SKF Pakistan (Pvt.

)
Ltd.

Business Plan
Submitted By:

Saad Mahmood MBA-FA08-124

Madiha Shah MBA-FA08-171

Syeda Rida Fatima MBA-FA08-148

Submitted To:

Miss Faiza Rehman

 CONTENTS
Page
1. Company Description 3

2. Product Line 4

3. Organizational Chart 4

4. Executive Summary 5

5. Vision/Mission 6

6. Historical Background 7

7. Campaigns 8

8. Industry Analysis 10
8.1 Competitors
8.2 Company Life Cycle
8.3 External Envoirment
8.3.1 Technological
8.3.2 Socioculture
8.3.3 Economic
8.3.4 Legal/Political
8.3.5 International

9. Company Practices and Analysis 12

9.1 Internal Envoirment Analysis
9.1.1 Code of Conduct
9.2 Competitive Advantage
9.3 Leadership Practices

10. SWOT Analysis 16

11. Competitive Analysis 17

11.1 Porter's Competitive Forces

12. Analyzing Strategic Business Units 18 19

 12.1 SBUs
12.2 BCG Matrix

13. Problems Identification 19

14. Solutions to Problems 19

15. Conclusions 19

16. Recommendations 20

17. References 20

18. Bibliography 20

19. Evidences 21

20. Annexure 22

1. Company Description
19
The SKF Group is one of the leading global suppliers of
products, solutions and services in the area comprising
rolling bearings, seals, macaronis, services and lubrication
systems. The Group's service offer also includes technical
support, maintenance services, condition monitoring and
training.

The SKF business is organized into three divisions;

Industrial, Automotive and Service. Each division serves a
global market, focusing on its specific customer segments.

SKF has 110 manufacturing sites distributed all over the

world and its own sales companies in 70 countries. SKF is
also represented in 140 countries through some 15 000
distributors and dealers. SKF is always close to its
customers for the supply of both products and services.

SKF was founded in 1907 and from the very beginning

focused intensively on quality, technical development and
marketing. The results of the Group's efforts in the area of
research and development have led to a growing number
of innovations that has created new standards and new
products in the bearing world.

The Group has a global IS0 14001 environmental

certification and global health and safety management
standard OHSAS 18001 certification. Its operations are
also certified in accordance with ISO 9000 and other
customer specific requirements.

The SKF business is organized into three divisions:

Industrial, Automotive and Service. Each division serves a
global market, focusing on its specific customer segments.
There are seven staff units: Group Legal; Group
Communication; Group Finance; Group Demand Chain;
Group Business Development; Group Human Resources &
Sustainability; and Group Quality & Technology
Development.

19
2. Product Line

 Interactive Engineering Catalogue

 Condition monitoring products
 Coupling systems
 Maintenance and lubrication products
 Measuring equipment
 Mechatronics
 Power transmission products
 Seals product overview
 SKF Lubrication Solutions
 Vehicle service parts

3. Organizational Chart

The organizational hierarchy of SKF consists of the

following:

 CEO
 Directors
 Country Manager
 Area Manager
 Sales Manager
 Marketing Manager
 Finance/ Recovery Manager
 Field Workers

*For more detail see Annexure 1

19
4. Executive Summary
SKF established in 1907, is known as the world leading
supplier of products, solutions and services in the rolling
bearing business and one of the leading players in seals,
mechatronics, services and lubrication systems. It has its
registered head office in Sweden and currently working at
110 sites in 28 countries, with almost 42,888 employees
worldwide. The SKF business is organized into three
divisions: Industrial, Automotive and Service. Each division
serves a global market, focusing on its specific customer
segments. There are seven staff units: Group Legal; Group
Communication; Group Finance; Group Demand Chain;
Group Business Development; Group Human Resources &
Sustainability; and Group Quality & Technology
Development. In Pakistan it has two offices, in Lahore and
Karachi. Lahore office covers the Punjab and N.W.F.P
whereas Karachi office covers Sindh and Balochistan. The
market demand for SKF's products and services is
expected to be higher for the Group. The demand is
expected to be higher in Europe and Latin America,
significantly higher in Asia and relatively unchanged in
North America. The demand is expected to be higher in
the Industrial and Service Division and slightly higher in
the Automotive Division. The manufacturing level for the
second quarter will be unchanged compared to the first
quarter 2007 and significantly higher compared to the
second quarter last year. Although management believes
that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given
that such expectations will prove to have been correct.
Accordingly, results could differ materially from those
implied in the forward-looking statements as a result of,
among other factors, changes in economic, market and
competitive conditions, changes in the regulatory
environment and other government actions, fluctuations in
exchange rates and other factors mentioned in SKF’s
latest report on file with the SEC (United States Securities
and Exchange Commission) under "Forward-Looking
Statements" and "Risk Factors". 19
5. Vision/Mission

Vision
To equip the world with SKF knowledge

Mission
To be the preferred company...

