INTRODUCTION:

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

Slogan: “THE POWER OF DREAMS”

INTRODUCTION TO THE COMPANY

Products:

“VISION”

“To be the first preference at every level of car lovers, and be the market leader”

“MISSION”

A dynamic growth oriented company through excellence in quality, dedication to provide greater fuel efficiency at competitive prices, and service ensuring attractive returns to equity holders, rewarding associates according to their ability and performance, fostering a network of engineers and researchers ensuing unique contribution to the development of the industry, customer safety, satisfaction and protection of the environment by producing emission friendly green products as a good corporate citizen fulfilling its social responsibilities in all respects.

COMPETITORS

1. PAK SUZUKI

In pursuance of the terms and conditions of the Joint Venture Agreement executed between Suzuki Motor Corporation of Japan (SMC) and Pakistan Automobile Corporation (PACO), Pak Suzuki Motor Company Limited (PSMCL) was incorporated as a public limited company in August 1983.The new company took over the assets which included production facilities of Awami Autos Limited. PSMCL started commercial operations in January 1984 with the primary objective of passenger cars, pickups, vans and 4x4 vehicles. The foundation stone laying ceremony of the company’s green field automobile plant at Bin Qasim was performed by the then prime Minister of Pakistan in early 1989.On completion of first phase of this plant in early 1990, in-house assembly of all types of Suzuki engines started. The new plant was completed in

1992, on its completion all Suzuki products were transferred to new plant and three box 1300cc Margalla car was also added to its range of production. In September 1992 the company was privatized and placed directly under the Japanese Management. At the time of privatization SMC increased its equity from 25% to 40% subsequently; SMC progressively increased its equity to 73.09% by December 31, 2001. The Bin Qasim Plant further expanded its production capacity to 50,000 vehicles per year in July 1994 and 300,000 vehicles had been manufactured at this plant by December 2003.The most modern automobile manufacturing plant in the country distinguishes Pak Suzuki from other automobile plants. Pak Suzuki always endeavors to go aggressively for the sound development of the society by increasing motorization industrialization, creating job opportunities thus improving the people’s living standards with the combined efforts of all the dealers, vendors and Pak Suzuki employees.

2. INDUS MOTOR COMPANY (IMC)

Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. Vehicles in Pakistan through its dealership network. The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993. The shares of company are quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25 % stake in the company equity. The majority shareholder is the House of Habib. IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres. Indus Motor Company’s plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured. Heavy investment was made to build its production facilities based on state of art technologies. To ensure highest level of productivity world-renowned Toyota Production Systems are implemented. IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported vehicles.

The External Assessment:

The external audit is to develop a finite lists of opportunities that could benefit a firm and threats that should be avoided. External forces can be divided into five broad categories;

Economic forces

Social, cultural, demographic and environmental forces

Political forces

Technological forces

Competitive forces

Economic forces:

Overall economic conditions are not very sound. The country risk of Pakistan goes to 3 which is alarming situation for Pakistan. Due to mistrust in the Pakistan environment the foreign direct investment has been declined. Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and low levels of foreign investment. Between 2001-07, however, poverty levels decreased by 10%, as Islamabad steadily raised development spending. Between 2004- 07, GDP growth in the 5-8% range was spurred by gains in the industrial and service sectors - despite severe electricity shortfalls - but growth slowed in 2008-09 and unemployment rose.

Global crisis and Pakistan:

a) Pakistan did not face a major setback from the global crisis.

b) The economic hardship by the country has mostly been the result of domestic issues - internal strife, political instability and poor governance has slowed down an otherwise a viable economy.

c) Overall economic activity weakened despite growth in agriculture, while declining imports and slowing domestic demand resulted in lower tax revenue.

Pakistan's Economic growth:

· The ongoing global economic crisis, negative security developments and continued power shortages slowed Pakistan’s real GDP growth to 2% for 2008- 09 compared to 5.8% achieved in the prior year.

· The Unemployment rate is going up and up from 13.6% in 2008 to 15.2% in 2009 with the increase of level of poverty that is reducing the buying power of the

COMSATS Institute of Information Technology, Lahore Campus.

4

Chapter # 2

EXTERNAL AUDIT OF THE COMPANY

people that is threat for Honda cars

· The GDP growth rate for the year 2008-09 initially projected at 5.5 percent has now been revised downward to 2.5 percent compared to 5.8 percent of last year.

· The major pressure in the economy has stemmed from inflation.

· The SBP has projected inflation to slow down in the final quarter of FY08-09. Controlled inflation may usher in lower interest rate and improved liquidity, so necessary for growth of industry.

· Inflation remains the top concern among the public, jumping from 7.7% in 2007 to 20.8% in 2008, and 14.2% in 2009.

· The performance of the car assemblers remained lackluster during 2009 owing to the economic meltdown in the country. In the wake of rising steel prices, appreciation of yen against rupee and imposition of 5% FED in the budget of 2009, the car assemblers passed on the increase in cost to the consumers. This brought the decrease in demand of the automobiles.

The role of IMF (International Monetary Fund):

· The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis.

· IMF has disbursed the first two tranches of $ 3.1 billion. The World Bank and ADB have pledged support and an independent overseas support group, Friends of democratic Pakistan have decided a support of $ 5.28 billion. Eased out political situation in the country will help in an improvement in business

environment.

Financial position of Pakistan:

· The stock market has exhibited a growth of 36 percent post March 16. Foreign exchange reserves have crossed US $11 billion. The commodity prices are reflective of an inherent demand in the economy. A bumper wheat crop is being projected and it will provide a boost to demand.

· The market value of stocks decreased from 70.26 billion in 2008 to $23.49 billion 2008 $70.26 billion.

· The Pakistani rupee has depreciated since 2008 as a result of political and economic instability from Rs. 70.64 in 2008 to Rs. 81.21 in 2009.

· The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis.

Political forces

a) The government plays an important role in the operation and manufacturing products and services in terms of regulations. Following are some of the factors that could cause Honda Cars to differ materially from the expected results.

