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Table of contents:

Introduction:

Pestle analyses:

Political and Legal:

Economical and Socio cultural:

Technological:

SWOT:

Strengths:

Weaknesses:

Opportunities:

Threats:

Porters five forces:

Intensity of rivalry:

Bargaining power of customer:

Bargaining power of supplier:

Threat of new entrants:

10

Threat of substitutes:

10

Strategy formulation and implementation: 10


Conclusion:
References:
Introduction:-

11
11

Pak Suzuki Motor Company (PSMCL)

is a Pakistani affiliate of Japanese

automaker known as Suzuki. It is the largest car assembler in Pakistan


leaving behind giants like Toyota and Honda. It was founded in 1983 after an
agreement between government of Pakistan and Suzuki.
Net profit is stated in billion of rupees. As you can see that net profit jumped
from 2012 to 2013 so rapidly because they introduced Swift. This product
made headlines with its sale and ultimately it caused the profit of Suzuki to
fluctuate in a positive way. Suzuki Pakistan has the highest market share in
Pakistan for a consecutive fourth year. They have been very wise in that
area. They dont have the kind of competitors their sales of small cars. While
coming to big cars they have to compete with Toyota and Honda.

1.92

1.85

0.98
0.79

2014

2013

2012

2011

Pestle analysis:Pestle analysis consists of political, economical, socio-cultural, technological,


legal and environmental analysis. This is the analysis of the external
environment as we can see that above all given analysis are external. Pestle
analysis is then further used to identify strengths and weaknesses of any
given firm. I have selected Suzuki Pakistan. Lets start with the political
analysis first.
Political:As we know that we have not faced very stable and ideal condition where
investors would happily invest. In fact due to terrorism and other reasons it
has become a major headache for the Govt. of Pakistan to attract investors.
Suzuki Pakistan is one of the few automobile companies who continued to
keep its plant here. First time in the history of Pakistan any democratic
government completed their five years without the martial law being applied
or any other hurdle. So political environment is traveling towards a stable
state but you never know, after all it is Pakistan. Suzuki Pakistan has good
relations with government of Pakistan and most importantly at this time
government would not mind any kind of investment in the country in fact
they might appreciate them. So Suzuki Pakistan has a clear way as we see
political environment. However there could be one issue and that would be
political irregularities or in simpler words corruption. This is the area where
our government needs to care and Suzuki Pakistan can also fall prey to this
issue.
Legal:As all countries, Pakistan also has some legislation about each sector. But
like

developing

countries

it

is

hardly

being

imposed

by

authorities. Only due to corruption government encourage smuggling


and black marketing. When anyone supported by government or give

more commission to Govt. get inside in the market and they have very
soft behavior by government for any legal action. Such unethical
activities destroy all law and legislation.
Legally I dont think so that there are going to be any hurdles for Suzuki
Pakistan as long as they are abiding every law.
Economic:Pakistan, an impoverished and underdeveloped country, has suff ered
from decades of internal political disputes and external ongoing conflict with
India. We have an unstable and very delicate economy. Economically we
have faced many shut downs and other issues for example the crisis created
when we declared ourselves as a nuclear state and our relation with other
countries became intense and we had to face many bans including export
and import bans. Our foreign reserves crashed. We dont have that
bargaining chip that India has which is population. Our population is
increasing rapidly and that is not a positive thing but India has cashed their
population. World industry is shifting towards India due to large market.
However, IMF approved the government
policies, encourages by diff erent foreign assistance and renewed access
to global market since 2001.By following these policies government
succeed to reverse the situation of economy during last five years.
Socio cultural:Usually developed countries have the sense of these things. If we discuss
this in the context of society then we can easily summarize this. Developed
countries strive for their rights. If some organization is polluting the
environment or doing something that in any way would harm society they
would properly stand against and they will not relax until they have their
rights served. But here in Pakistan we do not have that. Here we mostly are
unaware of our rights so this could be a positive thing for not only Suzuki but
for all other automobile companies doing business in Pakistan. Suzuki