For our customers, distributors and suppliers:

Delivering industry-leading, high value products, services
and knowledge-engineered solutions;

For our employees:

creating a satisfying work environment where efforts are
recognized, ideas valued, and individual rights respected;

For our shareholders:

delivering shareholder value through sustainable earnings
growth.

Drivers
Profitability
Quality
Innovation
Speed
Sustainability

Values
High ethics
Empowerment 19
Openness
Teamwork

6. Historical Background

SKF has a long history in Pakistan dating back to the

1940’s. In 1994 SKF established a liaison office to support
the SKF distributor network and its customers. In 2004 SKF
Pakistan Pvt. Ltd. was founded to be able to service and
market its products in even a better way than ever before.
SKF Pakistan Pvt. Ltd. is a wholly owned subsidiary from
SKF AB, Sweden.

SKF Pakistan employs a team of dedicated engineers who

are responsible for the marketing & sales of bearings and
related products via its wide distributor network. The
engineers working for the company offer customers
technical support in the field of bearings operations. The
last 5 years SKF has been growing in Pakistan with more
than 25% annually.

The Company is totally committed to ensuring that the

quality of its products and services constantly meet our
customers' expectations and delivered in accordance with
SKF standards.

The Company gears itself towards developing long-term

strategic partnership with its customers by helping them
to maintain effective and efficient operation of their plant
processes. A solid proof to this partnership is the more
than 30 Service and Supply contracts with our key
customers nationwide dating as far back as 1997. These
partnership agreements span across many industries from
Cement & Minerals, Pulp & Paper, Textile, Sugar, to Food &
Beverage, Petrochemical, Automotive and other
manufacturing industries.
19
We provide value to our customers through our local
expertise in bearing application engineering, installation
and maintenance, failure analysis, condition monitoring
and vibration analysis. Our local capability and
competence in both fields of bearing technology and
reliability systems are unparalleled with our well-equipped
and experienced engineers, our leading-edge technologies
backed up by SKF’s global engineering and logistics
resources.

7. Campaigns

SKF 100-Year Jubilee

Curiosity, persistency, making products and solutions

smarter and more efficient - has since Sven Wingqvist's
days been the very meaning of SKF's existence. For one
hundred years, our focus has been to improve the
prerequisites of the industry, driven by a true passion for
knowledge. Since 1907 and the birth of the self-aligning
ball bearing, we've made an astonishing journey. In only
25 years we established SKF factories and offices in 40
countries; which in those days was an outstanding effort.
Ever since our beginning, we have come to set the
standards for our industry - through innovation and
constant renewal of products and solutions. We've been at
the helm of industrial evolution for the past hundred
years, and we will keep that position - embracing the next
centennial, working for a sustainable world, equipped with
SKF knowledge.

Gothia Cup

2006 SKF became one of the official partners in Gothia

Cup, the worlds biggest and most international youth
football tournament. It is annually held in Gothenburg,
Sweden and every year 1500 teams representing 65 -70 19
nations takes part in the tournament. In addition, SKF is
widening the existing concept by creating more meeting
places around the world, pre-events called Meet the World.
These pre-events is taking place in 20 countries. Twelve up
to thirty-two teams are invited to each event and the
winners at these events will win a trip to the Gothia Cup in
Gothenburg, in July 2007. This way, a greater number of
youth will get the chance to come to a meeting place and
play football.