Instability and political clashes:

b) Now a day’s Pakistani environment is instable due to political clashes among political parties. Inside country war and drown attacks in north frontier areas. This political instability has led to uncertain environment in the country, which is a threat for any business including Honda

Depreciation Allowance:

c) The government reduced the depreciation allowance on used imported vehicles from 2% to 1% per month during the year. This positive step by the government provided a much needed relief to the industry and used car imports slowed to 6,524 units for the year compared 13,145 units for 2007-08. This acted as a huge opportunity for the overall domestic automobile sector. However, due to the inability of the of car manufacturers to reduce the sale price of the cars, the government has given an ultimatum to the automobile manufacturers that they will increase the depreciation allowance on the used imported vehicles in the near future.

d) The government has made an attempt to create a competitive environment in the automobile industry, but this competition gives rise to declining of sales that the local industry has suffered before and is a great threat for Honda.

Liberal Policies:

e) According to the analysts, the current policies on used cars in Pakistan are still extremely liberal when compared to India, Thailand and other countries and are often misused by importers under transfer of baggage scheme.

Tax imposition and duties:

f) The imposition of additional levies and taxes in the Federal Budget 2008- 09 which included the 5% Federal Excise Duty on cars with engine capacity in excess of 850cc and application of fixed slabs of withholding tax at the registration stage.

g) This compounded the situation resulting in a sharp increase in automobile prices and dampening of demand. Post budget imposition of 35% cash margin on letters of credit further aggravated the liquidity situation for the auto sector before it was withdrawn several months later.

Tightened monetary policies:

High interest rates and reduction in car financing facility offered by banks further depressed the demand for cars.

Thus, the industry car sales went down by 50% from 147,441 units sold in FY08 to 74,180 units in FY09.

Sales went down mainly in the 800cc and 1000cc categories, which contribute 60% to the total auto sales. The car sales of Honda Atlas slumped by 28% from 15,487 units sold in FY08 to 11,144 units in FY09.

The tightened monetary policies not only hampered the sales of the company, but also increased the cost of debt that it had taken for the expansion purpose.

Technological Forces:

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

· Honda cars has always followed the tradition of introducing new technology and providing global cars of international quality to its customers, since the launch of its first model in 1994.

· During the short span of 15 years, your company has introduced 4 new models of Honda Civic and 4 new models of Honda City –the highest among the other car makers in Pakistan.

· Many features and specifications were introduced first time in Pakistan. Your company introduced the 3rd Generation Honda City on January 31, 2009. It has V-tech Engine, Anti Lock Braking System (ABS) and Euro- 4 emission systems, which are considered to be the strictest emission standard worldwide.

· The new City has Drive-By-Wire (DBW) control technology for fuel efficiency. It has also enhanced G-CON collision safety which reduces the impact on passenger cabin. To maintain the global quality standards, the Company has invested Rs 2.1 billion on development of local parts, dies and fixtures of Honda City. However, the new features increased its cost and so the selling price.

· Honda produces cars of highest quality with high specifications of Honda to its global customers. Honda has the pride of providing the environment - friendly, Euro IV compliant cars to its customers, which no other maker has in Pakistan.

· On the strength of our confidence in our products, the company with new City launch effective February 2009, increased warranty of new City to 70,000 Km or 3 years from the date of purchase, whichever comes earlier, increasing Joy of Buying of new Honda City.

Social, cultural, demographic and environmental forces:

· Effects of the automobiles on societies:

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

· Economic changes

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

· Changes to urban society

Traffic Jam: Another change brought about by the automobile is that modern urban pedestrians must be more alert than their ancestors. In the past, a pedestrian had to worry

about relatively slow-moving streetcars, or getting kicked in the face by horses, or stepping in horse dung. With the introduction of the automobile, a pedestrian has to worry about being hit by automobiles at high speeds, and breathing noxious exhaust fumes.

· Social status

The automobile signifies much more to many than simply a mode of transportation. Henri Lefebvre called the automobile "the epitome of possessions". In the early years, the car served as a mark of distinction above all others. The automobile rapidly became a symbol of social status, and in some cases, a fashion item. The automobile, more than any other possessions, allowed people to show off wealth. Not only was the ownership of an automobile demonstrative of a certain level of income and prestige (and still is, especially in poorer nations), it is also highly visible.

· Safety

Automobile accidents caused many deaths and injuries, especially before automobile safety laws were implemented. To this date, automobiles remain a major cause of accidental death and injury, not to mention emotional stress.

· Vehicle Air Pollution:

Air pollution is viewed as a serious problem in many cities in South Asia. Many city governments say that transport is mainly responsible for air pollution and have adopted, or are considering adopting technological measures to reduce vehicle emission. This situation demands selection of appropriate measures in the sector.

The impact of outdoor air pollution on public health and lost productivity should be seriously taken as toxicity and ambient concentrations are the most damaging health impacts. The particulate matter causing serious respiratory illnesses and premature deaths throughout South Asia, and airborne lead, which retards intellectual development of children in Pakistan and Sri Lanka is a common phenomenon, where leaded gasoline is still used.

Competitive forces

Honda faces competition in the international markets from a number of brands such as

· Toyota

· Mitsubishi

· Mercedes

· BMW

However, Honda cars in Pakistan that had started its operations in Pakistan 1994 under a joint venture with Atlas has been is enjoying the key position in 1300 c.c and above.

The main competitors of Atlas Honda in Pakistan are:

Indus Motors:

Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. Vehicles in Pakistan through its dealership network. The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993. The shares of company are quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25 % stake in the company equity. The majority shareholder is the House of Habib. IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres. Indus Motor Company’s plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured.

Suzuki:

Suzuki is the leading name in small commercial vehicles and passenger cars. Suzuki commenced its operation by assembling small 800 cc cars. Suzuki has so far a sole leader in 800cc and 1000cc passenger cars as well as 1000cc jeep Potohar. But the emergence of so many competitors in the market will definitely trigger a very hard time to Pak Suzuki. Suzuki has launched Mehran 800cc, Cultus 1000cc, Baleno 1.3 & 1.6 Eli and Gxi, Bolan van & Ravi pickup 800cc and Potohar jeep. The total production capacity of Suzuki Motors is about 50000 units and the total actual production in 1999 is 32,805. The sales volume of Suzuki is highest among the competitors with 31,296 cars as per June 30, 2000. According to Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) , Suzuki has achieved the 60 per cent deletion status in 800cc Mehran car. Localization in other products like 1000cc Khyber 42 per cent, 1300cc Margalla/Baleno 32 per cent, 800cc pickup 50 per cent 10 passenger pickup 47 per cent and 1000cc Potohar jeep 40 percent.

