“Mass Railway Transit System”

GROUP MEMBERS:-

ADNAN MUHAMMAD SHAH (MBA-FA08-008)

MEHWISH AKHTER (MBA-FA08-045)
ABEED ULLAH (MBA-FA08-004)
MUHAMMAD HASEEB (MBA-FA08-052)
HAMID AHTESHAM (MBA-FA08-031)
ADNAN AKRAM (MBA-FA08-007)
ADIL AHSAN DAR (MBA-FA08-113)

SUBMITTED TO:-
MR SHAHID MEHMOOD

Dated: 26 May 2009

 Ch – 1
Selection of Project
 “Mass Transit System in Pakistan”

We have selected our project by keeping in view Metropolitan Rapid Transit System of Paris. So
when we will prepare the feasibility report of Mass Transit System in Pakistan in further steps of our
project we will follow Metropolitan Transit System of Paris. France is the one of leading countries of
Metropolitan Transit System in all over the world. We can also say that France has largest network of
Metropolitan Transit System in all over the world.
 Ch – 2
History of the Project
History of the Project

Introduction:
Métro is the abbreviated name of the company which originally operated most of the network: the
Compagnie du chemin de fer métropolitain de Paris, shortened to "Métropolitain". That was quickly
abbreviated to Métro. The Métro today is operated by the Régie autonome des transports parisiens
(RATP), a public transport authority that also operates part of the RER network, bus services and light
rail lines. The name métro proved very popular and was adopted in many languages, making it the
most used word for a (generally underground) urban transit system. It is also possible that "Compagnie
du chemin de fer métropolitain" was copied from the name of London's pioneering underground
railway company, the Metropolitan Railway, which had already been in business for almost 40 years
prior to the inauguration of Paris's first line.

a) History of Underground Railway System.

The first underground railways

In 1854 an Act of Parliament was passed approving the construction of an underground railway
between Paddington Station and Farringdon Street via King's Cross which was to be called the
Metropolitan Railway. The Great Western Railway (GWR) gave financial backing to the project when
it was agreed that a junction would be built linking the underground railway with their mainline
terminus at Paddington. GWR also agreed to design special trains for the new subterranean railway.

Construction was delayed for several years due to a shortage of funds. The fact that this project got
under way at all was largely due to the lobbying of Charles Pearson, who was Solicitor to the City of
London Corporation at the time. Pearson had supported the idea of an underground railway in London
for several years. He advocated plans for the demolition of the unhygienic slums which would be
replaced by new accommodation for their inhabitants in the suburbs, with the new railway providing
transportation to their places of work in the city centre. Although he was never directly involved in the
running of the Metropolitan Railway, he is widely credited as being one of the first true visionaries
behind the concept of underground railways. And in 1859 it was Pearson who persuaded the City of
London Corporation to help fund the scheme. Work finally began in February 1860, under the
guidance of chief engineer John Fowler. Pearson died before the work was completed.

The Metropolitan Railway opened on 10 January 1863.Within a few months of opening it was
carrying over 26,000 passengers a day.The Hammersmith and City Railway was opened on 13 June
1864 between Hammersmith and Paddington. Services were initially operated by GWR between
Hammersmith and Farringdon Street. By April 1865 the Metropolitan had taken over the service. On
23 December 1865 the Metropolitan's eastern extension to Moorgate Street opened. Later in the
decade other branches were opened to Swiss Cottage, South Kensington and Addison Road,
Kensington (now known as Kensington Olympia). The railway had initially been dual gauge, allowing
for the use of GWR's signature broad gauge rolling stock and the more widely used standard gauge
stock. Disagreements with GWR had forced the Metropolitan to switch to standard gauge in 1863 after
GWR withdrew all its stock from the railway. These differences were later patched up; however broad
gauge was totally withdrawn from the railway in March 1869.

On 24 December 1868, the Metropolitan District Railway began operating services between South
Kensington and Westminster using Metropolitan Railway trains and carriages. The company, which
soon became known as "the District", was first incorporated in 1864 to complete an Inner Circle
railway around London in conjunction with the Metropolitan. This was part of a plan to build both an
Inner Circle line and Outer Circle line around London.

A fierce rivalry soon developed between the District and the Metropolitan. This severely delayed the
completion of the Inner Circle project as the two companies competed to build far more financially
lucrative railways in the suburbs of London. The London and North Western Railway (LNWR) began
running their Outer Circle service from Broad Street via Willesden Junction, Addison Road and Earl's
Court to Mansion House in 1872. The Inner Circle was not completed until 1884, with the
Metropolitan and the District jointly running services. In the meantime, the District had finished its
route between West Brompton and Blackfriars in 1870, with an interchange with the Metropolitan at
South Kensington. In 1877, it began running its own services from Hammersmith to Richmond, on a
line which had originally opened by the London & South Western Railway (LSWR) in 1869. The
District then opened a new line from Turnham Green to Ealing in 1879 and extended its West
Brompton branch to Fulham in 1880. Over the same decade the Metropolitan was extended to Harrow-
on-the-Hill station in the north-west.

