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5
Jul
INTRODUCTION
BUSINESS
OF
COMPANY'S
PEL has continued on the path of recovery and the business in both its divisions power
and home appliances have grown. Efforts for improvement in productivity, quality of our
products and diversification have yielded positive results and the company has earned a
net profit after tax of Rs.94.100 million (last year 59.000 million). Since the company had
suffered losses in the past, which had eroded its equity leaving huge bank borrowings, the
dept servicing remains a major burden on its operations. Simultaneously increasing
business volumes requiring additional working capital have not allowed the much needed
ease in its cash flows which could offer a smoothness in its operations.
The continuous gain in the value of US dollar upto the September 11,
2001 incidence (which is now a declining trend) has resulted in further negative
impact on Rupee-Dollar parity. The decrease in the value of Rupee could not be
fully covered up in the prices of our products due to low purchasing power
resulting in reduction of gross margins. The company will thus have to maintain
its thrust on high volumes alongwith further reduction in costs and improved
quality measure to consistently maintain the profit path in the future.
POWER DIVISION
Products manufactured in Power division are Transformers, Energy Meters and
Switch gears. Business in this division has suffered badly in pervious years due
to problems in WAPDA and KESC. The most needed upgradation of WAPDA's
distribution pilferage was started by the new management. The energy meter
production of single phase and three phase are moving toward an optimum level.
Plans for further improvement in productivity and quality of our meters are also in
progress. Our shares for the supply of distribution transformers to WAPDA has
taken a quantum leap recently. Accordingly, PEL is planning to increase our
production capacity of transformer plan through the techniques of improved
production operations including manpower utilization, product innovation,
process reengineering. We are expecting to obtain the production capacity level
of 2000 transformer per annum. A break through in the Switch gear business has
been already achieved. PEL has successfully supplied a large order of Switch
gear from WAPDA against International Tender. Since entire business of Power
Division is now being carried out against L/C, international tenders or advance
payments, chronic problem of delayed payments has also been resolved.
APPLIANCES DIVISION
Business in appliances division has shown mixed trend but the Company is finally on the
right track. Crystal Refrigerator with Aero design and Danfoss compressor with
performance certification by Danfoss Germany was launched in the February 1999. This
has been received very well in the market and our refrigerator sales have shown an
increase of ver 125% since 1999. This thrust is expected to continue in the following year
as a result of company's innovative approach in product development coupled with an
aggressive
marketing
strategy.
Deep Freezer tested and certified by Danfoss Germany and with improved
aesthetics has also been well received by the market. We have already been supplying our
Deep Freezers to Coca-Cola international and lever Brothers and intend to continue our
focus
on
institutional
sales
of
this
product.
Sales of window Air-conditioners is almost at the same level of last year but have
not reached the desired level with a pressure on prices and exchange rates impact causing
increase in losses to the subsidiary PEL Appliances Limited. Main reason of this situation
is a huge influx of imported product as a result of change in custom valuation recorders
allowing imports at during prices and under invoicing. In addition supply of smuggled
air-conditioners also continued even after Government's announcement to impose
controls on such activities. This is expected to discontinue after old stocks of smuggled
goods are exhausted and fresh supplies are not allowed.
The company in order to address the above situation has embarked upon
a major plan to improve product quality, widen product range, introduce power
efficient models, add competitive features like remote control, added filters etc.
And to improve the product aesthetically. After consistent efforts in the recent
years PEL have been able to develop a new range of models under the brands
name of 'Energy Saver'. The cooling and balancing if this machine is tested &
certified by Copeland of USA. This has received a very positive response from
the market due to its efficient energy savings, cooling, low noise, compact size,
nature friendly features. PEL anticipates that the company will make a break
through in the volume of Energy Saver as what we have successfully performed
in case of Crystal brand Refrigerators. In addition a major exercise is being done
to reduce material cost and improve manufacturing process. Technical support
and know how is being obtained from international companies and foreign
laboratories to achieve this objective.
Tariff structure on Televisions has been rationalized in the federal budget for
2001-2002 and as a result violability of locally assembled televisions has
considerably improved. Sony intends to take full advantage of this situation and
volumes of locally assembled televisions are resultantly expected to increase
manifolds. Agreement for conversion of VEGA flat screen television has also
concluded and we have very successfully started its production in September
2000.