Pakistan have been here for almost 33 years now and only problem that I see
is that they have not entertained our nation as they others in sense of
variety of cars. They simply have kept us in second shape. That is another
area where they need to improve.
Despite this that our country is not as aware as developed countries Suzuki
Pakistan has established many corporate social responsibility projects and
they also have urged other competitors to participate by setting an example.
Technological:Suzuki Pakistan has been here for almost 33 years now and they can use
that as an advantage. Pakistan as a country has not been exposed to new
technology like many other countries have so here Suzuki Pakistan can show
a bit of innovation and lead the automobile industry instead of competing it.
Right now I dont think so that Suzuki Pakistan is even a fierce competitor.
Suzuki Pakistan has their market share and they have their customers but
they are also selling Mehran. I dont know if Pakistani nation have done
something bad to Suzuki that they are not introducing new models. After a
long time they finally introduced Swift but that is not enough. In the recent
year 2014 Suzuki Pakistan introduced three products to its Pakistani
customers. One of them is Motor bike. This is also a good step that they are
increasing their product line. But still this is one of the very major areas
where Suzuki Pakistan needs to improve them.
SWOT Analysis:SWOT analysis consists of strengths, weaknesses, opportunities and threats.
We will analyze these in the next phase.
Strengths:-

If we take a look at the strengths of Suzuki Pakistan we will encounter many


of them. Their presence in Pakistan for so long in Pakistan has given them a
unique strength but now lets discuss their actual strengths.
High market share is a one like I said their presence for so long has been
very beneficial for them. They have taken advantage of this in terms of high
market share. Pak Suzuki motor has highest market shares due to low price
vehicles as they are assembled locally. The target segment of Pak Suzuki is
middle class and growing middle class. The first vehicle that most people buy
in Pakistan is Suzuki. Advantages of buying Suzuki vehicle are increase in
demand, it is economical, it has good resale value, and its spare parts are
easily available at cheaper rates and better fuel efficiency as compared to
other vehicles. Pak Suzuki motors has well defined and bureaucratic
organizational structure with strong management and skilled work force. Pak
Suzuki motors also have well managed and highly competitive staff.
Pak Suzuki motors have vast distribution channel with highly maintained
supply chain and large market size to operate. Strong dealers network in all
over Pakistan and reliable after sales service are the strengths of Pak Suzuki.
Pak Suzuki provides one window solution for all auto related problems under
one roof. Pak Suzuki along with selling vehicles also provides various other
auto related services. These services are Suzuki Finance, Suzuki Insurance,
Suzuki Certified Used Cars and Suzuki Extended Warranty.
Pak Suzuki gives loans on EMI (Easy Monthly Installments) as decided by the
buyer

for

the purchase of Suzuki vehicle. Suzuki Insurance service is an auto insurance


arrangement forSuzuki vehicle with unique features. Pak Suzuki also deals in
sales of certified used cars and also provides extended warranty on sold out
vehicles. It is of great value for customers and of great advantage to Pak
Suzuki. Availability of all these services under authorized dealership of Pak
Suzuki all over Pakistan is strength and it resulted an increased in goodwill
and brand loyalty.