The early tunnels were dug mainly using cut-and-cover construction methods. This caused widespread
disruption and required the demolition of several properties on the surface. The first trains were steam-
hauled, which required effective ventilation to the surface. Ventilation shafts at various points on the
route allowed the engines to expel steam and bring fresh air into the tunnels. One such vent is at
Leinster Gardens, W2.In order to preserve the visual characteristics in what is still a well-to-do street,
a five-foot-thick (1.5 m) concrete façade was constructed to resemble a genuine house frontage.

On 7 December 1869 the London, Brighton and South Coast Railway (LB&SCR) started operating a
service between Wapping and New Cross Gate on the East London Railway (ELR) using the Thames
Tunnel designed by Marc Brunel, who designed the revolutionary tunnelling shield method which
made its construction not only possible, but safer, and completed by his son Isambard Kingdom
Brunel. This had opened in 1843 as a pedestrian tunnel, but in 1865 it was purchased by the ELR (a
consortium of six railway companies: the Great Eastern Railway (GER); London, Brighton and South
Coast Railway (LB&SCR); London, Chatham and Dover Railway (LCDR); South Eastern Railway
(SER); Metropolitan Railway; and the Metropolitan District Railway) and converted into a railway
tunnel. In 1884 the District and the Metropolitan began to operate services on the line.

By the end of the 1880s, underground railways reached Chesham on the Metropolitan, Hounslow,
Wimbledon and Whitechapel on the District and New Cross on the East London Railway. By the end
of the 19th century, the Metropolitan had extended its lines far outside of London to Aylesbury,
Verney Junction and Brill, creating new suburbs along the route—later publicised by the company as
Metro-land. Right up until the 1930s the company maintained ambitions to be considered as a main
line rather than an urban railway.

b) Underground Railway System in France.

The first line opened without ceremony on 19 July 1900, during the Exposition Universelle world's
fair. The system expanded quickly until the First World War and the core was complete by the 1920s.
Extensions into suburbs (together with Line 11) were built in the 1930s.
The network reached saturation after World War II. The Métro introduced newer trains to allow higher
traffic. Further improvements are limited by the design of the network, such as short distances between
stations. The solution was a second network, the RER, developed from the 1960s.

In the late 1990s, the automated line 14 was built to relieve RER line A.

Overview

Paris Métro

Info

Locale
Paris

Transit type
Rapid transit

Number of lines
16

Number of stations
300

Daily ridership
4,500,000

Operation

Began operation
19 July 1900

Operator(s)
RATP

Technical
 System length
214 km (133 mi)

Track gauge
1,435 mm (4 ft 8½ in) (standard gauge)

The Métro has 214 km (133 mi) of track and 300 stations (384 stops), 62 connecting between lines.
These figures do not include the RER network. The average distance between stations is 562 m (1,845
ft). Trains stop at all stations. Lines do not share platforms, even at interchange (transfer) stations. This
also applies to RER lines.

Trains average 35 km/h (22 mph) with a maximum of 70 km/h (44 mph) on all but the automated,
driverless trains of line 14, which reach 80 km/h. An average station-to-station trip takes 58
seconds.Trains travels on the right. The track is standard gauge but the loading gauge is smaller than
on the mainline SNCF network. Trains vary from three to six cars. Trains on the same line always
have the same number of cars. Power is from a lateral third rail, 750V DC, except on the rubber-tyred
lines where the 750 V DC is from guide bars. Lines 1, 4, 6, 11, and 14 are rubber-tyred.

Almost all lines follow roads, having been built by the cut-and-cover method near the surface (the
earliest by hand). Hence line 1 follows the straight course of the Champs-Elysées and on other lines
some stations (for example, Commerce) have platforms that do not align: the street above is too
narrow to fit both platforms opposite each other. Parts of the network are built at depth, in particular a
section of line 12 passing under Montmartre and all of the new
 Ch – 3
Application of Trade Theories

OVERVIEW OF TRADE THEORIES

Free Trade occurs when a government does not attempt to influence, through tariffs, quotas, or other
means, what citizens can buy from other countries or Produce and sell to other countries. The Benefits
of Trade allow countries to be richer by specializing in products they can produce most efficiently.
The history of trade and government involvement presents mixed evidence. There may be some ways
that some governments can make things better by intervening. But government intervening in free
trade is definitely dangerous

1. ABSOLUTE ADVANTAGE THEORY :-

Absolute advantage theory refers to theory posited by Adam Smith in the 18th century that asserts that
a nation would benefit from manufacturing more output than others since it is in the possession of a
particular resource or commodity. This particular resource can also be a certain method or knowledge
that increases the production efficiency, and thus reduces the relative need to resources. The absolute
advantage theory is considered to be an inter industry trade, country based theory.
HOW GREAT WESTERN RAILWAY OF GREAT BRITAIN HAS AN ABSOLUTE
ADVANTAGE?

