FINAL REPORT

PEL

BUSINESS POLICY

SUBMITTED TO:
SIR NAVEED AHMAD
 Group Members:
Muhammad Saad Tariq F16-1036
Kashif Sohail F16-1310
Robinson Javed F16-1006
 Table of Content:
1. Acknowledgment
2. Dedication
3. Executive Summary
4. Company Logo
5. Introduction
6. History
7. Company Operation
8. Product Line
9. Certification
10. PEL Hierarchy
11. Management Levels
12. Vision / Mission Statements
13. Mission Statement Analysis
14. Mission Statement Evaluation
15. PEL Customers
16. External Factors
16.1. Economics Forces
16.2. Political Legal & Govt Forces
16.3. Technological Forces
16.4. Social Cultural
16.5. Demographic & Environmental Forces
16.6. Competitive Forces
16.7. Porter`s Model
16.8. SWOT (OPPORTUNITY/ Threats)
16.9. External Factor Evaluation Matrix
17. Internal Forces
17.1. Management Function
17.2. SWOT (Strength /Weaknesses )
17.3. Internal Factor Evaluation Matrix
18. Market Analysis
18.1. Major Competitor
18.2. Market Analysis
18.3. BCG Matrix
18.4. Product Life cycle
19. Financial Analysis
19.1. Gross Sale
20. Strategies & Objective
20.1.1. Goals at PEL
20.1.2. Plan at PEL
21. Contemporary Issues in Planning at PEL
22. Objectives
23. Recommendation
24. Conclusion
 Acknowledgment
It Gives Us Great Pleasure In Bringing Out This Report Of The Project Entitled
“PEL”. Firstly We Would Like To Thank Our Teacher And Our Group Members
Who Worked Hard In Preparation Of This Report And Shared Their Valuable
Suggestions And Ideas When We Were In Need Of Them. We Are Also Grateful
To Them For Giving Us The Opportunity To Work With Them And Providing Us
The Necessary Things For The Project. We Are Very thankful To All Involved In
This Project As Without Their Inspiration And Valuable Suggestion It Would Not
Have Been Possible To Develop The Project Within The Time.

With Sincere Thanks,

“All Group Memebers”.

 Dedication
We dedicate this project to Allah Almighty our creator, our strong pillar, our
source of inspiration, wisdom, knowledge and understanding. He has been the
source of our strength. We also dedicate this work to our lecturer who has
encouraged us all the way and whose encouragement has made sure that we give it
all it takes to finish that which we have started.
 Executive summery
Pak Electrons Limited (PEL) is the flag bearer of the Saigol Group of Companies.
The products manufactured by PEL have always been of high standard and the
name 'PEL' is synonymous with QUALITY all over Pakistan. Since its inception,
the company has been working for the advancement and development of
engineering know-how in Pakistan. The company has produced hundreds of
engineers, skilled workers and technicians through its apprenticeship schemes &
training programs.
Change Your Life
Introduction:
Pak Electrons Limited (PEL) is a Pakistani engineering corporation which
manufactures major home appliances and electrical equipment. PEL was founded in 1956
through technical collaboration with AEG. In 1978, PEL was acquired by Saigol
Group and was taken public a decade later. Over the years, PEL has formed alliances
with several international giants, including General Electric, Fujitsu and Hitachi. The
company also became the sole distributor of LG Corporation's home appliances in 2009.
PEL operates in two segments - power and appliances. The former includes
manufacturing of transformers, grid stations and energy meters among other goods, while
the latter division deals in making, assembling and distribution of home appliances like
refrigerators and air conditioner. PEL’s Appliances Division is the flag carrier of the
Saigol Group involved in home appliances manufacturing. PEL window-type air
conditioners were introduced in 1981 in technical collaboration with General Corporation
of Japan. Ever since their launch, PEL air conditioners have a leading position in the
market. Recognizing the shift in consumers' preference from window-type to split-type
air conditioners, PEL has focused its manufacturing efforts on split-type air conditioners.
The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s
IAR-SILTAL of Italy. Like air conditioners, PEL's refrigerators are also in great demand.
Today, PEL Crystal has 30% market share across Pakistan. PEL deep freezers were
introduced in 1987 in technical collaboration with M/s Ariston of Italy. PEL's Power
Division consists of three Main Products: (1) Energy Meters; (2) Transformers; and (3)
Switch gears.

