealers.

System Variations
It is also the main weakness of PEL that there are rapidly a change in polices of
selling the products. That’s creates problems for the selling team how to sell the
products to the dealers because the top management requires the urgent amount
of money. So selling team sells the products sometimes on hard cash that will
reduce the prices of products that gives the benefits to the dealers and creates
problems for the management.

Lack of Product Range

PEL has introduced more products of consumer items but there are more needs to
develop new consumer items like PEL Television, Vacuum cleaner and other items.

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Due to lack of product Range, Company cannot earn more profit because
consumers have high demand of these products and they say that if company is
investing in these products then we can keep all PEL items and we never need to
keep other’s company products.

Inappropriate Working of HR Department

In this modern and highly competitive era, Human Resource Management has an
immense importance for the company. The companies making progress in the
world have excellent human resource management departments. In PEL, the
Human Resource department is not performing their all duties properly. HR
department was started before 3 years and it looks like a formality that company
has HR department. HR department is not functioning properly and it is weakness
of company which can cause company’s repute in the market and will loose
attractiveness for the employees.

Less Utilization of Resources

Due to lack of finance a company cannot utilize all its resources on its full capacity.
It increases the cost of products per unit that decreases the profit margin of each
consumer item. Sometimes company cannot allocate the resources according to
the requirements of production department that’s becomes the problem for the
complete utilization of resources. For the company it is also the main point of
weakness.

OPPORTUNITIES
For the PEL there are more opportunities for expansion the business. If PEL realize
that opportunities then it will be more fruitful and profitable for the company. Even if
company does not take advantage of these opportunities then it will loose its
competitive position and high profit. Its competitors will give PEL tough time to
pursuing the opportunities that are adopted by them. Following are the
opportunities for the PEL.

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Exploration of Market in Pakistan
PEL has the opportunity to explore the market in all over the Pakistan. Even though
PEL introduce its products in all cities of Pakistan but there are so many places
that have the capacity to absorb the PEL’s products. These places are tribal areas
in NWFP and northern areas of Punjab and NWFP, central area of SIND. If
company introduces their products in these areas then it can get a large amount of
profit and increase its market shares.

Rising population
Although rise in population is a problem for the country but where there is problem,
there is an opportunity. So due to increase in population the demand will also
increase in the market. So PEL can have more customers in future.

Increase in Product Range

It is the main opportunity for the PEL that it can increase its product range that will be a
more profitable for the company. PEL can improve its product range in the power
segment with the establishment of a new factory and can explore further growth
opportunities in the Middle East and Eastern Europe, going forward. If PEL does not
take this opportunity then it will loose high margin of profit and market share. It will
reduce the fixed cost and increase the efficiency of the employees.

Export Opportunity
PEL Company has also the opportunity to export their products in other countries
like UAE, SAUDI ARABIA, and other Arabic and African countries. It will not only
reduce the dependence on one market but also increase the market shares and
profits. It will also help the company to spread the fixed cost on all of its production
that will reduce the total cost and company will enjoy the high profit.

Increase in Production Capacity

Company can also increase its production capacity at the maximum level that will
increase the efficiency of the employees and also will reduce the total cost.

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Sometimes company cannot allocate the resources according to the requirements
of production department that’s becomes the problem for the complete utilization of
resources. Company should look the market conditions then it will produce their
products.

Increasing Investment in Power Sector

Due to current power and energy crises in Pakistan, the government is increasing
investment in power sector. So this is a great opportunity for PEL to focus on power
division and take the steps to capture high demand of power products in the future.

THREATS
PEL Company in such a competitive era has many threats as well. These threats
are for the present situations and future. Company should make its policies and
strategies according to these threats. So following are the main threats for the PEL:

Strong Competition
There is very strong competition for the home appliance in the market. So every
company tries to come in the number 1 position for achieving the maximum shares
in the market. Every company adopts different strategies for selling of the products.
It reduces the profit margin of each company and increase the bargaining power of
the buyers who will demand higher quality of products and lower cost. That is the
main threat for the PEL Company.

Chinese Products
China’s products are another threat for the Pakistani companies because these
products are cheaper than the Pakistani products. An even china product not well
in quality but it is comparatively in low prices than the consumer’s home appliance
that are manufactured by the indigenous company. China products stress the
indigenous companies to lower the quality and prices that will not be profitable in
the long run.

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Decrease in Pakistani Rupee Value
The economy of Pakistan is not strong and that is why value of Pakistani Rupee is
decreasing. This decrease in value of Rupee can severely affect the company as it
will result into increase in the cost of raw material purchased from outside Pakistan.
This will increase the cost of production and company has to rise in prices of its
product which can disturb its economic products position in the customer’s minds.