COMPANY'S
MISSION
STATEMENT
1. To grow the size of the organization, develop better business practice and build-up
greater
resources.
2. To practice actively and consistently in Pakistan's economic development.
3. To
build
up
better
operating
philosophy.
keep
pleasant
working
environment.
6. To
always
7. To
maintain
exclusive
promote
service
standards.
professional
co-operation.
8. To motivate the employees by making them feel that management cares about them
by recognizing their efforts by remuneration or by promotion depending on the individual
efficiency
and
what
he
deserves.
9. To create feeling of co-operation so that all employees are satisfied.
10. To
11. To
build
provide
wide
up
range
of
customer
products
and
services
satisfaction.
to
customers.
COMPANY'S OBJECTIVES
1. The continuous improvement of all products and services through total involvement
of
employees.
2. The development and strengthening of joint ventures and partnerships with external
and
internal
customers
and
suppliers.
3. Providing innovative and higher quality products to achieve total customer
satisfaction by understanding their requirements and anticipating their future expectations
or
needs
through:
Monitoring Annual Targets for quality improvement in all areas and function of the
organization.
Valuing people by understanding and drawing upon their strengths i.e. abilities and
knowledge
and
make
efforts
for
their
training
and
development.
4. With a dedicated team of professionals the company is striving to improve the quality
of life in Pakistan homes through reliable equipment for power distribution and home
appliances.
5. The growth in the size of the organization develops better business practices and
builds
up
greater
resources.
6. The aspiration to capture the complete product family of the product.
DEPARTMENTS
There
are
major
departments
in
PEL
they
are
:-
(i) Marketing
Department
(ii) Finance
Department
(iii) Production
Department
(iv) Human
Department
(v) Administration
Department
(vi) Research
1. MARKETING
&Development
Department
DEPARTMENT
This
department
is
headed
MANAGING
DIRECTOR YOUSAF. H. ISHAQ. Then Further down in hierarchy there are: Brand
Managers.
Manager
Distribution
Credit.
Customer
service
officers.
Institutional
sale
There
are
are
Headed
They
six
Manager.
branches
by
of
Regional
PEL
Sales
in
Pakistan.
Manager.
(RSM).
The sales policies are recommended by head office for all region. The policies
for customer service are defined by General Manager Customer Service at head office.
Targets are given to regional sales Manager of each particular region and then the RSM
gives further target and incentives to sales officers to achieve the demand targets.
In
Lahore
the
market
is
divided
into
areas:-
Abid
Market
Patiala
Market
Out
skirts
In
Abid
In
patiala
Market
Market
there
there
are
are
20
16
dealers
dealers
and
30
sub
dealers.
and
21
sub
dealers.
In
outskirts
In
there
Lahore
RSM
are
there
35
dealers
is
:-
(1)
Area
Sales
Manager
Sales
executive
(2)
(10)
Marketing department controls the 4P's in the company i.e. Product, Promotion,
Placement, Pricing. They are also responsible for the alteration and Modification in the
different brands of the company and of new product e.g. They can suggest colour change,
size of product etc. which is being demanded by the customers. They try to bring
innovations in the products to make them attractive for the customers and to compete
with
the
competitors
i.e.
Dawlance,
General,
Waves
etc.
There
are
as
well
as
electronic
media
for
promotion
activities.
FINANCE DEPARTMENT
The
department
is
controlled
by
general
Manager finance, Mr. Manzer Hussain this department is divided into 3 sections: Finance
Accounts
Credit
Control
(i) Finance
Finance
deals
with
Banks
(ii) Accounts
Accounts
booking
deal
transactions
with
costing
as
well
system,
as
internal
(iii) Credit
This
deals
Billing
&
auditing.
Control
section
with
of
Credit
finance
and
PRODUCTION DEPATMENT
recovery
department
procedures.
Sanctioned
Actual
Production
2001
Installed Capacity
2001
Electric motors
25,612 HP
Nil
Transformers
1500
351 MVA
Energy Meters
600,000 NOS.
431,862 NOS
Airconditioners
36,250 TONS.
3,494 TONS.
Refrigerators/Deep- Freezers
89,525 CFT
766,399 CFT
Compressors
360,000 NOS.
