BACKWARD INTEGRATION STRATEGY OF SUCCESFUL PAKISTANI COMPANIES

MASTERS OF BUSINESS ADMINISTRATION STRATEGIC MANAGEMENT PROJECT REPORT

Prepared by
Merajuddin Mazhar Muhammad Salman Shamim Syed Muhammad Rehan 0936118 0936119 0836168

Project Manager
Dr. Mustaghis-ur-Rehman

A project in partial fulfillment of the award of Masters of Business Administration Shaheed Zulfiqar Ali Bhutto Institute of Information Technology - SZABIST

INTE TION ST TE B OF SUCCESFUL PAKISTANI COMPANIES

ACKNOWLE

EMENT

The most pleasant part of writing this report is to thank those who have contrib ted to it The list of expressions of thanks no matter how extensive is always incomplete. These acknowledgements are no exception. After Almighty Allah we are grateful to our teacher Dr. Mustaghis-ur-Rehman who has helped us in every step and stage for compiling and making this report.

ABST ACT

Backward integration can provide a tool for economic development in lesser developed countries. At a micro level, transaction cost analysis provides an explanation for the degree of vertical integration found in import channels. Macro level consequences of backward integration are derived and policy recommendations are suggested to achieve greater backward integration.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ................................................................................................ 6 1.1 Vertical Integration ............................................................................................................ 6 1.2 key Driving Forces Vertical Integration ............................................................................. 7 1.2.1 Cost reductions ........................................................................................................... 7 1.2.2 Offensive Market Power: ............................................................................................ 7 1.2.3 Government policy: .................................................................................................... 8 CHAPTER 2: LITERATURE REVIEW ...................................................................................... 9 CHAPTER 3: BACKWARD INTEGRATION STRATEGY OF SOME SUCCESFUL PAKISTANI COMPANIES ...................................................................................................... 13 3.1 Chenab Textile Ltd .......................................................................................................... 13 3.1.1 Vision ....................................................................................................................... 15 3.1.2 Mission ..................................................................................................................... 15 3.1.3 Vertical Integration Strategy of the Company: ........................................................... 15 3.1.4 Backward Integration: ............................................................................................... 16 3.1.5 Spinning: .................................................................................................................. 16 3.1.6 Weaving: .................................................................................................................. 17 3.1.7 Preparation: .............................................................................................................. 17 3.1.8 Dyeing: ..................................................................................................................... 18 3.2 Ismail Industries: ............................................................................................................. 19 3.2.1 Mission Statement: ................................................................................................... 20 3.2.2 Vision Statement:...................................................................................................... 20 3.2.3 Continuous Inclusion of New Products:..................................................................... 20 3.2.4 Value chain analysis: ................................................................................................ 20 3.2.5 Ismail Industries Brands Tree: ................................................................................... 21 3.2.6 Backward Integration Strategy of Ismail Industries: .................................................. 23 3.2.7 Plastic Division of Ismail Industries Limited - Pakistan ............................................. 23 3.2.8 Products ................................................................................................................... 23 3.2.9 Technology............................................................................................................... 24 3.2.10 Philosophy of Business ........................................................................................... 24 3.3 House of Habib:- ............................................................................................................. 25

3.3.1 Companies hold by house of habib: ......................................................................... 25 3.3.2 Indus motors history: ............................................................................................... 26 3.3.3 Auvitronics History:- ................................................................................................ 27 3.3.4 Vertically Integrated Auvitronics for Indus Motors: ................................................. 27 3.3.5 AgriAutos: ................................................................................................................ 28 3.3.6 Vertically Integrated Agri autos For Indus Motors:- ................................................. 29 REFRENCES............................................................................................................................ 30

LIST OF FIGURES AND TABLES

Page No Figure 2-1 Historical Context of Vertical Integration Figure 2-2 Operationali ation of Vertical Integration Table 3-1 Chenab Production Facility Figure 3-1 Ismail Industry CBU Figure 3-2 Candy Land SBU Figure 3-3 Bisconi SBU Table 3-2 Asto Pack Details 10 12 14 21 21 21 23

CHAPTER 1: INTRODUCTION

1.1 Verti l Integrati n

Vertical integration is all about owning upstream suppliers and its downstream buyers. It also increases or decreases the intensity of control with respect to companys inputs and distribution of outputs [Werner Z. Hirsch]

There are two types of vertical integration:

1. Backward integration 2. Forward integration.

Backward integration is all about companys control of its inputs or supplies similarly forward integration is all about companys control of its distribution. Over the years the strategic reasons for opting for a vertical integration strategy have changed. Firms have used vertical integration in last decades to achieve economies of scale and also it was used for smooth operations in mid 20th century for supply of vital inputs. Backward integration or forward integration is also considered as cost reduction strategy.