Dewan Farooque Motors:

It is the major competitor which has commenced its operation with a wide range of products in domestic automobile market. Dewan Motors is basically a collaboration with Hyundai and Kia, two Korean auto manufacturers. The initial response to Dewan's offering in the market with record company booking of its Santro Plus. It has launched its Kia classic 1300 cc car with sophisticated features. In future wide range of models like Kia Shuma 1500-1800cc car, Kia Sportage 2000 cc sports utility are expected to launch in the market. Dewan has also launched its 1.5 tons Shehzore, the assembly of Hyundai light commercial vehicle has already started at the Sindh Engineering Plant in Karachi under contractual agreement.

Daihatsu:

Daihatsu, another new player in the market with its Cuore 850 cc, increased the competition in the market. Daihatsu and Indus Motor signed an agreement to launch the Coure in market. The project worth Rs 750 million was developed at Port Qasim between Daihatsu and Indus Motor to produce Coure. Daihatsu also heated up the competition in small car segments.

Porter's Five Forces Model:

Michael Porter identified five forces that influence an industry. These forces are: (1) degree of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier power. Like other industries operating under free market, capitalistic systems, viewing the automotive industry through the lens of Porter’s Five Forces can be helpful in understanding the forces at play.

THREAT OF NEW ENTRANT:

Although Pakistani Market is dominated by protectionism but because of financial crisis a lot of Automobile companies have their eyes on South –East Asia as a dumping site Honda motors company must gear up for fierce competition. These new Entrants have sufficient capital and guts to start a price war among the local industry.

Economies of scale:

Economies of scale no doubt reduces the cost of manufacturing but now days Customers are Saving Oriented Rather Consumption Oriented low price in this period of recession will not attract customer the best way is to go for fuel efficient cars.

First Mover Advantage:

Honda motors have the First Mover advantage in case of Fuel efficient Cars. Honda R&D Department already achieved so much in this field depleting oil sources is a major problem for every country now Toyota is looking for different options such as: Bio Fuels, Hydro Electric power Cars, Electric powered cars & Cow Dung.

Access to Channel of Distribution and Relationships:

Honda motor has the advantage of customer satisfaction and distribution channels. Honda motor conducts workshops and seminar for Dealer Staff so that the interaction with the customers shall be a pleasant one. This Customer care leads to Customer Loyalty.

THREAT OF SUBSITUTE PRODUCTS

America is the biggest victim of economic Rescission and the biggest car consumption country is America. American People has taken a Saving Stance now the American car manufactures have their eyes on India, China, and Pakistan as a dumping sites so some time in upcoming years Honda motor can face fierce Competition and have to step up for the competition because Pakistani people have a lot of options.

BARGANINIG POWER OF BUYERS:

Buyers are price sensitive because products are little differentiated and switching cost is lower. The buyers hence have greater power to bargain on the finished good, i.e. vehicle. The switching cost is very low for the customers. However the automobile industry remains marginally strong due to the large buyers to producer ratio

BARGAINIG POWER OF SUPPLIERS:

Honda motors almost produces 98% of car in Pakistan but Most of the Raw material is imported through Toyota Japan so Suppliers is the parent company that is why importing material is not a big issue for Honda. The automotive industry is a dynamic place. With the forces above at play, and with history as a guide, it is safe to say that the automotive industry will continue to change, evolve, and adapt.

External Factor Evaluation Matrix:

An external factor evaluation matrix allows the strategists to summarize and evaluate economical, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The threats and opportunities of Honda Company have been identified in the PEST analysis and the ratings of the factors (1-4) have been done from the brain storming and the facts and figures that have affected the company. Following is

the EFE matrix: From the above matrix calculation, we can see that the total weighted score for Honda Motors is 2.49 which is 0.01 points lower than 2.50 i.e. the midpoint a and is below the average. This

External factors Wght Honda Atlas

Opportunities Rating Wgtd.Score

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

2. Customer desire for hybrid and fuel efficient vehicles 0.08 3 0.24

3. Increase in technology in automobiles forces customers to return to dealer for service 0.1 4 0.40

4. Introduction of ethanol fuel in Pakistan 0.02 1 0.02

5. Increase in demand of small vehicles 0.05 3 0.15

Threats

1. Recession in the economy 0.05 1 0.05

2. WTO (World trade Order) opening local markets for global competition 0.02 1 0.02

3. Entry of reconditions cars 0.13 2 0.26

4. Political instability 0.05 1 0.05

5. Tightening monitoring Policy 0.06 2 0.12

6. Energy crises 0.1 3 0.30

7. Depreciation of rupee against dollar 0.1 4 0.40

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

9. Inflation 0.07 2 0.14

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

Total 1 2.49 shows that the company is not performing that well due to the bad economic and political conditions of the country.

Competitive Profile Matrix (CPM):

The competitive profile matrix (CPM) identifies a firm’s major competitors and its particular strengths and weaknesses in relation to the sample firm’s strategic position

Honda Atlas Indus Motors Pak Suzuki

Critical success factor Weight Rating Score Rating Score Rating Score

Product Quality .14 4 0.56 4 0.56 2 0.28

After Sale Services .10 4 0.40 4 0.40 3 0.30

Price Competitiveness .13 4 0.52 4 0.52 4 0.52

Technology .10 4 0.40 4 0.40 3 0.30

Dealership Network .12 2 0.48 4 0.24 4 0.48

Market Share .10 2 0.20 3 0.30 4 0.40

Spare Parts .12 2 0.36 3 0.24 4 0.48

Environment Friendly .09 4 0.27 3 0.36 2 0.18

Customer Loyalty .10 4 0.40 4 0.40 2 0.2

Total 01 3.32 3.69 3.94

From the above matrix we can observe that the most important factor for the automobile industry is the product quality, followed by price competitiveness and then the dealership networks and the availability of the spare parts. Suzuki is the strongest of all the three companies as it is proven from the matrix and also from its market share in Pakistan that is the highest among all. Honda is the lowest and the weakest of the companies.

