National College of Business Administration & Economics

Final Project
Of
Strategic Management

Presented By:
Muhammad Rizwan Arshad------------------MBA-4-Weekend
Asim Pervaiz--------------------------------------MSC-4- Weekend
Abdul Rehman----------------------------------- MSC-4- Weekend
Bilal Saeed---------------------------------------- MSC-4- Weekend

Presented To:
Dr Ishtiaq Ishaq

Executive Summary:
This report was commissioned to analyze and discuss the application of the strategic management
process on Sohrab the cycle and motor Cycle manufacturing organization of how they have done
its strategic analysis, the way of them formulating strategy and implementation of strategy.
Sohrab's past and present business strategies are broke down to show how the company has
reinvented and re-established itself. At the birth of Pakistan there was not a single factory in the
country. In 1952 shortage of foreign exchange started creating difficulties for the importers. Giving
careful though to the problem, the shop owners of Nila Gumbad chalked out a plan to establish a
bicycle-manufacturing factory within the country on co-operative basis. Initially, only a few spare
parts of bicycles were manufactured locally and about 90% spare parts were import from abroad.
Then sohrab started his business and Sohrab Pakistan Limited have following 12 departments in
organizational structure. Despite the high sales company is facing loss from last few years after
when group purchased it. Loss per share for third quarter 2011-2012 is RS 7.8. Other financial
indicators are not very motivating.

Company must understand the importance of their employees and must establish more employee
friendly environment. Last but not least company must work to decrease the financial cost and
debt burden of company.

Although there were many problems which I have identified over there and I have also given
suitable solutions to resolve them but I must conclude my report by saying this was the best place
for me to learn and to apply my mind against the current procedures if the company.
Sohrab Pakistan is an important part of Rustam group. Despite some negative aspects about way
of managing employees, Over all company is organized all required departments with proper
qualified employee are present except HR. During my short period project at Sohrab Pakistan I
understand the difference between real world business and academic.

Introduction of organization:
At the birth of Pakistan there was not a single factory in the country, which manufactured bicycles
and their spares. Taking advantage of the situation, some major importers brought in bicycle from
abroad and such imports were passed on for sale to retailers most of whom were located in
Lahores major market in Nila Gumbad area.
In 1952 shortage of foreign exchange started creating difficulties for the importers. Giving careful
though to the problem, the shop owners of Nila Gumbad chalked out a plan to establish a bicycle-
manufacturing factory within the country on co-operative basis. As such 22 persons got together
and laid the foundation of a co-operative society. Its first meeting was held on 17th July 1953,
later, on 8th September 1953, the society was registered under section 9 of Co-operative societies
Act II of 1912.
As stated above the society was registered to provide mutual help and benefits to its founding
members. According to the rules of the society, its controlling powers lay with its general body.
By the grace of God since its inception to this day, elections of the society are held punctually.
The society has been functioning successfully all along is because of the fact that its members take
deep interest in its working. Elections of its working committee and Board of Directors are held
new after every three years. Since the Directors also happen to be the owners, they take decisions
for the betterment of the society with full sense of responsibility.
Initially, only a few spare parts of bicycles were manufactured locally and about 90% spare parts
were import from abroad. With the passage of time, the situation started improving and today
almost 98% bicycles spare parts are being manufactured in house or through vendors. The credit
goes to the society that is providing spares regularly. To all the bicycle-manufacturing units in the
country to produce finished their goods. The success of the society can be viewed by the facts and
figures enumerated below.
Organizational Structure:
Sohrab Pakistan Limited have following 12 departments in organizational structure.

1. Accounts
2. Finance
3. Procurement
4. Internal Audit
5. Administration
6. Electrical
7. Mechanical
8. Production
9. Store
10. Laboratory
11. I.T

The number of its members has increased from 22 to 228.

 The fixed capital, which was initially of Rs- 22,000/- has grown up now to the tune of Rs-
67,670,000/-.
Area of the Factory has increased from 3 1/2 Kanal to 25 Acers.
In the beginning, there were a few workers in the factory, while the factory has 2,300
workers now.
The production of factory has increased from 5 bicycles per day to 2,000 (approx)
bicycles/Day.