Weaknesses:Pak Suzuki locally assembles vehicles at assembly plant using imported and
locally manufactured parts. The scarcity of locally available raw material and
less production of most parts at local level result in increase of costs. Over
the years, Pak Suzuki has failed to assemble and manufactures a complete
vehicle at local plant. Pak Suzuki deals their clients on the basis of project to
project contract rather forming a long term partnership. It does not ensure
Pak Suzuki to provide vehicles to the same client in future. In simple word, a
client once gained is not secured for future deals. Though Pak Suzuki has one
of the largest distribution networks in Pakistan still it is notable to form
dealership network in sub urban and rural areas.
The focus of Pak Suzuki on simple, economical and user friendly vehicles has
made it less adaptable to latest and advanced technology. It is less focused
on exterior design and moron keeping simple like user friendly vehicles with
less advanced and less complicated handling. It has also not manufactured
many automatic vehicles as compared to its competitors. Suzuki vehicles
also have a negative image of investing les on safety and security of
passengers. There is also no international standard training institute of
technical educational available for its employees and it sends most of
employees abroad to undergo certain trainings. Pak Suzuki Pakistan has also
failed at some level to forecast the external factors and has underestimated
the market. Suzuki launched SWIFT to counter imported Toyota VITZ as VITZ
was capturing the market of 1300 CC small cars. The Go Varmint has a tax
policy for automobiles on the basis of Horse Power. Though SWIFT countered
the demand for VITZ to some extent but it lost market comparing to Honda
city 1298 CC. As the tax on HONDA CITY was lower than Suzuki SWIFT due to
less horse power the consumer turned to Sedan Car, HONDA CITY. SWIFT
faced a decline of 1% in its sales the following year. Now Pak Suzuki is
reducing the horse power of SWIFT to counter the tax policy effect.

Recently Pak Suzuki has launched a luxury car KIZASHI at an overwhelming


price

of

million

PKR.

Now

the

consumers

in

Pakistan

have

other better options of buying Audi or BMW at a cheaper price as compared t


o it. Pak Suzukidealers predict it as a disaster and are pessimist about this
new product.
Opportunities:Automobile market in Pakistan is full of opportunities and Pak Suzuki has
grabbed this opportunity rightly. Though Pak Suzuki holds maximum share in
the market still it has vast areas to penetrate and explore. The growing
middle class and increasing purchasing power has led to an increase in
demand for cars. Pak Suzuki has an opportunity to grab this growing demand
by positioning its products in context to consumer demand.
Introduction and innovation in product line is a vast area to explore for Pak
Suzuki. Producing Luxury vehicles such as KIZASHI has made Pak Suzuki to
penetrate into market of Luxury cars. Pak Suzuki is already producing EcoFriendly vehicles and it will turn its few products into Hybrid Cars. The
ongoing adverse security situation in Pakistan has led to increase in demand
for security vehicles mostly used by security agencies. Pak Suzuki has an
opportunity to produce security Vehicles such as bullet proof vehicles, pickup
trucks and armored vehicles.
Light and Heavy Duty vehicles such as trucks and buses have huge growth
potential in Pakistan. In the past, Pak Suzuki has exported spare parts and
assembled vehicles to Bangladesh. It has an opportunity to explore other
international markets and increase its exports to other countries as well. The
Companys long term plans inter -alia includes tapping of export markets.
Pak Suzuki can liaison and sign partnership with public and privates sector
institutions for supply of vehicles. In the past, Pak Suzuki sold Cultus, Bolan
and Ravi to government institutions on large scale. Similarly, Pak Suzuki has

also signed a contract with government to provide 50,000 units of Suzuki


Mehran and Suzuki Bolan for Apna Rozgaar Yellow Cab scheme.
Pak Suzuki provides various financial, insurance, repairing and customer care
after sales services for customers. As the security situation is worst in
Pakistan,

Pak

Suzuki

can

also provide tracking and security services for its customers. Providing securi
ty services will increase trust of customers on Pak Suzuki. The Company also
contributes to auto parts industry for localization of imported parts as low
localization has made the industry vulnerable to adverse movements in the
exchange rate, which impacted production costs and retail prices. Pak Suzuki
continues to pursue localization in order to reduce the cost of product and
keep the prices competitive besides saving of foreign exchange.
Threats:Despite being the leader and largest shareholder of Pakistan automobile
industry, Pak Suzuki is also facing several threats from local and international
competitors. Tough competitors like Toyota and Honda as well as import of
used Japanese cars are a serious challenge for Pak Suzuki.
The changing government policies are also badly affecting Pak Suzuki.
Imposition of heavy taxes and high import tariff has caused increase in
production cost and declined in demand. Devaluation of Pak Rupee against
US dollar and Japanese Yen as well as unstable economic conditions is
causing serious threats to Pak Suzuki. Inflation and smuggling of spare parts
are a result of bad governance and mismanagement of government which is
a threat to auto sector.
The overall security and political situation in Pakistan is also less favorable
for automobile companies such as Pak Suzuki. Pak Suzuki provided the
vehicles for Yellow Cab and Apna Rozgar Scheme to the government but

allegations and criticism on this project also led to loss of goodwill of Pak
Suzuki.