History:
Pak Electron was setup in 1956 as a Public Limited Company with the object of initially
producing transformers, switchgears, and electric motors. AEG experts and PEL personnel
carried out the designing and production of this equipment jointly. After the conclusion of joint
venture agreement with AEG Saigol Group acquired the PEL COMPANY in October 1978. The
company floated its shares to the general public and was listed on Karachi Stock Exchange
(KSE) and Lahore Stock Exchange (LSE). In 1980, Appliances Division was established and in
1981 its starts the production of Window Type Air Conditioners with the technical collaboration
of General Corporation of Japan. This air conditioner was well received in the market for its
quality. Subsequently in 1987 the production of Refrigerators and Deep Freezers was started. In
1993 the company has started the assembly of Compressors for Refrigerators and Deep Freezers
under technical collaboration with Messrs. NECCHI COMPRESSORI of Italy. It was in early
70s that PEL became known in overseas markets due to its quality. The company started its
export to countries like Saudi Arabia, Abu Dhabi, Qatar etc. Later on PEL supplied electrical
equipments to various other countries in the Middle East, Far East and Africa with great success.
Company Operations:
PEL is the company of Pakistan .which is produce those thing which is use by Govt &
General Public. The company’s operations are divided into two divisions:

1. Power Division

2. Appliances Division
Product Lines:

They are produce home appliances. Like

1. Refrigerator
2. Air Condition
3. Washing machine
4. Windows Air Condition
5. Micro Wave Oven
6. LED
7. Generator

Power Line:
1. Distribution Transformer
2. Dry Type Transformer
3. Power Transformer
4. PMT Transformer
5. Switchgear
6. Digital Energy Meters
7. Analog Energy Meters
8. EPC contracting
Certification:
The Company also provide their services related with their product which is certified
with these companies
 PEL Hierarchy:

CHAIRMAN Director
Operations

Director
Manager

Internal HRD/ QA Appliances

Finance
Audit IR&A & Division

QC
Supply Power
Management Division

Finance /
Accounts

Manufacturing Sales &

Marketing

Manufacturing Sales & Marketing

EPC
Contracting
Management Level:

Chairman BOD

Managers 200

Executives 670

LINE Staff 800

Workers 4274

Vision & Mission statements:

VISION:
“To excel in providing engineering goods and services through continuous improvement.”

Mission:

To provide quality products & services to the complete satisfaction of our customers and
maximize returns for all stakeholders through optimal use of resources. To focus on personal
development of our Human Resource to meet future challenges. To promote good governance,
corporate values and a safe working environment with a strong sense of social responsibility
Mission Statements Analysis:
Mission Components Included
Customers
Products and Services
Markets
Technology
Concern for Survival
Growth and Profits
Philosophy
Self-Concept
Concern for Public Image
Concern for Employees
Not Description
included
 Loyalty
 To provide quality products

 use of resources
 maximize returns for all
stakeholders
 Quality , customer care,
good governance, corporate
values
 complete satisfaction of our
customers
 strong sense of social
responsibility
 safe working environment
with

Mission Statement Evaluation:

Key Variables Case Facts Evaluation

Broad in Scope quality products & services,
complete satisfaction of our Acceptable
customers
Length (Less than 250 ------- Acceptable
words)
Inspiring ------- -------
Identify the utility of the ------- Mentioned
firm’s products
Reveal that the firm is strong sense of social responsibility Mentioned
socially responsible
Reveal that the firm is safe working environment Mentioned
environmentally responsible
Include Nine Component 9 outof 9 Acceptable
 Reconciliatory Unspecified
Enduring Unspecified

PEL Customers:
PEL have many customer including Govt & Private companies like

1. Utility: WAPDA, PEPCO, KESC & AJK-ED

2. TRANSCO: NTDC.
3. DISCOs: TESCO, PESCO, IESCO, LESCO, FESCO , GEPCO, MEPCO, SEPCO,
HESCO & QESCO
4. GENCOs
5. IPPs & RPPs.