MARKETING OF HONDA:

Honda Atlas Marketing Objective:

Honda Atlas Pakistan Limited as well established automobile companies in Pakistan they always keep focus on that mission and vision in the same direction HACPL does target of goal achievement. The standard of the HACPL according to marketing is very high. HAPL existence and central point of Honda Atlas to sell dream Car because in Honda point of view “Power of Dreams” itself attracting the customer for that need to build unique product. HACPL marketing objective has been targeting in terms of provide satisfied customer service, make possible to keep in reach the product, and strive to give outstanding service to valued customers. In addition to providing regular service to customers, the company also regularly conducts Service

Campaigns, to facilitate customer's need for service. This has given company customers’ absolute confidence in their cars. In the constant endeavor of Honda Atlas company to achieve No .1 Customer satisfactions with respect to loyalty of brand. Honda Atlas Company has been committed to meet customer expectations, and to provide good value for money.

Honda Atlas Marketing Mix:

Marketing mix elements or 4p’s strategy of marketing is the essence of any business same like this strategy of marketing mix apply in top listed automobile company overall the world Honda atlas these key elements of marketing mix make the difference between Honda atlas and other automobile companies, Honda atlas also comes up with a strategy to figure out which strategy is best for them given the objectives and resources. They must also consider the strengths and weaknesses of the company as well as opportunities and threats. To enhance the aptitude of the companies, a marketing mix strategy is introduced. The marketing strategy will create lucrative marketing mixes for defined target markets. Honda atlas has been enhancing their outcomes and marketing value by implementing the right combination of the four P’s.

Product:

Honda Atlas has competitive edge to other automobile Companies in term of product quality.

Accord:

Witness the debut of the astonishing new Honda Accord: the outcome of our all-out pursuit of sedan excellence, successfully uniting all contradictory elements. A bold exterior presence with a luxury air, yet a sporty youthful feeling. An expansive upperclass cabin with comfortable travel space for five adults and panoramic visibility. A larger body with sportier performance than ever before and powerful I-VTEC engines designed for high fuel economy. A renowned global car with all advanced Honda technologies for driving command, plus eco-performance for increased recyclability. And, Honda's world-leading safety protection, which even extends to pedestrians and those in other vehicles. Experience its overall quality, riding comfort, and details for yourself, and you'll know why the new Accord represents a distinct "status upgrade" for the sedan.

Civic:

What moves you? What drives you? What excites you? Honda seeks the pinnacle of technology in pursuit of answers. Now, we present a bold way to stir the body and soul, designed to quicken the pulse at first glimpse, and stimulate the senses with each and every encounter. The sporty new Honda Civic possesses rare spirit, and so do you. See, touch, feel, drive and discover.

City:

See it coming, like an arrow. Striking good looks, cutting-edge design, sharply focused tension. See it shoot straight ahead. What is it? Discover the compact sedan breakthrough with strength to open a new era and outlast fleeting trends. Sleek styling and strong performance, with swift, gutsy response to the driver's pedal action. Classleading* spaciousness and relaxing ride for outstanding comfort. Imagine the pride of driving and owning this distinctive new-generation standard. Get ahead in the new City. People will be watching.

CR-V:

Dynamic styling appeal. Elevated SUV outlook. Premium driving refinement. And an exhilarating yet stable feeling. The new Honda CR-V has all you want, and more. A spacious cabin and utilities, due to packaging innovation. Plus superb i-VTEC response, quietness, and safety. Discover delightful CR-V driving. Now, all roads are exciting.

Price:

BRAND MODEL PRICES

CR-V 2.4 Litre Rs: 5,299,000

CIVIC I-VETIC MANUAL Rs: 1,619,000

I-VETIC AUTOMATIC Rs: 1,739,000

VTI-ORIAL MANUAL Rs: 1,794,000

VTI-ORIAL AUTOMATIC Rs: 1,869,000

ACCORD I-VTEC Rs: 5,699,000

CITY MANUAL Rs: 1,249,000

AUTOMATIC Rs: 1,379,000

Promotion:

Honda Atlas (Pakistan) always strives to give outstanding service to valued customers. In addition to providing regular service to customers, HONDA also regularly conducts Service Campaigns, to facilitate customer's need for service. This has given to customers’ absolute confidence in Honda cars. Honda also participates in promotion of that product. Honda Atlas has a rapidly and quickly promote products more than its competitors.

Place / Physical Distribution:

Honda Atlas Network of dealership has expanded and now company has twenty one 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pit shops network in all major cities of Pakistan.

LOCATION 3S DEALERS 2S DEALERS

KARACHI 6 4

HYDERABAD 1 -

LAHORE 4 7

ISLAMABAD 1 1

RAWALPINDI 1 2

MULTAN 1 1

FAISALABAD 2 2

SARGODHA 1 1

GUJRANWALA 1 -

SIALKOT 1 -

MIRPUR 1 -

PESHAWAR 1 -

ABBOTTABAD - 1

BAHAWALPUR - 1

BUREWALA - 1

AZAD KASHMIR - 1

GUJRAT - 1

MARDAN - 1

OKARA - 1

RAHIM YAR KHAN - 1

SAHIWAL - 1

SUKKUR - 1

VEHARI - 1

Total 21 30

Marketing Operations/ Function of Marketing Department:

Marketing operation functions is the very essential tool and it is excellent essence of any business same as this strategy imply by Honda Atlas Company to its authorized Dealer. It is dealing with brand loyalty of Honda products my concern exists between dealers and customers. Honda Atlas also depends on 3S but also facilitating with separately 2S as well (Service and Spare Parts). This offer of facilities Honda Atlas Motor compares to the Total Quality Management style of Honda Atlas Itself. These 3S and 2S always monitor by Honda Atlas itself that what’s going on in which Direction? These 3S and 2s has been facilitating through Dealers. Let we discuss these three elements simultaneously:

Sales:

The HACPL’s Sales Deals by its authorized Dealers. The dealers engaged in providing facilities the customer to buy Honda Brand(s). Honda Atlas Company has given dealership authority approximately sixteen Dealers (cars) all over Pakistan. All of the sales strategies followed by Honda Atlas Itself and it are directly involve and time by time Honda Atlas keep attached with each sector, do analysis the sales, performance of the dealers most importantly after sales, customer satisfaction report. Sales facilities part of Honda Atlas is to facilitate its loyal customer and overcome customer’s ambiguity, buying conflict and provide them maximum information before purchase. Honda Atlas is also very conscious in sales as well as Customers Satisfaction. All the authorized dealerships in Pakistan are a source of customer satisfaction. The after sales are supported by the immaculate service and the availability of spares at competitive prices for every car sold. To facilitate the customers for any assistance they require, Honda Atlas has a separate department, called Customer Relations, at the head office. This department is supported by the subsequent Customer Relations Officers at all dealerships. The purpose of Customer Relations Department and Customer Relations Officers is to enable our customers in getting any sort of help required by them.

Services

The product sold is not means that close the window for customer now, it is beyond that further after sales customer has largely engaged to deal in service and Spare parts aspect. HACPL is a customer service conscious company, for which it is always looking for avenues to develop further relations with the customers who have already purchased the Product. Honda

Atlas considers purchase of any product as the beginning of relations with customers. To prolong this relationship and encourage the customers to keeps on coming to the dealers, providing customer service the reason for this facility is to stress on the importance of periodic maintenance. Periodic maintenance is essential for every existing if this is performed regularly as per the maintenance schedule the car is trouble free and life of car increases by many years.

For these free services the labor is not charged, where as the customer has to pay for only the consumable like engine oil, oil filter, etc. HACPL is providing regular trainings to the dealers' technicians. The trainings cover all aspects of the cars and related Products including the periodic maintenance, diagnostics, trouble shooting and repairs according to HONDA standards. From this we want to facilitate the customers in maintaining their cars in top-most condition and enjoying the comfort and performance of the luxury vehicles they own. It is our endeavor to have uniform service standards made available at all dealerships in accordance with the international Honda standards. We consider the properly maintained vehicles not only to be a source of satisfaction to our customers; they also increase the sale value of their car.

Spare Parts:

The Spare parts element is heavily concern and involved with brand loyalty of Honda cars because cost of spare parts also consider when customer want to buy the car, customers are also price conscious, availability of spare parts and as well as quality of spare parts. Honda spare parts are expensive because they have to import those form Malaysia.

Honda Atlas always follow those strategies which they can gain customer most attention to its brands. Honda Atlas always make possible to be genuine and look genuine. Honda attract its customer in under the statement that “Buy Honda genuine parts from Honda dealers and enjoy 6 month's Honda Warranty, the Honda warranty can vary product to product and contribute to the country’s economy and enjoy the satisfaction of using 100% genuine Honda Parts. But if customers buy the parts from open market; most probably is that customer may be buying smuggled parts and thus committing a moral crime and robbing your country from precious revenue, customer may unable to claim but if customer buy from Honda authorized Dealer so the part will be 100% genuine, customer has no need to buy from open market, the trust between customer and Honda Dealers become long lasting etc. It is the Honda Atlas’ aim to be No.1 in customer satisfaction in all three S, Sales, Service and Spare Parts and two S in the same time.

PRODUCTIONS/ OPERATIONS:

Process Design:

Honda Atlas Cars (Pakistan Ltd. has a separate production department which is headed by Vice President (Production). A Japanese person is currently working on this seat.

The production department has a number of sections such as:

Vendor Section

Engine Section

Welding Section

Maintenance Section

Paint

Vehicle quality control.

These along with some other sections are arranged in four groups, each one headed by a Gm. For Example, there is one GM for welding, paint and maintenance.

Plant Capacity

Currently the plant has the capacity of 35 vehicles per day which is lower than that of Toyota. As for as the production level is concerned, it varies from time to time. It was 15 cars per day when I visited the factory. This shows that the plant is being underutilized. There may be several reasons for this under-utilization such as:

Weak economic condition of the country.

Problems with cotton crop.

High price of Honda Cars.

Decrease in purchase of cars by large companies.

Presence of Toyota

Decrease in the purchasing power of potential customers.

Machinery:

A brief list of machinery used in HACPL is given below:

Boilers

Compressors

Water treatment plant

Ovens (for backing the body of cars)

Spot welding guns.

Two-post lifts

G-SWAT/ B-S / S Side Slip / Shower testers

Important Parts:

Various parts of engine

Brakes

Seats

Lights

Cooling System

Tyres

Rims

Fuel tank

Production Process:

In order to fulfill requirements of widely diversified needs of the market, HACPL has developed its production facilities from a dedicated engineering set up to a highly flexible and wide range production system comprising of following activities Shown in chart.

Production Procedure

1. The production procedure starts from welding. This is done with the help of special machines. In this way the basic frame is manufactured and is transferred to panting section.

2. The painting section is equipped with modern machinery. Here, the process starts with wiping, cleaning and degreasing of frame which is followed by Phosphating and ED coating. Now the frame is backed in special ovens. After backing, following coat are applied:

Base coat

Final coat

Clear coat (for shining)

3. After painting, the frame is shifted to assembly line. Here ornamental parts such as lights are fixed followed by heavy parts like engine, tyres seats, wind shield, etc. The procedures at assembly line can be understood by figures mentioned earlier.

4. After passing through assembly line, the car moves to "vehicle quality department". Here, different tests are applied. Currently, HACPL is using three QAEs (Quality Assurance Equipment) which are mentioned below:

"G-SWAT" ( Geometrical Static Wheel Alignment tester) for alignment.

"B-S testor" for testing breaking force and speed meter.

"S-S testor" for testing side slip:

After applying these test, the car is driven and a 1-km "test course". Here the noise and performance of car a different road conditions are tested. Finally, a "shower test" is applied to find leakages if any.