Nil
MVA
FUNCTIONS
Recruitment
Selection
Training
Transfer
Firing decisions
Labor Affairs
Staff welfare
Manpower planning for next 5 years.
PRODUCT MIX
Our report concerns about home appliances sector of PEL. There are
three main categories of products.
(i) Refrigerator
(ii) Air
Conditioner
(iii) Deep
Freezers
(iv) Split
(v) Washing
Machines
in the industry are trying to capture the market by aggressive advertisement new product
launching,
bringing
innovative
features
in
existing
products.
The
active
companies
in
this
industry
are:
PEL
LG
Dawlance
Waves
General
CRYSTAL REFRIGERATOR
It is the largest in its class, rustproof from head to toe and powered by the world's
No.1 compressor (Danfoss). This low-noise compressor is extremely silent and
keeps the refrigerator running smoothly. The compressor is also well prepared to
face Pakistani electrical outages, it remains functional on voltages as low as 170
volts and has an upper limit of 250 volts.
CRYSTAL refrigerator's cooling performance has been tested and approved by
Danfoss (Germany). The refrigerator is available in a wide range of colours like
beige and green in PCM. CRYSTAL refrigerator comes with 3-year compressor
and 1 year parts warranty.
Super cool
PEL 2000 features a new aerodynamic design and is fitted with a new American
compressor, Copeland, which is the number one compressor in the world. Its
excellent cooling performance compressor cools 15%faster and has an even
lower level of electricity consumption. The cooling performance of PEL 2000
airconditioner has been tested and approved by ITS (intertek Testing Services)
USA. PEL 2000 is available in two colours, with and grey.
Powerful Airflow
PEL 2000 airconditioner is equipped an innovative airflow confirmation. The extra
large air outlet provides a strong yet comfortable air flow that covers greater
distance without losing power.
Window Airconditioner
Low Noise
The room airconditioner is extremely silent and very comfortable due to the latest
technology, low-noise compressor and side discharge design.
Non-Drip Feature
The window type airconditioner is designed to remain drip free at humidity levels
as high as 70%.
Split Aircnditioner
The elegant, new high-wall split system airconditioner from Carrier combines
attractive slim line styling with superior quality and efficiency. The soft white
colouring and smooth curved lines make this unit ideal for restaurants, shops,
offices and residential applications.
FEATURES
Super Quiet Operation
The new, elegant slim line indoor unit with three fan speeds and sir discharger is
designed for super quiet operation.
Computer Precision
The built-in computer responds to very small changes in temperature and adjusts
all controls continuously to keep a stable level of comfort.
3-Stage Cooling
Provides more options to run the unit in desired conditions.
Progressive
backed
Products,
Absolute
Guarantee
The carrier name on every units is your assurance of international quality. Carrier split
airconditioners are supported by a reliable 3-year compressor and 1 year parts guarantee.
Even Refrigerator
The cooling coil winds around the freezer compartment on all sides, thus
ensuring perfectly uniform and constant low temperature throughout the freezing
Special Features
New handle with strong grip. Increased pipe size to reduce
compressor head pressure, greater thickness of the foam (50 mm), improved
freezer serviceability, thermoformed top frame instead of extrusion, new light
cover design, rounded hinge cover and specially deigned wheels which make the
movement of the deepfreezer easy.
New Compressor
CRYSTAL deepfreezer is powered by the world's No.1 compressor,
Danfoss (Germany). This low-noise compressor is extremely silent and well
prepared to face Pakistani electrical outages. It remains functional on voltages as
low as 170 volts and has an upper limit of 250 volts.
PROGRESSIVE
PRODUCTS,
ABSOLUTE
GUARANTEE
2-year
compressor
and
1-year
parts
guarantee.
6000
This washing machine offers several washing modes and the selection of high, middle
or low water-level. It has a self-circulating fiber and a new-type selection of strong,
medium or weak water flow, with two ways of rinse, for water-filling or wateraccumulating.
This type of washing machine adopts advanced water-filling and spining functions to
save
rinsing
time
and
water.
Its
out-case
is
made
of
aluminium
alloy
to
prevent
rust.
5200
New-type, generating lotus-leaf-like big agitating waves which can prevent fabrics
from
twining
with
one
another,
for
enhanced
cleanliness.