1.2 key Driving Forces Vertical Integration

There are multiple factors that contribute in the organi ation and existence of huge integrated firms despite inherent inefficiencies. These can be:

Reduced costs Weak supply networks Increased market power Government policy

These factors are important during the early stages of an industry.

1.2.1 Cost reductions There is a cost related advantage for integrated firms over smaller firms when they avoid costs on transactions in immature markets, mainly during early stages of market development. Transaction cost includes the cost of measuring output in all of its dimensions and the consequence of not measuring it perfectly. This is another reason that forcers larger firms to become suppliers of global firms. Economies of scale is also achieved by firms from reduced costs through vertical integration, consequently other benefits which are also achieved includes:

y y y

Improved Assets Management. Decreased fixed costs. Lesser raw material and procurement costs.

1.2.2 Offensive Market Power: Since large integrated firms have increased access to resources like finances, human and technology and they have more bargaining power, therefore, they are better positioned to develop markets for the new products 7

1.2.3 Government policy: Large integrated firms influence and benefits from government policies. In the early stages of industrial development capital, labor and product markets as well as regulatory environment are poorly developed and hence governments have greater control over the allocation of resources. Larger firms in such emerging markets benefits from government policies and gradually become more vertically integrated and hori ontally diversified. Large vertically integrated firms are likely to emerge in high scale economy industries, in situations where premium products are being pioneered. Because it can have a significant impact on a business units position in its industry with respect to cost, differentiation, and other strategic issues, the vertical scope of the firm is an important consideration in corporate strategy.

CHAPTER 2: LITERATURE REVIEW

Vertical integration is basically a strategy of corporate. It has been the vital force in U.S. business for managerial style and development related to high productivity. In the past vertically integrated companies have been the main source for change and have increased wealth for shareholders (Kathryn). Most of the times it was not identified by the researchers that vertical integration can work as an effective strategy, provided that it was used wisely, that was because they usually took an aggregated view of it.

Vertical integration can provide several advantages including the temporary state of art ones that can be measured against the advantages of flexibility to develop the innovations in technology. Firms that initiate an early vertical integration, link to a specific technology in an inflexible fashion and can encounter the risk of being wrong as well as the cost can be extensive. But if these initiators are right then vertical integration can serve as a tool that can help establish industry standards, order the disordered environments or decrease the operating costs appreciably. Thus pilot plants should be built by the firms earlier to learn about distributors and suppliers before the intelligence gains can be matched by the competitors experience.

An economic overview explains that industries that are operating in stable environments and have large capital investments persists on being integrated, while firms having a volatile market have rolled back (Ashay Desai et al). The two industries that will operate on high integrated level are the mining and oil exploration industries.

Figure 2-4 Historical Context of Vertical Integration

Several operations in the marketing as well as production of similar products is controlled by a vertically integrated firm and its management follows an integrated profit policy (Werner Z. Hirsch 1950). Vertical integration can work in the direction to the chief raw materials, to the final consumer or in both directions simultaneously. Backward vertical integration means that the unit that started out the vertical integration is closer to the final consumer than any other unit. Forward vertical integration means that the unit that started out vertical integration is far from the final consumer than any other unit. (Srinivasan). There are only few examples of pure vertically integrated firms. The reason is that the ample volume has to be handled by such firms before they can introduce vertical integration. It basically points out towards large marketing and production volume which is generally linked with several plants (hori ontal integration) or numerous commodities or both.

Firms usually choose the degree of vertical integration by their make or buy decisions. (Rudie Harrigan). Thus vertical integration is then analyzed from a long term profit maximization viewpoint. It forms its basis on two grounds;

10

(a) Strategy that relates to the future which is mostly and always different from the present (b) Strategic decision entail resource commitments A firm that emphasizes on long term therefore will base its vertical integration decision on the probable changes as well as on the current changes in technology. The two main results are: 1. If the competition is high then integration is negatively affected by technological change. 2. The most advantageous level of integration and degree of completion in industry are negatively related. The findings propose that firms should examine outsiders regularly to evaluate if some activities can be done by them more cheaply than in-house. Extensive integration will have to give way to narrower integration with the maturity of industries.