Corporate Campaign

In May, 2006 SKF launched an exciting new corporate

campaign. This is the most aggressive and comprehensive
campaign ever produced in SKF’s history. Based on our
strong industry leadership and experience, SKF can today
offer one of the most comprehensive assortments of
technology and competence that can offer customers
results beyond their expectations? Supported by our
growing strength in the technology platforms, and our
strong network of industry, segment and product
specialists, and the innovate shared culture of SKF
employees around the world, today we can offer one of
the most comprehensive and truly global offers of any
company. Think about what you can do to help meet the
challenge as we work to show our customers, and the
world, the true power of our experience, expertise and
creativity. Help do your part to show the true Power of SKF
Knowledge Engineering.

The Swedish Ship Götheborg

The journey to China of the Swedish Ship Götheborg

started in Götheborg, Sweden on October 2, 2005 and will 19
also end there on September 12, 2007. There will be
approximately seventeen stopovers, nine of which on the
way to China where Shanghai is the final destination. At
each stopover, the sponsors and SOIC are setting up a so
called SOIC Village where the public will be able to go on-
board the ship and the Swedish sponsors will be able to
meet their local customers. The ship will dock for four
months in Shanghai before starting her journey back home
in mid December 2006. The first stop on her trip back will
be Hong Kong on New Year's Eve.

8. Industry Analysis

8.1 Competitors

 FAG
 NTN
 NSK
 Hundreds of Taiwan and Indian companies

8.2 Company Life Cycle

SKF, at present is at the stage of growth in its life cycle. It
has been through the stage of development and
introduction and has made substantial financial gains, but
now it may start moving towards its maturity stage its
business because of increased competition in the market.
SKF still have the ability to expand to the more countries
as it is still expanding and till now it covers 28 countries of
the world with 110 units. 19
*For more detail see Annexure 2

8.3 External Envoirment

 Engineering and Mechanical Industry enjoys active

demand in the International as well as domestic
markets.
 These products are continuously demanded
worldwide, whole of the year.
 The customers are willing to pay for quality products
 The sales of this sector’s were $40 billion in the past
year.
 The manufacturing bases for these products are
shifting towards developed countries, primarily due
to the expertise engineers and the cost of training of
inexperienced operational staff.

8.3.1 Technological

 Complex and highly competitive global market

 Industry consolidation, partnerships, and
collaboration
 Rapid rate of technology development and change

8.3.2 Socioculture

SKF encourages workforce diversity, provides quality

Envoirment for the employees, and discourages child
labor.

8.3.3 Economic

SKF is influenced by the macro-economic factors. There

has been a change in macro-economic factors of Pakistan
and SKF is influenced by these factors. The increase in 19
taxes has an adverse affect on the company’s revenue.
Government of Pakistan is committed to deregulate and
liberalize industry through privatization of state-owned
companies.

8.3.4 Legal/Political

 Political pressure for marketing of products to local

manufacturers where expenditure is more than
revenue seriously affects the revenue of SKF.
 There is proper union in the organization that is
working for the benefit of the employees and there
are no serious conflicts between the management
and union because of friendly environment between
both parties

8.3.5 International

 SKF partners with international automobile

manufactures.
 SKF have signed agreements with world’s leading
companies to increase business by updating market
needs and fulfilling them.
 SKF’s shares are sold internationally.

9. Company Practices and Analysis

9.1 Internal Envoirment Analysis

The SKF business is organized into three divisions:
Industrial, Automotive and Service. Each division serves a
global market, focusing on its specific customer segments.

9.1.1 Code of Conduct

19
For an international company such as SKF to be
consistently successful, it is vital that in performing our
duties, each and every one of us does so in such a way
that SKF is perceived and acknowledged as economically,
socially and ethically responsible.

Responsibility towards customers, distributors

and suppliers
To gain and maintain business by continuous development
and research and to be able to provide products, services
and solutions that meet customers' expectations
regarding quality, safety and environmental care, while
always applying the highest standards of business ethics.

Responsibility towards employees

To respect employees and their rights, to offer safe and
good working conditions, to offer non-discriminatory
conditions and to continuously develop skills and
competencies to enable the individual's satisfaction and
career possibilities.

Responsibility towards society

To manage the business as a responsible member of our
society, showing respect for laws, customs and needs of
the different countries where we are present, as well as
respecting the protection of internationally proclaimed
human rights. The aim of our environment and social
responsibility initiatives is to actively contribute to a
sustainable development.