Porters five forces analysis:Intensity of rivalry:I will differentiate Suzuki Pakistan in three parts and their rivalry as well. First
part deals with their small cars. If we take a look we will find out that Suzuki
Pakistan dont have very strong competitors or in some cases no competitors
at all. Second part is about their dealings with big cars where they have to
compete with Honda and Toyota. Third part is that they compete in motor
bikes where they face many competitors. Because of their minor competition
in small cars they have the highest market share.
Bargaining power of customers:
Since Suzuki is the largest in market share so interesting fact is that they
have to face the most bargaining power of customers. Because their
customers are more than others so they have the threat. But lets come to
reality they are selling their 1983 model even now with minor changes so
what bargaining power customers could possibly have.
Bargaining power of suppliers;Suzuki assembles here so they have a weaker side here. Since raw material
is scarce so here suppliers can use their bargaining power. In this case they
might have to increase their prices or decrease their profit. In both cases it
could be bad for Suzuki Pakistan.

Threat of new entrants:If we analyze Suzuki Pakistan they had to face some competition from new
entrants. For example in most recent years FAW and alto they entered in the
race of small cars. Otherwise if we take a look at the future they dont have
to worry much because usually high investment businesses like automobiles
face few new entrants maybe few in their lifetime. Like in last century Ford
and GMC faced Toyota.

Threat of substitutes:In this area Suzuki Pakistan doesnt have to worry much as in other models.
In Pakistan there are not much substitutes available for the products of
Suzuki Pakistan accept few. So threat of substitutes is there but not with the
intensity of other models. Swift their leading model in 2013 faced
competition from Toyotas Vitz. Similarly Suzuki bikes have competition but
their other products are easy going.
Strategy formulation:
There are few areas where Suzuki Pakistan needs to formulate new
strategies. Based on my analyses so far Suzuki you could say that Pakistan
have been dealing with those old models since they ventured with the
government of Pakistan. So they need to change that. Second they need to
overcome their threats and weaknesses. They also need to improve in their
advertizing. In the past they have been the part of many government
schemes so they also need to be aware of upcoming government schemes.
Strategy implementation:-

The part where Suzuki needs to put effort is innovation and creation. For the
past 33 years they have been feeding Pakistan with the same old model so
they need to change that. They need to provide this nation with new models
and they should discontinue their oldest model. They should initiate a new
marketing plan in which they should provide cars for everybody. They should
participate in big competition by competing with Honda and Toyota.
Conclusion:I will conclude my assignment on few points. Suzuki Pakistan lacks in major
areas where world has progressed like innovation. Despite being good at
market share they have not been able to cope with their weaknesses. They
have not faced competition that could be the one reason for their survival for
so long. They competed with Toyota as they introduced Swift. They have
immense opportunities in area like motor bike. They should increase their
operation in the production of bikes. They follow cost leadership so that could
be a good thing. They have faced threats and can face threat in future
regarding political situations. I mean they have been here for 33 years so ups
and downs are must. Recently their introduction of KIZASHI is a good step
towards moving on so they should keep doing that. Price of KIZASI could be a
problem for their customer but they have matched with quality.
References:
www.paksuzuki.com.pk
World of cars (2007)
Neihon keizai (Tokyo)
Express tribune
New Yorker
Rise of Suzuki (2005)

Carpool (2011)
www.we.com.pk
ministry of commerce pakistan