Adopts up-to-date built-in instantaneous loop and overtime safety to enhance
dependability and safety of use. It can automatically buzz an alarm stop the machine as
soon
as
washing
ends.
Adopts advanced water-filling and spinning functions to save rising time and water.
Its
out-case
is
made
of
aluminum
alloy
to
prevent
rust.
PEL is the first company to introduce the 3S concept in home appliances in Pakistan.
Now you can avail our unique sales, service and spares facilities all under one roof. With
a dealership network all over Pakistan, PEL gives you unmatched after sales support,
making every PEL appliance a value packed addition to your home. So whenever you
buy from PEL, you can be sure of getting more than what you paid for.
PEL introduces for the first time in Pakistan, the complete range of PEL Energy Savers.
Each model has been designed with different room sizes in mind and gives you
unprecedented savings on your electricity bill. Take control of your electricity bill with
PEL
Energy
Saver.
Energy
Efficient
Design
Quiet Operation
The new Energy Saver range has been designed to be super quiet. No matter what
fan
speed,
PEL
Energy
Saver
performs
at
its
peak
without
disturbance.
Thank's to its specially designed louvers, the PEL Energy Saver range
has the widest air sweep, 3 fan speeds (low, medium and high) allow you to run
the air-conditioners in different cooling modes.
ENVIRONMENT AIR QUALITY CONTROL
The anti-bacterial filter in PEL Energy Saver is designed to filter out
microorganisms and ensure that the air that comes out of the air-conditioner is
clean and healthy for you.
COMPACT SIZE
The new compact sizes now take less space inside and outside your room.
RUST-RESISTANT
WARRANTY
All PEL Energy Saver models are backed by a 5-year compressor, 1 year parts
warranty and a 7-year condenser and evaporator guarantee against rust.
FUTURE OUTLOOK
PEL plans to focus around key objectives of building a strong demand for core products through
effective marketing and product improvement. Under the difficult business environment PEL are
confident to perform satisfactorily in the coming year by keeping a watch on quality, achieve
cost
reductions
through
improved
efficiency
and
growth
momentum.
A/C COMPETITORS
General
Waves
L.G
REFRIGERATOR COMPETITORS
Dawlance
Samsung
L.G.
Waves
PLACEMENT
The
distribution
set-up
of
PEL
has
undergone
many
changes..
In 1988 the set up was very simple. There were only four sale officers who use to
manage area offices in Multan, Rawalpindi, Lahore and Faisalabad.
1989 the company decided to form an effective dealership network. The company had its
dealers
in
all
major
cities.
In 1993 management plane to form a region to further improve the distribution system.
The whole country was divided into four major region. 1996 it is further improve by
increasing
region
from
4
to
6.
Distribution system of PEL is designed in such a way as to cover the whole market and
ensure timely delivery of products to the consumers. Details of their distribution setup is
given
below.
PEL
has
two
channel
levels.
(ii) INDIRECT
MARKET
CHANNEL
It is a channel with one or more intermediary level. The general public can buy PEL
products
through
authorized
dealers.
PEL has been network; Regional sales force is connected with dealer. Core customer are
directly attached. Dealers are also visit and analyse distribution system.
During the selection of dealers for PEL, they consider => Worthiness of dealers, =>
Potential demand. They offer them incentive, schemes for cost sales and always adopt
policies
in
response
to
competitors.
PRICING
Prices are kept according to competitor level. PEL considers market should
not shrink because of pricing. Prices does not depend on seasons.
The prices are strictly observed by the Co e.g. A dealer sells a product below the price
given by company to any customer then the company can fine dealer upto 5000 Rs. and
can cancel his dealership. The company has appointed various "Informers"who
constantly visit and check that company price is being maintained. These people inform
the company if any irregularities in pricing and then company takes appropriate action
against dealers. Pricing is important to control sales. Pricing depends upon market
conditions. Marketing Manager is independent in his region but has to get approval from
company for giving more incentives to dealers. The dealers play important role in
sales.
SEGMENTATION
(i) GEOGRAPHIC
SEGMENTATION
Segmentation is done on the basis of geography. Pakistan is divided into two zones; =>
North, => South.
NORTH ZONE
North
Punjab
NWFP
SOUTH ZONE
Zone
includes:-
South
zone
This
includes:
zone
Sind
Baluchistan
REGIONS
There
are
six
regions
of
PEL
in
Pakistan.