5. In this final stage, pre delivery inspection (PDI) is made and a sticker is attached. Now, the car is ready for shipment.

Quality Control

A lot of importance is given to “quality control" in HACPL. The personal of HACPL is highly qualified in this regard. When purchase material arrives, thorough checking of that material is made. If any deficiency is found then it is reported. If the deficiencies are beyond the acceptable level then the material is returned to supplier according to terms & conditions of the contract. However, the chances of such happenings are very less because HACPL has very tight purchasing policy and it has no compromise on quality. Similarly, the finished product is tested before delivering it to the customers in order to assure the quality standards. On the whole, the quality control / quality assurance personnel are continuously engaged in improving quality to need the requirements of each customer individually and the market as a whole. HACPL is successfully using "Kaizen" system for quality control. Employees are encouraged to improve quality and reduce cost. Every month, about 20-25 prizes are given on showing good performance. HACPL is ISO 9002 certified. It was the winner of "Best Quality Award for Asia" in 1996, 1997 & 1998.

PLANNING AND DEVELOPMENT:

Currently, Honda Atlas Cars (Pakistan) Limited is not in a position to make major changes in its cars. Only minor changes can be made here and decisions about these changes are made at the top level. Marketing & Production people play an important role in this regard.

Research & Development Department:

The role of research and development is to introduce innovative ways to achieve the objectives especially through production facilities. Unfortunately, there is no research and development department in HACPL. This function is performed by Honda Motor Company, Japan. All major changes in models of Honda cars are introduced there. Employees of HACPL are sent to Japan, where they are trained according to new conditions. Later on, these changes are introduced in the models offered in Pakistan.

Deletion Program:

“Deletion is to replace the imported parts of vehicles with the parts either manufactured in house or purchased through local vender industries.” Honda Atlas Cars (Pakistan) Limited is perusing a realistic and progressive deletion program for indigenization of assemblies, parts and components. This dynamics program is being implemented through in-house assemblies and manufacturing operations, and is being supplemented by vendor development. HACPL is almost same as that of its major competitor, i.e. the manufacturer of Toyota Cars. Efforts are being made by top management to increase this percentage.

Achievement of Objectives through Operations:

The production department of HACPL is playing a vital role in achieving the overall objectives of the company through efficient utilization of resources.

· HACPL is achieving production efficiency through:

Evaluation & improvement of quality control.

Training of production employees.

Modernization of plant and machinery.

· Similarly cost minimization objective is being achieved through:

Deletion program

Avoiding poor quality products, which are a loss for the company. As mentioned earlier, HACPL is achieving excellent quality levels through giving training to personal plus proper use of technology.

Inventory:

Inventory is a stock of any things held to meet future demand. Inventory is created when the rate of receipts exceeds the rate of disbursements. It is depleted when disbursement exceeds receipts.

There are three types of inventory:

Raw material inventory

W.I.P. inventory

Finished goods inventory

The basic objective of any firm is to minimize total inventory cost (ordering & carrying). The same is the case in Honda Atlas Cars (Pakistan) Limited. In HACPL, the whole inventory system is computerized. Following are the advantages of this computerized system.

Updating records.

Providing management reports.

Automating the recording process.

Re-computing decision parameters.

In HACPL, the inventory basis and audit reports are prepared.

Reason for P-System:

1. Administration of the system is convenient because replenishments are made at fixedmintervals; Employees can set aside a day or part of a day regularly to concentrate onmthis particular task.

2. Order for multiple items from the same supplier may be combined into a single purchase order. This approach may result in a price break from the supplier and savesmthe buyer some paperwork, thereby reducing ordering costs, suppliers also may prefer combined orders because all items in the order may be shipped at the same time,mreducing transportation costs and increasing vehicle utilization.

3. The inventory position, IP, needs to be known only when a service is made.

Safety Stock

HACPL maintains a safety stock of 2 to 3 months. The reason for maintaining a safety stock is as follow:

To protect against shortage that occur due to suppliers.

To protect smooth and continuous operations.

In HACPL, the inventory is held in the following forms:-

Inventory of imported parts.

Inventory of local parts.

In order to avoid stock out, they have more safety stock of imported parts as compared to that of local parts.

Shortage of Inputs

There are special warehouse for the purpose. Both imported and local parts are stored here. The boxes of parts are placed at approximate distance and forklifts can easilymmove within the warehouse. The results in convenient movement of parts from warehouse to assembly line etc.

Storage of Output (Cars)

There is no proper warehouse for parking of cars moving out of assembly line. A place has been assigned for this purpose but there is no roof over it. Actually these can are serviced when they arrive at the showrooms of dealers so management of HACPL does not feel any need of having a covered place for these cars.

Aggregate Planning

Aggregate planning is a statement of production rates, work force level and inventory holding based on estimates of customer requirements and capacity limitation.

Production Plans

The production plans are prepared for three months based on the customer’s orders and uncertainty in demand,

Work Force Level

In HACPL, work force schedules are arranged on the basis of production plan. If demand is high, then extra workers can be hired on contract basis or the existing permanent employees can be

employed in extra work to meet the targets. When I visited the factory of HACPL, the daily production was 15 cars. For this reason, there was a single shift except for maintenance department.

Material Management

Material management concerns short-range decisions about supplies, inventories, production level, staffing patterns, schedules & distribution is as follows:

Purchasing:

Purchasing in the management of the acquisition process, which includes deciding which supplies to use, negotiating contract and deciding whether to buy locally or centrally. Purchasing must satisfy the firm’s supply needs and support the firm’s production capabilities. In HACPL, the whole action can be described under following headings.

HACPL imports materials from the parent Honda Motor Co, Japan in the CKD (complete Knocked Disk) form. HACPL also purchases materials from the Local Vendors

Supplier Selection:

HACPL prefer those suppliers who fulfill the following requirements:

Provide best quality material at low cost.

Shorter Lead Times

Provide material to production plant of HACPL. (I.e. provide material at destination).

On time delivery

These are the reasons which forces HACPL to go for local contracting.