1) CHIF PORT FOR AMERICON TRADE:

The Great Western Railway originated from the desire of Bristol merchants to maintain the position of
their city as the second port in the country and the chief one for American trade. There was initially no
direct line from London to Wales as the tidal River Severn was too wide to cross. Trains instead had to
follow a lengthy route via Gloucester, where the river was narrow enough to be crossed by just a small
bridge. Work on the Severn Tunnel then begun, but unexpected underwater springs slowed the work
down and prevented its opening. With its shares in demand it was possible for the company to raise
substantial sums of money from new share issues. The additional income funded the building of
further new lines and the upgrading of old ones to shorten the company's previously circuitous routes.

2) GWR WAS MUCH STRAIGHTER AND LEVELLED THAN OTHER RAILWAYS:-

The Great Western Main Line was designed to be much straighter and level than was usual for
railways constructed at the time.

3) INTRODUCED CERTAIN TECHNOLOGICAL ADVANCES:-

The GWR championed certain technological advances, for instance commissioning the world's first
commercial telegraph line. This ran for 13 miles (21 km) from Paddington to West Drayton.

4) LESS FARE:-
Early trains offered passengers a choice of first- or second-class carriages. In 1840 this choice was
extended: passengers could be conveyed by the slow goods trains in what became third-class. The
Railway regulation Act made it a legal requirement that the GWR, along with all other British
railways, had to serve each station with trains which included third-class accommodation at a fare of
not more than one penny per mile and a speed of at least 12 mph (19 km/h). Moreover the Cheap
Trains Act 1883 resulted in the provision of workmen's trains at special low fares at certain times of
the day.

5) FINANCED BY GOVERNMENT:-
The Great Western Railway was created by an Act of Parliament on the 31st August 1835 to provide a
double tracked line from Bristol to London , however work had started in 1832 to secure finance for
the line, research possible routes and design stations, bridges etc.

6) INTRODUCTION OF BROAD GAUGE:-

A broad gauge of seven feet was introduced– actually 7 ft 0¼ in (2,140 mm) for the track –
potentially to allow large wheels outside the bodies of the rolling stock thus providing smoother
running at high speeds; and to take a route which passed north of the Marlborough Downs, a route
with no significant towns but which did offer potential connections to Oxford and Gloucester.

7) INTRODUCTION OF STEAM RAIL MOTORS:-

Self-propelled "steam rail motors" were first used between Stone house and Chalford railway stations;
within five years 100 had been constructed. These trains had special retractable steps that could be
used at stations with lower platforms.

8) FORMED A NETWORK OF FAST TRAINS:-

In 1905 the GWR ran its first vacuum-braked general goods train between London and Bristol using
newly built goods wagons with small wheels but vacuum brakes. This was followed by other services
to create a network of fast trains between the major centers of production and population that were
scheduled to run at speeds in excess of 40 mph (64 km/h).For the track work a light bridge rail
continuously supported on thick timber baulks, known as "baulk road". Thinner timber transoms were
used to keep the baulks the correct distance apart. This produced a smoother track and the whole
assembly proved cheaper than using conventional sleepers for broad gauge track.

CONCLUSION:-
Thus it is concluded that the system is vast, effective, well-managed and has absolute advantage. From
the above points it is quite clear that the system has great absolute advantage.

2. PORTER DIAMOND THEORY

If we study thoroughly the history of under ground railway in London, it seems that the management
has been applied Porter Diamond Theory in the history of Metropolitan Railway.
Porter theorizes that four board attributes of a nation shapes the environment in which local firms
compete and these attributes promotes or impede the creation of competitive advantages.
The attributes are; Factor endowment, demand condition, relating and supporting industries and firms
strategy, structure and rivalry.
We will explain the theory with real examples from the history of Metropolitan Railway.