They
are:-
Karachi
Lahore
Multan
Gujranwala
Rawalpindi
Faislabad
objectives
To
To
of
advertising
are
increase
increase
recall
:sales
of
products
TYPES OF MEDIA
1. ELECTRONIC MEDIA
It
includes
T.V.
i.e.
PTV.
PTV
World
and
prime
T.V.
and
etc.
2. PRINT MEDIA
(i) National
(ii) Magzines
3. OUT
(i) Boarding
Newspaper
=>
e.g.
Herald,
Jang,
News,
News
line,
DOOR
Dawan
Banking
business.
MEDIA
(ii) Neon
Signs
(iii) Tri
Visions
PEL uses all these above mentioned Media Activities to promote its products.
for
Rs.400/- Per
set
Hajj
Car
if
dealer
sixty
sells
scheme
is
given
to
Dubai
the
target
days
No.
for
best
dealer
of
sets.
dealers
which set
target
tours.
CUSTOMER
For customer PEL gives some additional gifts with products i.e. Wall Clock,
Watches.
PUBLIC RELATIONING
In promotion mix PEL considers value of public relationing because it is:
Quite
Inexpensive
Public
Relations
have
more
Creditability
then
public
relations
Public relations can increase sales i.e. sponsor ships of cricket matches.
is
It
It
is
has
window
available
been
in
manufactured
It
has
Specially
designed
A/C
with
years
for
environment
in
Pakistan.
three
models.
collaboration
of
carrier.
compressor
of
Pakistan
to
guarantee.
provide
cooling.
WEAKNESS
It
More
consumers
weight
It
is
which
create
more
problem
available
only
in
energy.
transportation
and
installation.
in
two
colours.
duty
by
Govt.
OPPORTUNITIES
Removal
of
excise
Corporate
sales.
THREATS
Govt.
Policy
changes
with
time.
Large market share has been captured by smuggled A/C e.g. Russian A/C.
Severe competition from General.
is
manufactured
with
collaboration
of
carrier.
It has well designed system for after sales services all over Pakistan.
Cooling
system
is
up
to
the
required
Noiseless
standard.
compressor.
5-years
Guarantee
of
compressor.
WEAKNESS
Advertising
Target
is
market
Installation
It
very
is
for
much
split
cost
only
available
low.
is
is
in
less.
high.
two
models.
OPPORTUNITIES
By
By
increasing
advertisement
providing
more
models
demand
PEL
can
can
be
capture
generated.
more
market.
THREATS
Govt.
Policies
Target
market
may
in
effect
Pakistan
joint
is
ventures
lower
as
of
PEL
compared
to
&
CARRIER.
other
countries.
is
biggest
Crystal
is
available
in
in
size
many
as
compared
colours
as
to
its
designed
competitors.
by
people.
WEAKNESS
It
is
No.2
Refrigerator
in
Pakistan
after
Dawlance.
Dealers
Complain
about
Margin
in
pricing.
well
received
by
customer.
OPPORTUNITIES
PEL
By
Crystal
increase
is
capture
refrigerator
market.
THREATS
Govt. Polices may effect business of PEL by changing duties & taxes.
Any
innovation
PEL
has
strong
by
competitors
competition
with
can
effect
market
share
of
Dawlance,
Philips
(Whirlpool)
PEL.
L.G.
FINDINGS
As for as production facilities are concerned, PEL is facing investment problems as
compared to its competitors. Although they are trying to adopt latest technology based
fully-automated production system but lack of funds is the main hurdle in implementing.
As for as quality is concerned, the step of management towards TQM is of great
importance
and
PEL
is
trying
to
achieve
it.
The main thing in PEL is on "EMPLOYEE FOCUS". Employees are encouraged to
give views, suggestions etc. That is the reason, which forces management to include
CONCLUSION
PEL should concentrate on promotion of their products and try to enhance the
Target Market of split. PEL should try to capture the remove area market
especially in Rural areas.
To get more market share it needs qualitative products with innovative styles, and
aggressive marketing activities to create awareness among public regarding their
appliances
product.
More attractive Incentives should be designed to get more dealers interest in their
products.
To make their products technically round they need more technology advancement
especially after failure of their T.V. in market. More innovative & new technology is
needed.
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