Mission & Vision Statement

Mission Statement:
The philosophy of PCICS Ltd is to provide excellent transportation to the common man at easily
affordable prices and to provide total satisfaction in all its spheres of activity.
Vision Statement:
The main aim of Society is to establish, undertake, set up and manage an industry or industries
for the purpose of manufacturing complete Bicycles, Motorcycles, Automotive Vehicles, Electric
Fans, Refrigerators and Air Conditioners and other industries, their spare parts and allied items
and other engineering goods connected with the Cycle, Motorcycle, Automotive Vehicles and
Electric Fan, Refrigerator and Air Conditioner and other industries and primarily to distribute
them among the members of the Society for their personal use or sale / disposal in the manner as
provided in Bye-Law No. 12 (c).

Strategic Analysis
Corporate Level Strategy:
As we know Corporate level strategy is concerned with the strategic decisions a business makes
that affect the entire organization. Financial performance, mergers and acquisitions, human
resource management and the allocation of resources are considered part of corporate level
strategy.
Business Level Strategy:
This is done through Business-level strategies. Business level strategies detail actions taken to
provide value to customers and gain a competitive advantage by exploiting core competencies in
specific, individual product or service markets.
Functional Level Strategy:
Functional level strategy is a response to operational level strategy. It advocates for the business
to see its management decisions as specific to a functional area of the organization, such as
marketing, human resources, finance, information management and public relations.
SWOT Analysis
Strength:
First mover advantage
Part of a bigger industry group
Market leader in industry
Different approach towards marketing and sales
Capacity to produce 26000 cycles daily
Have well trained and expert employees
Trust worthy brand name all over the Pakistan
Have good and old relations in international market and need less efforts to make imports.
Have sufficient storage space for inventory.

Weaknesses:
Safety issues in the factory as once cane knives came out of the machine.

Salary package of lower staff is less as compared to emerging competitors.

Underutilization of capacity because of many reasons

High fixed cost of salaries plant etc. although production seasons

Have adverse debt to equity ratio 1.75.

Financial cost is an extra burden as fixed cost.

Departments boundaries are not clear at head office.

Still in old age of paper of work rather than IT use.

No way to motivate of employees

Losing market share adversely

Opportunities:
Move to other products like bike and rickshaw
Company can add more features in their products
Rely on their own spare parts and raw materials
Company is allowed to export so decrease fixed cost
More focus on marketing plan to increase sales

Threats:
Biggest problem is to people switch to bikes,
Brand position is going to weak
Import of spare parts from Korea is too expensive
Regulations changing and new taxes
New competitors with good quality in market

EFE Matrix:
EFE Matrix is an analytical technique related to the SWOT analysis. EFE is an acronym of the
External Factor Evaluation. EFE Matrix evaluates the external position of the organization or its
strategic intent. The evaluation process:
Opportunities:
1. Move to other products like bike and rickshaw
2. Company can add more features in their products
3. Rely on their own spare parts and raw materials
4. Company is allowed to export so decrease fixed cost
5. More focus on marketing plan to increase sales

Threats:
1. Biggest problem is to people switch to bikes,
 2. Brand position is going to weak
3. Import of spare parts from Korea is too expensive
4. Regulations changing and new taxes
5. New competitors with good quality in market

IFE Matrix:
IFE matrix means Internal Factor Evaluation Matrix; is a popular strategic management tool for
auditing or evaluating major internal strengths and internal weaknesses in functional areas of an
organization or a business. IFE matrix also provides a basis for identifying or evaluating
relationships among those areas.
Strength:
1. First mover advantage
2. Part of a bigger industry group
3. Market leader in industry
4. Different approach towards marketing and sales
5. Capacity to produce 26000 cycles daily
6. Have well trained and expert employees
7. Trust worthy brand name all over the Pakistan
8. Have good and old relations in international market and need less efforts to make
imports.
9. Have sufficient storage space for inventory.

Weaknesses:
1. Safety issues in the factory as once cane knives came out of the machine.

2. Salary package of lower staff is less as compared to emerging competitors.

3. Underutilization of capacity because of many reasons

4. High fixed cost of salaries plant etc. although production seasons

5. Have adverse debt to equity ratio 1.75.

 6. Financial cost is an extra burden as fixed cost.

7. Departments boundaries are not clear at head office.

8. Still in old age of paper of work rather than IT use.

9. No way to motivate of employees

BCG Matrix:
The growthshare matrix (aka the product portfoliomatrix, Boston Box, BCG-matrix,
Boston matrix,Boston Consulting Group analysis, portfolio diagram) is a chart that was created
by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyze
their business units, that is, their product.