1. FACTOER OF ENDOWMWNT :
Factor of endowment means a nation position in factors of production such as skilled labor; the
Metropolitan Railway has very effective and efficient labors, such as
• Pearson: Pearson had introduced the idea of an underground railway in London for. He
advocated plans for the demolition of the unhygienic slums which would be replaced by new
accommodation for their inhabitants in the suburbs, with the new railway providing
transportation to their places of work in the city centre.
• Marc Brunel: the Thames Tunnel designed by Marc Brunel, who designed the revolutionary
tunneling shield method which made its construction not only possible, but safer, and
completed by his son Isambard Kingdom Brunel.
• It has more other effective and efficient labors

2. DEMAND CONDITION :
The nature of home demand for Metropolitan Railway services ware very high.
Example:
• The Metropolitan Railway opened on 10 January 1863.Within a few months of opening it was
carrying over 26,000 passengers a day. This shows high demand for the Metropolitan Railway
services. 23 December 1865 the Metropolitan's eastern extension to Moorgate Street opened.
Later in the decade other branches were opened to Swiss Cottage, South Kensington and
Addison Road, Kensington (now known as Kensington Olympia).
• Due to the increase in demand the Metropolitan District Railway began operating services
between South Kensington and Westminster using Metropolitan Railway trains and carriages.
The company, which soon became known as "the District", was first incorporated in 1864 to
complete an Inner Circle railway around London in conjunction with the Metropolitan. This
was part of a plan to build both an Inner Circle line and Outer Circle line around London.

3. RELATED AND SUPPORTIVE INDESTRIES :

Construction companies, steam engine companies and other supportive supplier industries and related
industries which were internationally competitive at that time
Example:
The tunnels were dug mainly using cut-and-cover construction methods by the companies. The first
trains were steam-hauled, which required effective ventilation to the surface. Ventilation shafts at
various points on the route allowed the engines to expel steam and bring fresh air into the tunnels. One
such vent is at Leinster Gardens, W2.In order to preserve the visual characteristics in what is still a
well-to-do street, a five-foot-thick (1.5 m) concrete façade was constructed to resemble a genuine
house frontage.

4. FIRM STRATEGY, STRUCTURE AND RIVALRY :

In this heading the porter diamond theory point out that the condition governing how companies are
created, organized and nature of domestic rivalry
The Metropolitan Railway has a proper structure, organized and it has many domestic rivalries.

Example:
 • In 1854 an Act of Parliament was passed approving the construction of an underground
railway which was to be called the Metropolitan Railway. The Great Western Railway
(GWR) gave financial backing to the project when it was agreed that a junction would be
built linking the underground railway with their mainline terminus at Paddington.
• There were six railway companies: 1- the Great Eastern Railway (GER); 2- London,
Brighton and South Coast Railway (LB&SCR); 3- London, Chatham and Dover Railway
(LCDR); 4- South Eastern Railway (SER); 5- Metropolitan Railway; and 6- the
Metropolitan District Railway.
CONCLUSION:
From the above facts and figures we make conclude that all four components of the porter's diamond
theory are favorable.

3. NEW TRADE TEHORY:

In the Mass Transit Railway System industry has high fixed cost:
• As with the passage of time specialization increases output by extending the network to
different part of the country (U.K) like constructing the railway tunnels, pedestarian tunnels
etc,that why their economies of scale increases.
• Mass Transit Railway System industry is cost saving (prevent the cost of constructing roads,
motorways, high traffic jams) which come through learning by doing.
• There are few competitors of Mass Transit System Industry in world like RATP, ELR, and
GWR.
• In Mass Transit Railway System Industry Competitor may emerge as first mover advantage.
 In France the new entrant was RATP Company for mass transit railway system so they
attain the economies of scale by extending the network to different part of the country
and maximize the profit.
 Government intervention is very important in this trade theory. There was financial
backup to The Great Western Railway (GWR) by the government of United Kingdom
setting up Mass Railway Transit System in Great Britain.
 Government may create conflict between two competitors. Disagreements between
GWR and Metropolitan's had forced the Metropolitan to switch to standard gauge in
1863 after GWR withdrew all its stock from the railway.
 4. COUNTRY SIZE THEORY:

My starting point is that resources are not spread evenly across regions, so that when one part of a
country is rich (as from salt deposits (long ago) or natural harbors or oil reserves), it will prefer to be
on its own in order not to share its wealth with a larger group. But of course these pockets of wealth
will be vulnerable to attack (trade wars and embargos for starters, but then military invasions too) if
they are on their own and not in reliable alliances. “Optimal” country size is thus about compromising
security (which is positively correlated with size) with the cost of sharing valuable resources. Risk
adverse people might agree on a large country size if they did not know whether they would be rich or
poor, but once they discover regional wealth, that region can be expected to be exploited
From the history of our project we came across to know that the company Great Western Railway
(GWR) has applied and use this country size theory. As the company firstly established in England
and it first move to France here the country size theory is applied because France have the similar
culture as compare to the England and they know that the demand of this service is same as that of in
England. These two countries also share the border and the cost of transportation is low as compare to
start their business in some other far countries.