11

Figure 2-5 Operationalization of Vertical Integration

12

CHAPTER 3: BACKWARD INTEGRATION STRATEGY OF SOME SUCCESFUL PAKISTANI COMPANIES

3.1 Chenab Textile Ltd
One of countrys leading textile group and one of the biggest exporters of domestic textile products is Chenab group of Industries. Set up in 1974, as Chenab Fabrics & Processing Mills Limited and later transformed to Chenab Limited. Mian M. Latif and his father Late Haji M. Saleem founded the industry, he was also known as a cotton industrialist It is regarded as one of leading manufacturers and exporters garments and related products in Pakistan and is appreciated for the high quality products. Since its operations in 1975, Chenab has been involved in all activities ranging from spinning to retailing and is a successful organization when we considered it as vertically integrated unit. Its per annum capacity of processing and finishing fabrics is more than 70 million meters into and is highly effective and efficient. Chenab also offers a product range of: y y y y y Bed linen, Bedspreads, Curtains Table linen Kitchen accessories

Chenab is also known for producing mens casual and formal wear, products for women and children is also been produced that has exclusive designs and fabrics in competition with global markets. State of the art machinery is an added competitive advantage for Chenab industry. Chenab has one of the larges processing facilities in textile industry in Pakistan and 13

consequently it is capable of meeting the various requirements of its diversified customers across the world through its out standing facilities for weaving, spinning, ginning and exports of top of the mark highest quality garments and related byproducts.

Production Facility Spinning Weaving Weaving Bleaching Dyeing Printing Finishing Polyester Wadding Fabric Coating Stitching Quilting Embroidery Gas base power generation

No of Machines 19,200 Spindles 270 Auto Looms 240 Air Jet Looms 3 3 4 22 1 Plant 1 1584 14 6 14 Generators

Capacity (Per Day) 36,000 lbs 18,000 mtrs 80,000 mtrs 225,000 mtrs 90,000 mtrs 160,000 mtrs 250,000 mtrs 18,000 kgs 15,000 mtrs 210,000 mtrs 25,000 mtrs 4000 mtrs 15.6 M.W

Table 3-2 Chenab Production Facility

Company places primary importance on maintaining environment friendly operations. It is the first textile company in Pakistan to install a waste water treatment plant that separates various impurities from wastewater and received certifications for environment friendly products. Chenab Limited has implemented ERP (Enterprise Resource Planning) solution to integrate and best utilization of its resources. Customer Relationship Management is part of the solution being implemented, and Chenab online order track system is also in place to facilitate customers round the clock.

Chenab Limited has around 30 years of management experience in the field of home textile, and gathered various talents, such as scientific research personnel, designer, marketing and IT personnel.

14

3.1.1 Vision To be a competitive and customer focused organization with continuing commitment to excellence and standards. 3.1.2 Mission y To be business house of first choice for customers. y To be change leader. y To produce innovative, relevant a cost effective products. y Setting and maintaining high standards y To earn profits by achieving optimum level of production by using state of the art technologies. y To provide ideal working conditions to employees and to take care in their career planning and reward the according to their skill and responsibility. y To meet social and cultural obligations towards the society being a patriotic and conscientious corporate citizens. 3.1.3 Vertical Integration Strategy of the Company: The fashion domain is real dynamic and highly aggressive. Chenab keeps a very vigilant check and balance on world fashion industry. Product innovation, research and development are achieved through this proactive strategy. People from different fields are formed into teams to deal with this strategy. These fields include marketing, designing and textiles. These expertises are combined by Chenab for the production of value chain based on creativity upon the idea generated by a technically skilled person. This value is then further improved by marketing professionals who converts technical feasibility into fashion and so the journey from imagination to physical implementation is thus completed.

Textile industries are usually known for fabric manufacturing and its byproducts. Here at Chenab they also build up long-term business associations with customer and this can be only ensured through greater customer satisfaction and highest quality production.

As a vertically integrated organization, Chenab has an edge which beyond compare by any other firm in this whole region. Research and development is the area which is under heavy investment by Chenab to support their proactive strategy through which new products and new ideas are generated. They have Ginning, Spinning & weaving plants 15

which allow them to create an array of weaves with different types of yarn/fibers. Chenab own its outlets throughout the country named ChenOne, resulting in both backward and forward integration at the same time and benefiting from them.

3.1.4 Backward Integration: With a capacity to process 0.5 billion meters per month of finished fabric the manufacturing facilities related to backward integration at Chenab comprises of:

y y y y

Ginning Spinning Weaving Processing

Chenab by all means is the largest textile industry in the region

3.1.5 Spinning: Pakistan textile industry has seen major changes due to its modernization in last few years. The spinning division at Chenab Ltd. (Spinning Division) is fully automated with computers and state of the art technology and all the equipments have been streamlined. Thus the mechanical speed has greatly increased due the inclusion of technology.