In star products according to BCG Matrix they have a standard cycle 22 & 24 its sales
is very high its production is high. Its market growth is high and relative market share
also high it is our star product.
Moto cycle JS 70Cc Sohrab is falls in Cash Cows because its market growth rate is low
and relative market share is high.
Question mark products of Sohrab is chain wheel Driven cyclovan heavy dusty because
its market growth rate is high but reletive market share is very low.
Dogs product are fancy bicycle. Because people like china cycles. Our market growth
rate in this category is low and reletive market share is also low.

TOWS Matrix:
TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS and SWOT are
acronyms for different arrangements of the words Strengths, Weaknesses, Opportunities and
Threats. In both cases, this analysis results in a SWOT (or TOWS) Matrix like the one shown
below: Strengths. Weaknesses.
Quantitative Strategic Planning Matrix:
Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach
for evaluating possible strategies. QSPM provides an analytical method for comparing feasible
alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation
analytical framework.
Porters Five Forces Model
As we know Porter's five forces analysis is a framework for analyzing the level of competition
within an industry and business strategy development. It draws upon industrial organization (IO)
economics to derive five forces that determine the competitive intensity and therefore the
attractiveness of an industry.

Competition is increasing day by day china is very popular in this industry there products
are spreading all over the world. This is a big threat of new entry in the market for
Sohrab.
 Bargaining power of buyer is very high because of a huge competition. Customers always
claims for pricing which is really matter in the market. Our production techniques and
technology is not comparable with our competitor.
As we know Sohrab industry is producing cycles, motor cycles, tricycles, exercisers etc.
but same products from various companies are also now available in the markets which
are very high threats for Sohrab.
Sohrab industry is not meeting the market demand because his production system is not
good. Techniques and production system is very old. Competitors list is alos very long in
the market. Customers have many choice.
Technology is changing day by day. Traditional organization moving toward latest era.
But Sohrab is still in old manual production.

Chart of Strategic Business Unit(s) of this Organization

As we know a relatively autonomous division of a large company that operates as an
independent enterprise with responsibility for a particular range of products or activities.
"These strategic business units are responsible for their own profit or loss but are answerable to
the top management"

As we know Sohrab is responsible for their own profit or loss but are answerable to the top
management. There are some of problem in this organization regarding strategic business unit.

They are unable to define their market size. Production is very low as per the market
requirement. They are targeting only his old clients and dealers.
Sohrab is unable to find opportunity because of poor management system and traditional
organization setup.
Organization is well known about customer needs assessments. But unable to fulfill this
because of poor management and poor policies and traditional methods.
 Its over heads and cost structure is not well defined. Company is follow traditional
structures. Not focusing in costing minimization. Productions methods are old.
As Sohrab has above 200 shareholders members. Management system, production
system, almost all the departments are working nonprofessional. But gross profit and net
profit mentioned in annual reports.

Issues in Current Strategies:

Although sohrab Pakistan was the part of bigger group one of the most respectful group of
Pakistani business community. Sohrab Pakistan have sufficiently developed pool of customers.
Also due to low production and high demand of bikes in Pakistan from last few years, Customers
Company is doing well when we talk about list of customers, company is selling thousands of
items daily and exporting it to foreign customers in US $.
Despite the high sales company is facing loss from last few years after when group purchased it.
Loss per share for third quarter 2011-2012 is RS 7.8. Other financial indicators are not very
motivating
During my project at head office of Sohrab Pakistan I have find out some areas and problem that
must be consider.