5. THE PRODUCT LIFECYCLE THEORY

Mass Railway system was firstly launch in London (UK), here it keeps on growing

until it becomes mature enough to be launched in other countries near to it, and such that

these countries are good enough to accept it, here after London this mass transit system is

launched in France and there after a decade it achieves the maturity stage and this was

further moved to other European Countries. The countries achieving perfection in

this system has achieved the standardization and the price becomes the main competitive

weapon.
As there are 4 stages in product life-cycle, the fourth stage that is decline stage is being competed with
the price in our mass transit system.

6. COMPARATIVE ADVANTAGE THEORY :

This theory is not applicable on “Mass Railway Transit System”. Because this theory applies that,
“specialization and free trade will benefit all trading partners, even those that may be absolutely less
efficient producers”. And in “Mass Railway Transit System” there is no competitor no subordinate
product and company also has enough resources. That’s why this theory does not fit for this project.
 Ch – 4
Scanning of External Environment
Scanning of External Environment

Demographics
The Need for Transit Franchising
Numerous factors contributed to the government’s decision to initiate franchise transit in Pakistan.
These include inefficient poor quality transit service, difficulty with regulation, And lack of
specialized transit service for the transportation-disadvantaged. In addition, Under pressure from
multilateral donor agencies, the government found it difficult to Continue operating state-subsidized
urban transit, which was losing money and physical Assets.

Publicly-operated transit providers were able to operate only 40% of their fleet Owing to poor
maintenance (Armstrong-Wright & Thiriez, 1987). Private operators, on The other hand operated 70%
of their fleets. Similarly, the employee to bus ratio was two Times higher for public operators than for
private transit operators. Because of these cost Factors, publicly-owned transit was more expensive to
operate than the privately-owned Transit.

The following table conceptualizes the quality of service and capacity for the non-franchised transit
Modes in GIRA. Four public transit modes are compared for their capacity, affordability, And service
to the transportation disadvantaged namely low-income, disabled, women, And elderly. Suzuki
pickups are Para-transit vehicles operated on routes where large Transit vehicles cannot function due
to road space constraints.

The mid-income households refer to those who rely on public transit, yet they can also Afford to pay
the fares charged by private transit operators. Mid-income households find Bus and mini bus service
as acceptable. However, they would prefer improvement in Transit quality and are likely to pay for
comfort and convenience. In addition, such Households are more likely to stay away from wagons and
Suzuki pickups because of the Poor service. For low-income households, affordability is the prime
concern and
Therefore such households would resort to cheaper modes of transit, such as Suzuki Pickups. In
general, public transit is extremely inadequate to meet the mobility needs of Disabled and the lack of
dedicated seats for women.

QUALITY OF SERVICE

TRANSIT AFFORDABILITY TRANSPORTION DISADVANTAGED

MODE
PASSENG
MID- LOW DISABLE
ER WOMEN SENIORS
INCOME INCOME D
CAPACITY
POOR
(NO
ACCEPTA ACCEPTA ACCEPTABL ACCEPTAB
BUS 50-70 SPECIAL
BLE BLE E LE
PROVISI
ONS)
POOR
(NO
ACCEPTA ACCEPTA ACCEPTABL ACCEPTAB
MINI BUS 30-40 SPECIAL
BLE BLE E LE
PROVISI
ONS)

POOR
ACCEPTA
WAGONS 18-24 POOR POOR (INSUFFICIE POOR
BLE
NT)

SUZUKI
10-12 POOR FAIR POOR POOR POOR
PICK-UPS

Franchised transit has created new job opportunities while eliminating jobs for no franchised Transit
operators. If the new transit system proves to be resource efficient, it is Likely to offer better service
using fewer resources, which may cause a net loss in Employment. The franchising of transit is
expected to increase the Economic value of social resources by improving overall safety, mobility and
Accessibility. The ultimate challenge is to compensate those that are made worse-off.

Political Environment of Pakistan

Political environment can be defined as the impact of political change on the export firm's operations
and decision-making process.

Political environment of Pakistan varies from independence of Pakistan since 1947.As there was no
Stable democratic government and country faced different rules of Martial Law Dictators. Due to
which investors have been hesitated to come to Pakistan for investment. Political environment of
Pakistan can effect the project of Mass Railway Transit System in following ways.