Price war
As there is a stiff competition in the home appliance market that will cause the price
war. So every company reduces the prices of its products to increase the sales. It
will not only reduce the profit margin of the company but also reduce the quality of
products. So price war is the main threats for all the companies, which are
operating in these products.

Decreasing Growth Rate in Pakistan

There is also slow growth rate of home appliance in Pakistan that will increase the
stocks of the company. It becomes the burden for the company that how to sell
these stocks. Its main reason is that purchasing power of the buyer is very low and
it has no income to buy the expensive home appliance. It is also becoming a main
threat for all the companies.

Instability of Government
The rapid changes in governments will become threats for the companies because
every government adopts its own policies for the industries. So it increases the
uncertainty for the investors who want to invest heavy amount in their new projects.
That’s become the major threat for the companies and decreases the profitability.
Due to fear of politically instability companies will also not invest the heavy
amounts.

Tax Department
Tax department is another major threat for the companies that will restrain the
business expansion. There is more complicated tax procedure for the companies,

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which are interested to increase the investment in their businesses. Due to fear of
heavy taxes companies would not like to invest the heavy amount.

World Trade Organization

World Trade organization gave the permission in 2005 to each company of home
appliance to export their products after paying fewer duties or duty free products.
That will increase the pressures for the indigenous companies to reduce the prices
and increase the quality. It will increase the competition among the foreign
companies and indigenous companies. But our companies also run under
uncertainty conditions. This will decrease the morale of indigenous companies.

Rapid Technological Changes

World is watching fast technological changes and there is a rapid change in
designs and technologies in products. So it is very important to move with latest
technologies which increase the cost of production.

Black Economy in Pakistan

Due to the black economy in Pakistan the marketers cannot make proper estimation of
market demand. The marketers acquire data from State Bank Economic Surveys which
do not reflect the fair picture of the economy. It is a threat for company as it will not
properly forecast and meet the market demand of Pakistan, which can cause customers
to switch from PEL products to other companies products.

PEL’S ACHIEVEMENTS

 First Superbrand of Pakistan in Home Appliances

 PEL Awarded Health & Environment National Excellence Award-2008

 PEL Wins Best Environmental Reporting Award

 PEL Awarded 6th Annual Environment Excellence Award-2009

PEL’S PACRA RATINGS

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The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and the
short-term entity ratings of PEL at ‘A’ (Single A) and ‘A1’ (A One), respectively.
Meanwhile, the ratings of the privately placed secured Sukuk issues of PKR 1,200mln
and first two tranches (amounting to PKR 1,100mln) of PKR 2,000mln are maintained at
“A+” (single A plus). These ratings denote a low expectation of credit risk emanating
from a strong capacity for timely payments of financial commitments.
The ratings reflect the company’s relatively low business risk emanating from diversified
revenue sources, supplemented by its established position in the domestic power and
appliance segments. In the appliance segment, the company’s market positioning is
expected to benefit from its recent alliance with LG, a global leading player. The ratings
takes into account the management’s well-conceived business strategy of product
development and technological up gradation amidst intensifying competition.
Meanwhile, ratings are constrained due to highly leveraged capital structure of the
company and significant maturity mismatch in debt structure, putting pressure on PEL’s
financial profile.
Effective and timely execution of the company’s overall strategy – particularly the
success of initiatives in power division and strategic partnership with LG – is critical for
ratings. Managing its financial risk at an acceptable level would remain crucial for the
ratings. Meanwhile, any adverse changes in the quantum of business and/or credit
terms, resulting in stressed cash flows, could have negative implications for the ratings.

STRATEGIC PARTNERSHIP WITH LG

Pak Elektron Limited launched the new range of LG Electronics Home Appliances & Air-
conditioners in Pakistan at an impressive ceremony at Royal Palm Country Club,
Lahore on 8th July, 2009. After a strategic partnership agreement in April this year, Pak
Elektron Limited is the exclusive distributor of LG Home Appliances & Air-conditioners
throughout Pakistan & AJK.

The alliance is expected to be completed with internationally renowned LG, in following

three phrases:

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 (i) Sale and marketing of LG products (air conditioners, refrigerators, microwave
ovens, washing machines and vacuum cleaners) through PEL’s distribution
network, which has started beginning June-09,
(ii) technical collaboration between PEL and LG whereby PEL’s manufacturing
facilities would be upgraded for producing LG products, and finally,
(iii) PEL and LG will form an independent entity focusing on full range of appliances
business. These initiatives are expected to augment PEL’s market penetration
and overall share, while improving its product range.

Addressing the event, Pak Elektron Limited’s Director Operations, Mian Murad Saigol
said that Pak Elektron Limited has been a leading local company in electrical appliances
for over five decades, they, together with LG Electronics, which is a global leader in
consumer electronics, will bring a new range of technologically advanced & health care
conscious products for the Pakistani consumers.