Responsibility towards shareholders

To protect the shareholders' investments and strive for a
sustainable and improving return. Return on the
shareholder's invested money is always considered when
determining important strategies and financial action
alternatives. We keep our shareholders all over the world
well informed about the activities, results and strategies of
19
the Group, complying with the rules of the stock
exchanges where the SKF shares are listed.

Responsibility towards customers, distributors

and suppliers
We demand honesty and integrity in all parts of our
activities and expect the same from all parties with whom
we have any business relation - customers, suppliers,
partners, agents. We advocate free and fair trade, striving
for competition and ethical conditions within the rules of
the legal framework.
SKF encourages its suppliers to adhere to similar codes of
conduct and their performance in this respect has a
significant impact on our selection process. Consequently,
a supplier who does not meet these standards runs an
increased risk of being excluded from our demand chain.

Responsibility towards society

It is our policy to be open and approachable, to provide
factual and consistent information about the Group's
products, services and development. Information essential
to the stakeholders of the company shall always be given
as fast as circumstances permit.
We act in a socially responsible way and within the
framework of the national legislation of all the countries
where we are present, creating jobs and supporting our
customers. Our ability to profitably manage and grow our
business is the foundation by which we meet our social
responsibility.

9.2 Competitive Advantage

SKF is worlds number 1 company and a brand that is
recognized worldwide. It is in the market for almost a 19
century therefore it has a wide number of customers that
are fully satisfied by the products and services offered.
Some more advantages of SKF on its competitors are as
follows:

 Always up to date
 Knows market needs
 Qualified R&D Department
 Satisfies customer needs by quality products

9.3 Leadership Practices

Leadership and the relationship between employees within
SKF are based on our four core values. Among other things
these values require that:

 all employees be treated equally, fairly and with

respect regardless of race, gender, age, national
origin, disability, caste, religion, sexual orientation,
union membership or political affiliation.
 SKF does not engage in or support the use of forced
labour, nor shall any employee be required to lodge
"deposits" or identity papers when commencing
employment with SKF.
 SKF does not engage in or tolerate the use of child
labour. We define as child any person less than 15
years, unless local minimum-age law stipulates a
higher age for work or mandatory schooling, in which
case the higher age shall apply. If, however, local
minimum-age law is set at 14 years in accordance
with developing country exceptions under ILO
Convention 138, the lower age will apply.
 SKF respects the right of all employees to form and
join trade unions of their choice and to bargain
collectively. SKF will ensure that official
representatives of such trade unions are not subject
to discrimination and that such representatives have
access to the

19
 union members and their workplace.
 SKF ensures that wages and other related benefits
meet at least the legal or industry minimum standard
in the country in question.
 SKF complies with applicable laws and industry
standard on working hours in each country where we
operate.
 SKF is committed to offering safe and healthy
workplaces for all employees. SKF is certified to ISO
14001 and OHSAS 18001. The Group's aim, related to
health and safety, is to eliminate rather than just
reduce work-related accidents and injuries
throughout its facilities.
 SKF strives to give employees good opportunities to
train for job enrichment and wider responsibility, as
expressed in the Individual Development Plan.
 SKF will give all employees a fair chance to compete
for job opportunities. Unless overridden by national
legislation, only relevant skills and competencies
shall be the differentiating factors in selecting the
right person for the job.
 SKF ensures that the registration, filing and use of
employee data is treated with strict confidentiality
and in accordance with local legislation.

19
10. SWOT Analysis

Strengths
 World wide brand. Almost all the well known
companies in the world use SKF products in its
production line.
 In the market for almost a century due to which it has
a kind of monopoly in the market.
 SKF always stays up to date and tends to keep its
customers updated with the help of providing
continuous training its staff.
 SKF tends to know all the market needs, therefore it
continuously sends the research teams in the market
so as to fulfill them promptly. This acts as a main
factor for the success for SKF.
 Qualified R&D Department is one of the primary
reason for its success. SKF hire qualified personnel
from around the globe.

Weakness
 High Price is one of the main factors that can effect
SKF adversely especially in those countries and
customers that are price conscious.
 As SKF is doing business on a global scale so it has to
cover large area which can be a hurdle in promptly
implementing the decision worldwide.

Opportunity
 SKF has a great opportunity as it has been in market
for almost a century and has great experience in
working globally.
 Due to worldwide recognition SKF can penetrate in
local markets very easily as compared to newly
emerging companies.