 In 2002 a Japanese Mass Railway Transit system Company wants to launch the
underground Railway project in Karachi. But the Local Political party of Sindh who
was in Coalition Government at that time demanded the high Commission for this
project. So Company did not start its project. Our mass railway transit may also face
these types of problems by the government as well as by the political parties.
 Due to unstable government in Pakistan investors hesitate to invest in Pakistan because
new government may stop this project or increase the tax rates.
 As Pakistan is suffering in Terrorism since last 8 years. So investors will hesitate to
invest in mass railway transit system due to security problems.
 As due to high corruption in Pakistan’s government may issue more funds to
competitors of mass railway transit System Company who launch its project in Pakistan
causes lack of funds for the project. So company may face deficit in generating
revenue.
 Planning Commission of Pakistan may not give permission to the mass railway transit
system.
 Another hurdle to launch the mass railway transit system project is the approval from
ministry of finance. They may not allocate the required funds to the private sector
companies.
 As due to feudalism in Pakistan especially in sindh and Baluchistan province Feudal
they may not allow to use their lands for this project because most of the Landlords are
in Parliament they may use their authority to stop this project.
  Mass railway transit system project has to go through the following departments for
approval. Its may take several months’ even years so it will cause delay in project.
 government debt
 budget deficit or surplus
 corporate and personal tax rates
 Payroll taxes.

Planning
Commission of Pak

Ministry of Finance

Ministry of Interior

Ministry of
Environment

Ministry of Railway

 Pressure groups especially burocracy of GOVT of Pakistan will also influence for the
implementation of project.
 As our president who is known by Mr 10 % he may demand his commission in this
project and our project may not be able to fulfill so high commission.

Technological Factor
Technological factor in Pakistan will not support the company which wants to launch the project in
Pakistan due to following reasons.
 Technology in Pakistan is not so good to design the couches, engines and tracks for
mass Railway transit system.
 There will be specific skilled Professional labor required which should know working
of Mass Railway Transit System and should trained about the new technology which
lacks in Pakistan.
 Pakistan is not so efficient in building infrastructure like Railway Stations, Signals
System, Communication system etc.
 In Pakistan Labor and managers are not aware of new manufacturing process.
 In Pakistan managers are not aware of new products and services of competitors and
they don’t know about any new technology that could impact the company.
 They have no knowledge about cost and accessibility of electrical power.

Economical Factors

Pakistan is the 99th largest economy in the world in terms of purchasing power (439,558 millions),
and the 47th largest in absolute dollar terms. Pakistan's economy mainly encompasses textiles,
chemicals, food processing, agriculture and other industries.Pakistan is under develop country consist
170 millions of population; its per capita income is $ 2400 and 5.3% GDP.

Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political
disputes, low levels of foreign investment, and a costly, ongoing confrontation with neighboring India.
However, since 2001, IMF-approved reforms - most notably, privatization of the banking sector -
bolstered by generous foreign assistance and renewed access to global markets, have generated
macroeconomic recovery. Pakistan has experienced GDP growth in the 6-8% range in 2004-07,
spurred by gains in the industrial and service sectors. Poverty levels have decreased by 10% since
2001, and Islamabad has steadily raised development spending in recent years, including a 52% real
increase in the budget allocation for development in FY07. In 2007 the fiscal deficit - a result of
chronically low tax collection and increased spending - exceeded Islamabad's target of 4% of GDP.
Inflation remains the top concern among the public, jumping from 7.7% in 2007 to more than 11%
during the first few months of 2008, primarily because of rising world commodity prices. The
Pakistani rupee has depreciated since the proclamation of emergency rule in November 2007.

To make investment in Pakistan we have to analyze the following economic indicators:

1. Purchasing Power: Pakistanis living cost are considerably lower then Europeans costs. Its
income translated to UK Pound represents more purchasing power then Pakistani rupee. To
find out how much, we should go to the World Bank data and discover that based on
comparison of two countries. Pakistan GDP - per capita (PPP): $2,400 (2007 est.)Is equivalent
to France GDP - per capita (PPP) $32,600 (2007 est.). France per capita 13 time more then
Pakistan’s per capita income

2. Inflation Rate: Next we have to analyze the inflation rate of both countries. Inflation in
Pakistan remains the biggest threat to the economy, jumping to more than 9% in 2005 before
easing to 7.9% in 2006. In 2008, following the surge in global petrol prices inflation in
Pakistan has reached as high as 25.0%. Pakistan’s Inflation rate 7.6% is very higher then the
France’s Inflation rate 1.5% (2007 est.)

3. GDP growth rate: is another economic indicator for investment decision making. So the GDP
- real growth rate of Pakistan is 5.3% (2007 est.) is high then GDP - real growth rate of France
2.1% (2007 est.)

4. Unemployment rate: is another helpful economic factor for the investment decision making.
The Unemployment rate of Pakistan is 5.6% plus substantial (2007 est.)