Procedure for Returning Of Low Quality Material:

HACPL has its own quality standards regarding materials. HACPL has not any habit of accepting Low Quality Raw Material at low rates. HACPL returns the low quality materials to the supplier according to the terms and conditions of the contract.

Supplier Relations:

HACPL, Vendor Development is mainly entitled with the responsibility of establishing working relationship with all the agencies (Vendors) involved in Supply if materials. Similarly HACPL has formal relationships with the local vendors.

Distributors:

To store the finished products, (Honda Civic & Honda City), HACPL uses both FORWARD, BACKWARD placement. HACPL has a country-wise network of Sales Dealers who are actively engaged in promoting the image of HACPL and its cars. The details of HACPL’s dealers have been mentioned earlier.

Transportation Mode:

HACPL has a habit of using only one mode if transportation (i.e. Highway) for the both inputs and outputs. The logic behind this mode is low cast and flexibility of shipping to almost any location in Pakistan. Currently, HACPL has no transportation fleet of its own. Nearly five transportation companies are performing this function on contract basis. NLC is also included in these companies.

Total Quality Management: (T.Q.M.)

T.Q.M. stresses three principles:

Customer Satisfaction

Employee Involvement

Continuous Improvement

Attaining quality in all areas of a business is a difficult task. It is necessary for an organization to provide its customers with best or even consistent quality products in order to survive in the environment. The success of any business depends upon how accurately the company perceives the expectations of Customers plus its ability to bridge the gap between consumer expectations & operating capabilities. In HACPL the concept of T.Q.M. is more common. This can be explained as follow:

Customer Satisfaction:

HACPL’s employees try at their level best in satisfying the customers & hence stepping forwards the objective of the company. The contribution of Marketing & Production department is very important in this regard. These departments continuously go for the ways to improve the features of existing HACPL’s products and hence satisfying the customers.

Employee Involvement:

HACPL’s management considers its employees a great asset. The employees along with sales dealers are part of the large “Honda Family” and they form an integral part of policies and decisions that help shape the future of the company.

The management of HACPL considers the proposals/Suggestions of its employees up to a great extent. It appreciates the employees in this regard through Monetary or Non Monetary benefits. Management of HACPL put great emphasis on creating and maintaining an enterprise environment in the company that maximizes the interest and motivations of its employees which is very vital to enhance labor productivity and efficiency.

Training of Personnel:

HACPL puts great emphasis on training and development of employees to help them realize their full potential. Employees from all departments especially form production; finance and marketing attend training courses in their respective fields. This has greatly contributed in improving employee’s performance and efficiency at all level.

Continuous Improvement:

The Management of HACPL has a view of continuous improvement in order for the better Utilization of resources and improving Honda brand image in the market. HACPL is trying at its level best to introduce and implement better quality control procedures, redesigning the production process, automating the whole plant etc. Employee’s involvement is playing vital role in this regard.

RESEARCH & DEVELOPMENT DEPARTMENT:

The role of research and development is to introduce innovative ways to achieve the objectives especially through production facilities. Unfortunately, there is no research and development department in HACPL. This function is performed by Honda Motor Company, Japan. All major changes in models of Honda cars are introduced there. Employees of HACPL are sent to Japan, where they are trained according to new conditions. Later on, these changes are introduced in the models offered in Pakistan.

IFE Matrix:

Key internal factors Weight Rating Weighted score

STRENGHTS

Brand Image 0.05 4 0.2

Advance Technology .1 4 0.4

Customer Loyalty 0.06 4 0.24

Strong R&D 0.08 4 0.32

Greater Fuel Efficiency 0.08 4 0.32

Environment Friendly Cars 0.05 4 0.20

Safety 0.03 4 0.12

Smoother Drive 0.02 4 0.08

TQM 0.06 4 0.24

Global Models 0.03 3 0.09

WEAKNESS

Dealership Network 0.1 1 0.1

Costly Spare Parts 0.07 1 0.07

Limited Product Line 0.04 2 0.08

Lack Of Utilization Of Capacity 0.06 1 0.06

Shortage Of Trained Technicians Due To Complex

Sensor Technology

0.03 2 0.06

High Cost Of Production 0.04 1 0.04

Maintenance Cost 0.05 1 0.05

Resale Value 0.05 2 0.10

TOTAL 1 2.77

Stage 2 The Matching Stage

The strategy is defined as the match an organization makes between its internal resources and skills and the opportunities created by its external factors. The matching strategy formulation framework consists of five techniques that be used in any sequence:

The SWOT matrix

The SPACE matrix

The BCG matrix

The IE matrix

Grand strategy matrix.

These tools rely upon information derived from input stage to match the external opportunities and threats with internal strengths and weaknesses. nIn this project, we will be using only the SWOT matrix for the determination of then alternative strategies.

The SWOT matrix

A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:

SWOT Analysis of HONDA Atlas Cars

STRENGHTS

1. Brand image

2. Offering Global models

3. Smoother drive as compare to its competitors

4. Timely new models

5. Decentralized environment

6. Advance Technology

7. Safety

8. Environment Friendly

9. Customer loyalty

10. Highly loyal, committed and motivated employees

11. Greater fuel efficiency

12. TQM

13. Friendly working environment

14. Advertisement

15. Strong human resource

16. Reliability

17. CSR

18. Strong R & D

WEAKNESS

1. Dealership Network

2. Resale value

3. Maintenance cost

4. Costly Spare parts

5. Limited product line

6. Shortage of trained technicians due to Complex sensor technology

7. Lack of utilization of capacity

8. Market share and profitability

9. High cost production.

OPPURTUNITY

6. People’s awareness about Global Warming

7. Customer desire for hybrid and fuel efficient vehicles

8. Increase in technology in automobiles forces customers to return to dealer for service

9. Introduction of ethanol fuel in Pakistan

10. Increase in demand of small vehicles

SO STRATEGY

1. Promotion of products on the bases of environmental

friendliness and fuel efficiency. (S1, O1), (S2, O2, O4)