LG Electronics Pakistan General Manager Mr. E. D. Choi was also present at the
occasion. Mr. Choi emphasized the health care factor of the LG products. He mentioned
that the new health care product collection enables customers to lead a healthier &
better life and together with Pak Elektron Limited both companies are working towards
improving the lifestyle of their customers.

LEARNING AS A STUDENT INTERN

DUTIES

I have performed the following duties during my internship program in PEL Corporate
Sales Department. All doings and activities are checked by Mr.Rana Sameeullah (Sr.
BDE) and Mr. Yousaf (Sales Coordinator)

• I prepared “Aging Report” which contains information about the period of cash or
credit received or receivable. A specific schedule is made for 30days, 60days,

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 90days, and 180 days. On the basis of which company estimate its credit standing in
near future
• I prepared “Consignee Status Reports” in Microsoft Excel with the help of different
formulas. It contains the name and code of the party and sales manager, city name
and its code and also the opening and closing debit and credit balances of the
consignees. Consignee status contains the information about how many payments
are received and how many are still receivable from company’s consignees. The
following table illustrates it;

O. O. C.Balan C.
Sales Manager Balance Balance ce Balance
Consignee Code # City
Code #
(Dr.) (Cr.) (Dr.) (Cr.)

49999135 48765 Multan 76,000 87,437 68,456 76,886

49999324 87687 Lahore 65,739 34,556 54,656 5,566

49999122 67776 Faisalaba 8,57,64 4,566 45,466 4,556

d 0

49999045 67688 Karachi 5,62,00 54,567 8,234 9,654

0

Opening Balance (Dr.) – Closing Balance (Dr.) = Debit

Opening Balance (Cr.) – Closing Balance (Cr.) = Credit

Debit – Credit = Amount Receivable

Amount
Sales Officer Consignee
City Receivabl
Code # Code #
e

49999135 48765 Multan 3,007

49999324 87687 Lahore 17,907

Faisalaba
49999122 67776 8,12,164
d
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49999045 67688 Karachi 5,08,853
• I did Filing of documents into the concerned consignee files like purchase orders,
cheques received, payment information, invoices, order form etc.
• I entered the data of the units dispatched and entered all information related to
indoor and outdoor units.
• I prepared the bills of Installation charges. These installer’s bills include the
information about installation work (Installer services charges, and cost of extra
material used) on project sites. Firstly company receives bills from installers then
verifies and enters the bills in the company’s record and after preparation these bills
are signed by concern Sales Officer, Business Sales Manager, Corporate Services
Manager, and Finance Controller and forward to Finance Department. Finance
Department use to issue cheques in favor of installers, which are received by
installer parties from Corporate Sales Department.
• I prepared “Quotations” for the company and mail or fax them to the customer
parties. This document contains the per unit rates of the required products by the
customer.

Price Sales Tax Extra Sales Tax Excise Duty Ex-Factory

MODEL
@ 16% @ 0.75% @ 1% price
Split AC 26,328 4,212 197 263 31,000

• I prepared the Payment Information Slips which are prepared after the collection of
cheques from the party. It includes organization name, date and amount of payment
then checking of the collection edit list and verifying that each and every entry should
be matched with the payment information forms. Then it is handed over to
Distribution and Credit Control Department.
• I did recording of different bills of employees like fuel, mobile, medical bills etc in the
Corporate Sales Department records and handed over to concern departments like
IR Department and Accounts Department.

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 • I coordinated between Corporate Sales and different departments like Dispatch,
Distribution and Credit Control, IR & A, Accounts and Finance.
• I Received calls of the customers or the other people who wants some information or
queries. Randomly calling the sales coordinators in different cities in different areas
of Pakistan and asking them how many payments are received and left also the
status of sales.

PROBLEMS ENCOUNTERED

As such I didn’t face any type of problem during my internship. The only thing I found a

bit problematic was that it was a bit harder for me to take time from employees to teach

me new things and the working of corporate sales because of their extreme busy

schedule. Initially I had difficult time in mixing with organization members and felt

uncomfortable in that new place with new people. However, after some time, I became

a part of it just like everyone else and felt completely comfortable. The real problem I

faced in the PEL was the difference between what I had learnt from the books and what

was being practiced. Practical application of the theories learnt during academic

sessions was a great challenge, which I overcame by the cooperation of the staff.

NEW KNOWLEDGE ACQUIRED

Some new things, which I learned here, were
 How to work individually as well as in groups under relaxed and stressful
environment.
 Patience is very important in dealings, as anger can lose your customer.
 To increase your sales and stay in competition with top brands it is necessary to
keep your dealers happy by giving them incentives.
 How to coordinate with the other sales areas of PEL via email, telephone and
fax.
 How to deal with your customer’s complaints in a satisfactory way

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  Working of production plant of PEL products (Air Conditioners, Refrigerators) by
visiting the production site.