5. Demand: At the end we have to analyze the demand for the under ground railway services.
From the real observation, Pakistani nation are not satisfied from the local transportation, they
want improvement in railway transportation. As our daily life experience the demand for the
under ground railway service is high in Pakistan.
There are many economic factors which are helpful for the investment decision making are
summarized bellow:

Details Pakistan(2007) France(2007)

GDP (purchasing power parity): $411.9 billion $2.075 trillion
GDP - real growth rate: 5.3% 2.1%
GDP - per capita (PPP): $2,400 $32,600
Labor force: 48.23 million 27.91 million
Unemployment rate: 5.6% 7.9%
Inflation rate 7.6% 1.5%
Central bank discount rate: 10% NA
Electricity - production 93.26 billion kWh 537.9 billion kWh
Oil - production 68,670 bbl/day 69,680 bbl/day

At the end we make conclude that the economic condition of Pakistan is not favorable for making
investment in the Metropolitan Transit System. The main Unfavorable economic factors are lower
living standard, high inflation rate, less purchasing power etc.

Legal System:

Definition:
The legal systems today consist of civil law, common law and religious law. However, each country
often develops variations on each system or incorporates many other features into the system.

Our project may not be legally approved by the Government of Pakistan because for the railway
system we require a large part of land for making railway stations and for railway tracks which will
disturb the business sector if it goes through the cities and if it goes through the villages or agriculture
land it also disturb there routine work and cultivation. For this the owners of the businesses and the
land lords will take a stay against it. So Government of Pakistan may not allow this to enter in
Pakistan. And religiously it is legal in Pakistan.
Culture Factors:

Culture is the major aspect in the international business. Regarding Mass Transit System we have
inquired about the culture of Pakistan that whether it was accepted or not. Railway was introduced in
Pakistan during the British Rule in 19th century. It was from there became popular, as it serves
thousands of people at one time, and makes long journeys comfortable and time saving, Ever since
railway becomes the part of our culture and life. With the change in time it is now requirement and
need that a fast medium of traveling must be introduced that is cheap as well as comfortable. People
are much familiar with train as they have been using this more than 150 years. Thus it has become the
part of Pakistani culture and is thus feasible to launch.

Social Factors:

Pakistan being a developing country is facing various problems related to transportation like shortage
of transport facilities as well as roads. This underground railway system will very much overcome
both the problems of the society. Moreover there is a group in the society that doesn’t like traveling
via roads due to various problems with the introduction of this underground railway system their
preferences will be addressed and one more problem of traffic jams can be dealt with. This system will
help to provide transportation facilities for the masses according to their needs and time.
 Ch – 5
Selection of Mode for the Project
Entry Modes Decision

There are three basic decisions that a firm contemplating foreign expansion must make
1. Which markets to enter?
2. When to enter those markets.
3. On what scale.

1. Franchising
Franchiser
• Great Western Railway.
Franchisee
• Pakistan Railway.

Franchising is the specialized form of licensing in which the franchiser not only sells intangible
property to the franchisee, but also insist that that franchisee agree to abide by strict rules as to how
it does business.

Application of Franchising on Mass Railway Transit System

  Company (GWR) which launches the project of Mass railway Transit System will often
assist the franchisee (Pakistan Railway) to run the business on an ongoing basis.
 Pakistan Railway has to follow the strict rules of GWR of updated technology,
Maintenance, Quality of service.

Advantages of Franchising

Advantages of franchising are as follows.

 GWR is relieved of many cost and risks of opening a foreign market on its own.
 It allows Pakistan Railway to build a profitable operation as quickly as possible.

Ch –6
Selection of Location/Extension Plan
Selection of Location:

We will launch Project of mass Railway Transit system in Rawalpindi/Islamabad. Details of this
project are as follows.

Zone 1
 M.Way
Chowk

Golra
Morh

Pirwada
h-i
Morh

Cantt
Station

Saddar

Estimated distance between 2 stations

 M.Way Chowk – Golra Morh = 5Km
 Golra Morh – Pirwadahi = 6Km
 Pirwadhi – Cantt Station = 4Km
 Cantt Station – Saddar =2Km

Zone 2
 Kachery
Chowk

Swan-
Adda

ISB.Hig
hway

Karl
Chowk

Faiz-
Abad

Estimated distance between 2 stations

 Kacher Chowk- Swan Adda=8 Km

 Swan Adda-ISB.Highway=9Km
 ISB High way-Karal Chowk=5Km
 Karal Chowk-FaizAbad=4Km

Zone 3
 Kashmir
Highwa
y

Blue
Area

Secretari
-at

Rawal
Chowk

Faiz-
Abad

Estimated distance between 2 stations

 FaizAbad-RawalChowk=4Km
 RawalChowk-Secretariat=6Km
 Secretariat-bluearea=3Km
 Bluearea-Kashmirhighway=12Km
 KashmirHighway-M.Way=6Km
 Extension Plan
North-South Zone