2. Greater focus on the production of eco - friendly cars. (S6,S8, O2)

3. Availability of trained technical staff at 2 S and 3 S dealers. ( S15, O3 )

WO STRATEGY

1. Increase the dealership networks all over the country. (W1,W6, O3)

2. Availability of trained technical staff at 2 S and 3 S dealers. (W6, O3).

3. Introduction of flexible fuel vehicle and going for product diversification(W5, O4, O5)

THREATS

11. Recession in the economy

12. WTO (World trade Order) opening local markets for global competition

13. Entry of reconditions cars

14. Political instability

15. Tightening monitoring Policy

16. Energy crises

17. Depreciation of rupee against dollar

18. Increase in Petroleum and steel prices.

19. Inflation

20. Declining quality of the infrastructure in the country.

ST STRATEGY

1. Utilize research and development to minimize spare parts price.(S18, T1)

WT STRATEGY

1. Localization of supplies and raw material (W9, W4, T1, T7).

2. Downsizing ( W9, W8, T1)

3. Strict employee policies to contain overhead and unfavorable economic conditions

4. Mass Production

5. Influence and coordinate government institutes to ensure consistent power supply and minimum break down time. (T6,W7)

Stage 3 The Decision Stage

QSPM (Quantitative Strategic Planning Matrix):

In order to reach a decision based on objectivity and priority based analysis, one of the most frequently used techniques is the QSPM. This technique enables us to measure the attractiveness of feasible alternative actions. QSPM objectively indicates which alternative strategies are the best QSPM uses input from stage 1 and matching results from stage 2 analyses to decide among alternative strategies. Like other strategy formulation analytical tools, QSMP requires good intuitive judgment.

In the stage 3 of Honda Atlas Cars, there were three alternative strategies that we found very attractive. The data collected from the external and internal audit, and the matching done from the opportunities, threats, weaknesses and strengths brought us to consensus of selecting these alternative strategies. We selected three strategies in total;

1. Increase in the number of Dealership network

2. Product Diversification

3. Attaining economies of scale

The increase in the number of dealership network was chosen because; Honda had a smallest dealership network against his competitors Indus motors and Pak Suzuki. Honda is unable to access a number of potential customers due to a small dealer ship network. The next alternative strategy that was built with a consensus was to do product diversification. Honda has a small market share as compared to Indus motors and Pak Suzuki. One of the major reasons was the product diversification by its competitors. If Honda is able to do product diversification, it can increase its sales; capture the market share on the bases of strong brand image and customer loyalty. Attaining the economies of scales was another highly preferred alternative strategy that could help the company to increase its income and improve its performance. Honda has done expansion of its company, but it has not been using its plants up

to its required optimal capacity. Due to this the company is facing high cost as well. So if the company mass produces the cars and use the plants to its maximum capacity, it will be able to decrease the cost. The only variables affecting this strategy are the marketing promotions done by the company, and sale of the manufactured cars.

Alternative strategies Increase in the number of Dealership network Product diversificat ion Economy of scale

External factors Wght AS TAS AS TAS AS TAS

Opportunities

11.People’s awareness about Global Warming 0.05 1 0.05 4 0.20 2 0.10

12.Customer desire for hybrid and fuel efficient vehicles 0.08 3 0.24 4 0.32 2 0.16

13. Increase in technology in automobiles forces customers to return to dealer for service 0.1 4 0.40 3 0.30 1 0.10

14. Introduction of ethanol fuel in Pakistan 0.02 3 0.06 4 0.08 2 0.04

15. Increase in demand of small vehicles 0.05 3 0.15 4 0.20 2 0.10

Threats

21.Recession in the economy 0.05 2 0.10 3 0.15 1 0.05

22.WTO (World trade Order) opening local markets for global competition 0.02 2 0.04 4 0.08 3 0.06

23.Entry of reconditions cars 0.13 -- -- -- -- --

24.Political instability 0.05 -- -- -- -- --

25.Tightening monitoring Policy 0.06 4 0.24 3 0.18 2 0.12

26.Energy crises 0.1 4 0.40 2 0.20 1 0.10

27.Depreciation of rupee against dollar 0.1 3 0.30 4 0.40 2 0.20

28. Increase in Petroleum and steel prices. 0.09 1 0.09 3 0.27 4 0.36

29. Inflation 0.07 2 0.14 4 0.28 3 0.21

30.Declining quality of the infrastructure in the country. 0.03 -- -- -- -- -- --

Total 1

STRENGHTS

1. Brand image 0.1 4 0.40 3 0.30 2 0.20

2. Advance technology 0.1 2 0.20 4 0.40 3 0.30

3. Safety 0.08 1 0.08 4 0.32 2 0.16

4. Environmental friendly 0.07 1 0.07 4 0.28 2 0.14

5. Customer loyalty 0.06 4 0.24 3 0.18 2 0.12

6. Strong R&D 0.1 1 0.10 4 0.40 3 0.30

7. Fuel efficiency 0.09 1 0.09 4 0.36 2 0.18

8. Total quality management 0.05 3 0.15 4 0.20 2 0.10

9. Timely new models 0.06 4 0.24 3 0.24 1 0.06

WEAKNESS

1. Dealership network 0.08 4 0.32 2 0.16 3 0.24

2. Costly spare parts 0.05 1 0.05 3 0.15 4 0.20

3. Market share and profitability 0.08 3 0.24 4 0.32 2 0.16

4. Limited product line 0.03 1 0.03 4 0.12 2 0.06

5. Shortage of trained technicians due to Complex sensor technology 0.05 3 0.15 2 0.10 1 0.05

TOTAL 1 4.57 6.19 3.87

Conclusion:

The weights taken for the following factors were taken from the EFE matrix and IFE matrix.

The rating was done on the bases of intuition, brainstorming and consensus at the end among the group members.

After the comparison of above mentioned strategies and their total attractiveness score it is more appropriate and feasible for an organization to follow the product diversification strategy.

In this context, the company will ha to put new production plants in order to produce new cars. This will include the arrangement of heavy budget and extensive marketing of the new products. Since the monetary policies of the country are tight at present, the company should arrange the capital in form of equity by floating the shares in the market or wait for the interest rates to fall down as the economic and inflationary situation of the country stables.

The products will contain product line of small cars i.e. 800 c.c. and below.