HOW EXPERIENCE IMPACTS MY CAREER

My internship experience has given me a realistic preview of practical life. Now I feel
that I am better prepared to enter the world of professional work. I have come to know
and been appreciated by a number of professionals who are lending their services to
the PEL for more than a decade. I feel honored that I have worked with such
experienced professionals. I must admit that such interaction in this respectable
professional community will help me in seeking out good job opportunities in the near
future.

My knowledge of Microsoft Office especially MS Excel came in handy while

working here in PEL, as daily reports were made in Excel .My knowledge of
Sales Force Management and Marketing helped me while working with Mr.
Qasir Mehmood (Sales Coordinator) whatever I asked from him, he was so
kind to guide me in detail. So, my urge for learning in field of Sales Force
Management and Marketing helped me a lot. I learnt in Business
Communication how to interact with clients/peer groups/customers with good
communication skills, which came in handy, here in PEL. I realize the
importance of research work for any organization by seeing its application.

Each task I performed was a different experience in itself. By the end of it, I
must say I realize my potentials, I have realized that practical life is not so
easy after all; it takes a lot of hard work and devotion, and not to forget time.
And I now know that if I want I can make things possible, and I also know
how good it feels to having accomplished something and being appreciated
for it. I definitely have learnt things, which will impact my career and my
character.

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The overall experience of my internship was very good; I have learnt the
sense of responsibility in its literal meaning. I am now capable of dealing
with different sort of clients, and how to be patient while doing so. Besides
this I also gained knowledge about documents which I previously lacked and
many more products being offered by the PEL. So in a nutshell, this
internship gave me the experience, which would no doubt boost my
confidence to work in future.

RECOMMENDATIONS
On the basis of my knowledge and perception I can recommend the company that;

 Pak Elektron Limited should adopt a true decentralized organization setup which
gives all employees to take part in decision making for the company. It will boost
their motivation and loyalty for the company.
 The company should have a strong marketing information system to make proper
forecasts about market situation.
 The company should use information technology efficiently to communicate
between departments in fast and proper way to save time and other resources.
 The company should announce two holidays (Saturday & Sunday) in a week; it
will not only help the company in cost cutting but also increase efficiency of its
employees.
 The company should add more features to their products. People are attracted
towards products with unique features and something that would make the
customers feel that they have got their moneys worth.
 The company should give Incentives and other benefits to its employees to
motivate them and to increase their performance.
 The company should take steps to make sure proper functioning of Human
Resource Department. There should be fair performance of employees and
reward them according to their performance.
 As economy is facing recession, PEL should give more allocation of budget to its
marketing department. Because in such economic conditions Marketing is
considered the key department which creates more value in the minds of the
customers.

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  To gain more competitive advantage over its co-market players, PEL should give
more focus on the Pull strategy in its promotion mix especially for appliances.
 PEL should develop its image as an employee oriented company rather to an
employer oriented company.
 The company must give more incentives to the dealers and sales officers so that
they remain loyal to the company and promote the company’s products
effectively.
 The company should take steps to shorten its cash conversion cycle to
accelerate time of collection from the customers.
 The company should speed up its delivery process by establishing expand its
stores in areas of high demand throughout Pakistan.
 The company should also focus on direct selling of its products to its customers,
although Consumer Marketing Department is doing so but at a very meager
level.
 The company should introduce seasonal schemes for its customers which will
help in moving up the sales.
 The company should advertise throughout the year so people should remember
them and will be more brand loyal and new customers will be attracted. They
should use all the medium of advertising to be more successful in attracting
customers.
 The company should develop systems for identifying opportunities, ranking them
and choose the best ones.
 The company should constantly add technology in its products and systems
according to changes in the international development that will give it a
competitive advantage in the marketplace.

CONCLUSION
To conclude I can say that I had a wonderful and learning experience in Pak Elektron
Limited which make possible me to write this report. In Pakistan the brand image of Pak
Elektron Limited is excellent in the minds of its customers. The company has good
strengths and so it can make a rapid progress in local as well as foreign markets. In my
views the management philosophy is the main hurdle in progress of the company. Now

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the company’s focus is only profit and employer’s oriented which cause employees’ low
motivation. No doubt PEL is making excellent products, but unfortunately PEL is not
realizing creative advertising is also important part of their Marketing success.

The current strategic alliance of PEL with LG will helpful for the company to expand its
technical and production capacity and will also expand the target market. I see the
future of PEL very bright as it is finding new opportunities and the company has the
potential to compete with any challenge in the market as it is in the market since an era
of above 50 years.

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