1. In any company employees are the key success factor. But in Sohrab Pakistan employee
satisfaction level is extremely low during my conversation with several employees all of
them wanted to change their job. In office when I saw the computer screen almost every
worker was surfing on job searching websites. The major reason behind this low motivation
is low salary package and slow promotion opportunities. Most of the workers with B.com
IT qualification in Accounts & Finance department are getting RS 8000 monthly salary.
Employee with the MBA degree and 8 years experience in the company is getting RS
29,000. Company is even not taking care of extrinsic motivation of their employees. Then
how they can expect employee involvement and creativity.
2. As long as organizational culture is concerned; there are values and culture of the office.
But to me it never looks like a public limited companys head office. It looks like a
traditional old 70s organization of sub-continent which never accepts modern day
globalization. There is no dress code or other implications. I think it is not a good impact
for a professional customer or a strange one.
 3. Imporient Group whose part is Sohrab Pakistan having two More companies including
Sohrab Pakistan whose products are exported to foreign customers but what I find out they
even not aware of Hedging techniques like forward options and forward contracts to
minimize the exchange rate risk. They are not doing anything to minimize their currency
exposure. Although PKR is depreciating against dollar they may be better off by not going
into forward contracts but in case of imporient chemicals whose business 100% depends
on imported products is badly affecting the financial condition of the group.
4. Financial statements for the 9 months show some big problems for Sohrab Pakistan. First
financial cost is major expense head in income statement of financials. Financial cost for
ninth month ended is Rs. 138,948,764 and this amount converted the operating profit of
Rs. 59,466,184 into Net Loss of RS 73,745,266 which is resulted Loss per share of RS
7.80.
5. If we consider the consolidated balance sheet for the third quarter ended it is clearly
showing unfavorable Current ratio of 0.74. companys Debt to equity ratio is 1.757 this
shows the companys aggressive attitude to support its growth potential but now company
is bearing the opportunity cost in the shape of high financial cost expanse which is the
biggest reason for loss.
6. Companys accumulated loss is Rs 866,711,651 the reason to show all figures is that
finance department is not aware of the importance of financial tools. They are simply going
where condition are taking them.
7. One of the employee who is in charge of internal audit asked me a question about bad
current ratio and still company need cash what should he do. I reply only go for long term
debt and try to increase your current ratio but he said I would simply change the amounts
and make current ratio better in books and get loan. That day I oversee the financials and
find out burden of debt on company. This shows mental capability of employees at Farid
sugar mills.
8. No HR department is present in company.
9. The head office is situated in Lahore but usually customers are in rural Punjab, Sindh,
Baluchistan, KPK so it is a bigger problem to transport products which then increase cost
of company.

Proposed Recommendations
 1. First of all make HR department. Because human asset at baba Farid need extra care all
employees at baba Farid including sales person, accountants etc are experienced as well as
educated to do their work. But if company develop proper HR department they will make
proper payroll system and set proper incentive system as compare to other competitor sugar
mills in Pakistan. With the help of extrinsic reward company can increase the motivation
as a result turnover rate will decrease and cost on hiring and training will decrease also.
2. Company needs to be professional and there are things in culture that must be eliminated
to make the environment more competitive and professional. Like dress code must be
developed and implement.
3. To avert the exchange rate risk company may consider opting forward options or forward
contracts. This may minimize the realization loss in financial and save money.
4. One thing they have to make clear that taking debt from banks is not always the solution
to support growth potential. The company is facing the result of taking too much loan. All
ratio are adverse and company to my point of view need to better the debt to equity ratio
because 1.75 is an alarming situation for any finance person.
5. Company must decrease its debts in order to decrease the financial cost. Company may
issue new stocks there is a tradeoff between control and profit. Current few shareholders
must understand the need of new stock issuance. Issuing new stock with in some limits will
not affect the decision making power or control within organization.
6. Hiring more educated employee may help making better culture.
7. They have to make plans to made factories in other areas of Pakistan where their sales are
more like southern Punjab, Rural Sindh etc.

Conclusions:
Sohrab Pakistan is an important part of Rustam group. Despite some negative aspects about way
of managing employees, Over all company is organized all required departments with proper
qualified employee are present except HR. During my short period project at Sohrab Pakistan I
understand the difference between real world business and academic. But now I can say that all
concepts that we learn during MBA program have application.

The GM Finance and exports executive were very kind and open to share their work and they have
shared lot of their experiences and practical knowhow of the business. From day one they gave me
important documents to see specially bank statements, tax documents of customers. Each new day
was a great learning for me in the form of some new and interesting tasks. My internship at Sohrab
Pakistan Head Office really gave me the real time sense of workplace. The staff was very helpful
and kind. They always appreciated my work and always guided me if I was facing any problem.

Now I know how to maintain proper files and understand every document matters and I knew the
need to maintain the copy of every document. Now I can operate office equipment including photo
copier. Importance of income and sales tax clear to me when I prepare list of tax deduction at
sources and e-filling of tax. Exports documentation was the most interesting task that I did during
my project.

In the end according to my point of view company must understand the importance of their
employees and must establish more employee friendly environment. Last but not least company
must work to decrease the financial cost and debt burden of company.

Although there were many problems which I have identified over there and I have also given
suitable solutions to resolve them but I must conclude my report by saying this was the best place
for me to learn and to apply my mind against the current procedures if the company.