And other Private customers.

External Factor:

Economic Forces:

 Devaluation of Currency
 Interest Rate
 Uncertain Economic Situation
 Dumping Pricing.
 Competition inside; China & Korea.
 Competition outside; China, Korea, India & Turkey.
 GST: 17%
 Price Preference: 30% to the importing country.
Political, Legal & Govt. Forces:

 Frequently Changes in tax laws

 Unstable Political Environment
 Energy Crisis
 Local Rules: PPRA Rules.
 International Rules: World Bank, ADB & JICA Rules.
 “Lowest most responsive”.
 No negotiations.
 Bank Guarantee; 10% of Bid value.
 Performance Guarantee; 10% of Purchase Order value.
 Bound to Contractual agreements.

Technological Forces:
 New Products.
 Extended Services.
 New Emerging Markets.
 New Marketing methods.
 Supply Chain Management.
 Manufacturing Process & Techniques

Social, Cultural:

Demographic & Environmental Forces are not effective

Competitive Forces:

 More than 50 competitors.

 New Entrants.
 Low pricing.
 Porter’s Model:

Substitute Products
(Medium)

Rivalry amongst Bargaining Power

Bargaining Power
Competitors Of Consumers
of Suppliers
(High) (High
(Medium)

Potential Entry of
new Competitors
(Low)

Rivalry amongst competitors: Modestly High

Potential New Entrants: 1 to 2 new competitors every year.

Suppliers Bargaining Power: Medium; Depends upon economy, source, time, demand, supply,
transportation mode and availability of raw material.

Substitute Products: A lot of registered companies having the product of same specification or
standard.

Buyers Bargaining Power: Tender advertised in daily newspaper. Lowest most responsive
bidder. Bound to contractual agreements.
SWOT (Opportunity & Threats):
OPPORTUNITIES:
 Expansion of Energy Sector
 Increase in Population
 Large Product Range
 Globalization
 Joint ventures, merger, and acquisition or take over

THREATS:
 Strong Competition
 Chinese Products
 Grey Market
 Devaluation of Currency
 Obsoleting of Technology
 Rapid Changes in Government Policies
 New Entrants
External Factor Evaluation:

Internal Factor:
There are Multiple factor involve which is effect internally like Management of the organization
is the number one factory which effect on company performance directly. Marketing is another
factory which is effect on company sales & promotion. Finance and Accounting is the factory
which base on company resources. Production Operation is the factor which belong to company
quality standards. R & D research and development is the factory which is base on company
innovations. MIS management information system then manage those information which is
useful for company.
Management Function Performed at PEL:

Planning:

Defining goals, establishing strategies to achieve goals, developing plans to integrate and
coordinate activities.

Organizing:

Team formation of each dept with the help of team leader Arranging and structuring work to
accomplish organizational goals

Leading:

Proper vision and direction of team leader Working with and through people to accomplish
goals.

Controlling:

Monitoring, comparing, and correcting work

PEL SWOT ANALYSIS:

STRENGTHS:

 ERP Based Company

 Strong Brand Image
 Strong Dealer Network
 Numerous Super Brand Award
 State of the art plant
 One of the largest manufacturer
 Strong R&D Department
  Strong After Sales Service
 Compliance of International Standards

WEAKNESSES:

 Financial Problem
 Large overheads
 High Prices
 System Variation

Internal Factor Evaluation:

Marketing Analysis:

Major Competitor:
PEL have tow Type of competitor which is follow as

1. Appliances
2. Power

Appliances Competitor:
There are some competitors which is compete PEL in field of home appliances

1. Dawlance
2. Waves
3. Haier
4. Orient
Power Competitor:
There are also some power Competitor which is compete it in field of Powers

1. Transformer:
2. Energy Meters:
3. Switchgear:
4. Power Transformer:
5. EPC Project

BCG MATRIX:
Product Life cycle:
Financial Analysis:
Gross Sales

Gross Sales: Rs. 20.3 Billion.