Threats
19
  Local competitors that have low quality might be a
threat to SKF

11. Competitive Analysis

SKF supports free enterprise and therefore competes fairly
and recognizes other companies' equal rights to do so.
The Company supports the development of competition
laws to protect this principle. It sets its commercial policy
independently and does not fix prices in agreement or
collusion with competitors.

11.1 Porter's Competitive Forces

Threats of new entrants

 Low threat
 SKF is a world wide recognized brand so there is
difficulty for new entrants to challenge the brand.
Another reason is the quantity of capital requirement
and economies of scale which cannot be easily
crossed by the competitors.

Threats of Substitute Products

 Low Threat
 SKF products are of high quality, unique and well
known for there performance and till now no new
substitute products are introduced.

Bargaining Power of Buyers

 Low bargaining powers of buyers
 SKF have a fixed price and discount rates worldwide
and is in a kind of monopoly situation as it does not
have any potential competitor.

Bargaining Power of Suppliers

 Low bargaining powers of buyers
19
  SKF is operating on a global scale therefore its
suppliers are also not in one region. In case the
existing suppliers are charging more then SKF can
promptly shift to another company due to its
operation in 28 countries

*For more detail see Annexure 3

12. Analyzing Strategic Business Units

12.1 SBUs
 Mechatronics
 Tools
 Bearing and Units
 Services
 Seals
 Lubrication Systems

12.1 BCG Matrix

1. Stars:
 Bearing and Units
 This SBU has large market share, moreover it
has potential of additional growth and as SKF in
on total at growth stage and this product is most
profitable to them.

2. Question Marks:
 Mechatronics
 Tools
 Although they are not a newly launched product
but have low market share but are expected to
have a lot of share and rapid growth. These
products might become a star if it captures big
portion of market or can be a dog if its market
share does not increases, thus creating still a
great risk for the company.

3. Cash Cows: 19
  Services
 Seals
 These SBUs are SKF's cash cow because they
have slowed down in growth and lies between
growth and maturity stage. Still it is rated high
among its competitors and has been successful
in capturing more market share as compared to
other competitors.

4. Dogs:
 Lubrication Systems
 This is so because its market share is low and
has small growth rate. It is making little profits
for the company as compared to the rest of the
products

*For more detail see Annexure 4

13. Problems Identification

 Due to poor marketing practices for the products like
no advertisement leads to sale decline.
 Lack of checks on the field workers.
 A high price forces the buyers to buy cheap products.

14. Solutions to Problems

 There should be specific marketing procedure other
than directly marketing the targeted customer
 There should be performance checks on the field
workers and a supervisor should be hired to check
their daily, weekly or monthly performance.
 SKF should take in consideration the buyers with low
budget and should provide discount that can result in
increase in sale volume.

15. Conclusions 19
Overall the company is working profitably, and on a global
scale. It faced a lot of problems in the initial phase but
now it is working smoothly. Company is now concentrating
on expand its business by entering into more countries.

16. Recommendations
 They should introduce creativity in their work so that
the employees can do their work active mindedly.
 There should be specific marketing procedure other
than directly marketing the targeted customer
 There should be performance checks on the field
workers and a supervisor should be hired to check
their daily, weekly or monthly performance.
 SKF should take in consideration the buyers with low
budget and should provide discount that can result in
increase in sale volume.

17. References
 Habib Ur Rehman Grewal
Sales Engineer
Desk: +92 42 575 6128 – 33
Cell: +92 302 865 2575
E-Mail: habib.ur.rehman.grewal@skf.com

 Ehtsham-ul-Haq
Distributor Development/Recovery Officer
Desk: +92 42 575 6128 – 33
Cell: +92 302 844 0397
E-Mail: ehtesham.ul.haq@skf.com

 Atique Ahmed
Sales & Application Engineer
Cell: +92 302 8222 059
E-Mail: atique.ahmad@skf.com
19
18. Bibliography
 www.skf.com
 Annual Financial Statement SKF
 “Management” by Danny Samson & Richard L. Daft
(Pacific Rim Edition)

19. Evidences

19
20. Annexure
Annexure 1

Organizational Chart (hierarchy)

19
Annexure 3
Company Life Cycle

19
Annexure 3
Porter’s Competitive Forces Model

Annexure 4

BCG Matrix
19
19