Saddar

L.Bagh

Aab
Para
Chandni
Chowk

Zero
6th Road
Point

Faiz-
Abad

Distance Estimation:

 Saddar-L.Bagh=3Km
 L.Bagh-Chandi Chowk=4Km
 Chandni Chowk- 6th Road=3Km
 6th Road-FaizAbad=2Km
 Faizabad-ZeroPoint=2Km
 ZeroPoint-AabPara=2km

West Zone
 Pirwadh
i Morh

Aab
Para
Pirwadh
i

Blue
Area
Double
Road

Naval
Comple
I-9 x
Markaz

Peshawa F-10
r Morh Markaz
Karachi.
Comp

Distance Estimation:

 Pirwadahi More – Pirwadahi =2KM

 Pirwadahi - Double Road =3KM
 Double Road - I-9 =2KM
 I-9 - Peshawar More =3KM
 Peshawar More - K.Company =2KM
 K.Company - F-10 =3KM
 F-10 - Navel Complex =3Km
 Navel Complex – Blue Area =4Km
  Blue Area – Aab para =3KM

Details of Operation

 GWR will first setup Research and Development Department.

 Secondly they will setup Finance department.
 After the Finance Department they will setup the Production Department.
 Production department also include the maintenance department.
 GWR will setup H.R department for the recruitment, selection and training of employees.
 GWR will setup franchisee in Rawalpindi/Islamabad.
 GWR will setup marketing department.

Fares and Ticketing Department

Stations are divided into two areas, paid and unpaid, which allow the rail operators to collect fares
by restricting entry only through the fare gates, also known as access control gates. These gates,
connected to a computer network, are capable of reading and updating electronic tickets capable of
storing data, and can store information such as the initial and destination stations and the duration
for each trip. General Ticketing Machines sell tickets for single trips or allow the customer to
purchase additional value for stored-value tickets. Tickets for single trips, colored in green, are
valid only on the day of purchase, and have a time allowance of 30 minutes beyond the estimated
traveling time. Tickets that can be used repeatedly until their expiry date require a minimum
amount of stored credit.

Safety Department

Assurance has been given by both operators and authorities, that numerous measures have been
taken in an effort to ensure the safety of passengers, with SBS Transit having to make greater
efforts in actively publicising its safety considerations on the driver-less North East Line before
and after its opening. Safety campaign posters are highly visible in trains and stations, and the
operators frequently broadcast safety announcements to passengers and to commuters waiting for
trains. Fire safety standards are consistent with the strict guidelines of the US Association.
Platforms are installed at all underground stations. These doors prevent suicides, enable climate
 control in stations and prevent unauthorized access to restricted areas. Above-ground stations have
open platforms; with a wide yellow line drawn 70 cm from each platform edge requiring
passengers to stand at a safe distance from arriving trains (or face a fine).Bylaws deter uncivil,
disruptive and dangerous acts, such as smoking, the consumption of food and drink, the frivolous
use of safety features, and trespassing on the railway tracks. Penalties ranging from fines to
imprisonment are imposed for these offences

Security Department
Security concerns related to crime and terrorism were not high on the agenda of the system's
planners at its original inception. However, in the wake of heightened security concerns after the
Madrid train bombings in 2004 and the foiled plot to bomb the Yishun MRT Station, the operators
deployed private, unarmed guards to patrol station platforms and check the belongings of
commuters.
Recorded announcements are frequently made to remind passengers to report suspicious activity
and not to leave their belongings unattended. Digital closed-circuit cameras (CCTVs) have been
upgraded with recording-capability at all stations and trains operated by SMRT Corporation. Trash
bins and mail boxes have been removed from station platforms and concourse levels to station
entrances. This is to eliminate the risk that bombs will be placed in them.

Conclusion:
Pakistan is one of the backward countries in the world. The living standard is very low and most of
economical indicators are unfavorable. This project is not feasible due to political, technological,
economical and legal environment of Pakistan.
Suggestions
Steps to improve Deficiencies
• In next 5-10 years political system should be stable by avoiding military
interference.
• Steps should be taken to eliminate corruption in transport department of
Pakistan i.e. Officers should stop favoring road transportation.
• Measures should be taken to eliminate terrorism.
• Attractive packages should be offered to attract foreign investment.
• Tax remittances should be offered.
• If the government of Pakistan legally allows us to establish the project with out
considering the stay orders of the landlords and the business mans who were
against the project.
• If in the near future the economic conditions of Pakistan will improve we will
defiantly launch the project.
• To improve technological advancement proper workshops should be made
which would manufacture railway couches, railway tracks, repairs engines etc
• New technology should be imported in drilling tunnels.

Working on these points the project is then brought into consideration….