Net Sales: Rs. 17.7 Billion.

Gross Profit: Rs. 3.60 Billion.

Net Profit: Rs. 0.12 Billion.

STRATEGIES OF PEL AS MARKET CHALLANGER

In competitive environment challengers strategies are very significant to survive in the market.
Firms in this category can adopt one of the following strategies: The leader is attacked but it is
very risky and high payoff. Company can attack unprogressive and under financed firms, it is
less risky and less payoff it can also attack on small local and regional firms, it is neither risky
nor high payoff

Choosing A General attack strategies:

Frontal attack:

The attacker matches its opponent price, product, advertisement and distribution. The principle
of force says that side with greater manpower (resources) will win

Flank Attack:

The attacker can attack along two dimensions:

 Segmental.
 Geographical

Technological leap fogging:

Challenger patiently researches and develops the next technology then launches its attack

Guerrilla Warfare:

It consists of small but continuous attacks to harass and demoralize the opponents.

Encirclement attack:

It involves launching grand offenses on several fronts attack on every feature of opponent’s
products

As far as PEL is concerned, it uses technological leap fogging strategy to attack. PEL is
launching products having several innovative features to differentiate its product from
competitors

 Water dispenser refrigerator is the product having innovative feature of

getting cool water without opening refrigerator
 6- Series refrigerator is the product having differential feature of light
bulb in freezer
PEL Genset Aircon Power Electric generator is the product having following differential
features:

Performance capable of running following items continuously for 10 hours.

 One 1.5 ton split

 One television
 Six tube lights
 One computer
 One fridge
 Five fans
 One deep freezer

Strategies Objective:

Financial Goals:
Target of reducing financial cost from 13%

Strategic Goals:

Increase profitability and sales turnover Increasing the product line

Plan at PEL:

Strategic Plans :

Capture 10% more market share within next 2 years.

To become the leading manufacturer of electrical goods in Pakistan.

Operational Plans:

Introduce a wide range of Products.

To achieve the desired targets with cost cutting techniques.

Efficient utilization of resources to maximize output.

Contemporary Issues in Planning at PEL:

Criticisms of Planning:

Main flaw in today's planning lies with the energy crisis prevailing in the country.

Due to its dynamic nature the changes in plans are very frequent.

Effective Planning in Dynamic Environments:

Different plans including sales and production plans need to be changed very often and is an
ongoing process.

Need to cater to market trends while planning and therefore being static or fixed is of no use.
Strategies:
 Increase our Export
 Increase in production
 plant capacity
 Retain local market share.
 Lower production cost,not effecting the quality.
 Change in internal design.
 Superior on time delivery
 Superior customer services.

Recommendations:
They should retire their expensive loans.They should carefully study their competitors.As
mentioned earlier company’s liquidity position is dismal. So they need to pay off their short term
loans.Their operating cost is very high so they should control their operating expenses. There
should be a continuous monitoring of performance. When performance deviates from plans one
does not have to wait for the next periodic review to correct it. The supervisor and subordinate
should discuss the situation immediately so the corrective actions can be taken at once in order to
avoid the major disasters. Whether performance appraisal discussions are held monthly,
quarterly, annually appraise should be clear about what he/she is doing right and wrong ,and how
he/she can overcome there deficiencies for the future appraisal. Performance appraisal should be
conducted in a way that employee should not perceive it as a fatigue or threat for there job but it
should take it as an opportunity to add or contribute more value in work of there organization

Conclusion
 PEL has great strengths and opportunities
 Should take risk and go to other markets
 Management philosophy is the hurdle in the progress of the company
 Take the advantage of today's media power to capture market
 Future of PEL is very bright as it is grabbing opportunities and has the potential to
compete with challenges