16

The process of opening of cotton bales is also fully automated at Chenab. To provide a uniform blend of fiber properties threads from bales are mixed and blended together. To attain highest efficiency at the new automated high-speed feeding equipment and fact that fiber properties are consistent, the bales are grouped in a systematic manner so that production or feeding is done according to properties of fiber.

3.1.6 Weaving: The oldest method from which fabric is made through yarn is weaving. Though the modernized way is much faster and complex the basic principal remains the same. Cloth was traditionally woven by a wooden shuttle that moved horizontally back and forth across the loom, interlacing the filling yarn with the horizontally, lengthwise warp yarn. Modern mills use high-speed shuttle less weaving machines that perform at incredible rates and produce an endless variety of fabrics.

3.1.7 Preparation: Customized fabric operation is the first crucial step towards the guaranteed final quality of all finishing processes. Different fabrics are quality controlled before they go to singeing, bleaching and mercerizing lines. Hi-tech equipment controlled by sophisticated systems ensures total reliability and consistently optimal operations.

17

3.1.8 Dyeing:

Equipped with environment friendly Singeing, continuous bleaching, chainless mercerizing and wider washing ranges compliments the back processes mandatory for quality dyeing and printing of up to 200,000 meters a day. A state of the art testing lab equipped with the latest precision testing instruments assures that specific customer standards are met. Chenabs highly qualified and experienced technicians are able to cope with everincreasing quality standards and changing customer requirements. Their work starts from the receipt of raw materials up to the time the final finished products have passed through inspection/testing at all stages. The Company has also proven its commitment to quality by achieving distinct certifications and awards. To ensure color consistency and quality computerized control systems management is applied at all the dyeing lines process. The widest imaginable colors and the most extraordinary range of dye stuffs are achieved due to the massive and continuous dying lines. Continuity, fastness and uniformity of products and fabrics are ensured dyeing at Chenab.

18

3.2 Ismail Industries:

ISMAIL INDUSTRIES Ltd. was incorporated as a public limited company in 1989. Ismail industry under the name of CANDYLAND manufactures very good quality confectionery products. Also under the brand name BISCONNI , they acquired a biscuit company from IBL (Meiji) in 2002 consequently expanding their portfolio and entering into manufacturing of biscuits. In order to cater to lower priced segment as competition from small-scale manufacturers was increasing, they launched FIRST, another confectionery company, in 2003. Ismail Industries has now, recently established a unit for the manufacturing of Cast Polypropylene by the name of ASTRO PACK to pursue a backward integration strategy and portfolio diversification. With the state-of-the-art technology and most updated process technology, they are considered as pioneers in the country. They have realized how important efficiency and creativity is to achieve stability and growth in dynamic and competitive environment. Putting people first strategy is the reason for their success. The company therefore continues to train, recruit and retain the best professionals in the field. More food technologists are employed by them than any other confectionery manufacturer in Pakistan and also they have an extremely modern laboratory capable of developing innovative products and testing products and ingredients for quality and consistency. The company pride on their selves as they are an equal opportunity employer and they have a diverse team who is playing their roles in various departments for the success of the company. Societal concerns and contribute to the environment is their vital responsibility as good corporate citizens. ISO 9001-2000 certification benchmark was achieved by them which serves as a key strength for them. Around more than 30 countries, they export their confectionary products around the globe which includes USA, Australia, Europe, Africa, Middle East and Far East and they have a very strong business relationship in these countries for more than 20 years. The 19

reason for this long lasting relationship with their customers is the commitment towards better quality and satisfaction of customers around the globe. A dedicated R&D department in the company to keep the company side by side with the latest trends in the industry. They have a very strict Quality Assurance Programs to ensure the adequate, proper and safer products to end users.

3.2.1 Mission Statement: To become the top confectionary producers in Pakistan and South Asian markets which retaining our competitive advantage through excellent quality of own products that are continuously redesigned and innovated to satisfy customers 3.2.2 Vision Statement: We aim to offer high quality product to our customer by remaining the most technologically advanced company in this field. We strive to be brand leaders in all the categories that we compete in. We wish to have substantial presence outside of Pakistan through export and local manufacturing

3.2.3 Continuous Inclusion of New Products: As the confectionary products have very short span of life thats why company puts greater emphasis on continuous development of new products in every four to six months through its dedicated R&D department. The middle line managers also use well known international products as its benchmark for newly developed products so that they can produce that type of high standard products in the local market of Pakistan.

3.2.4 Value chain analysis: Ismail industries value chain activity initiates from the raw material and ends in the hands of the consumer. The value chain continues towards the end of the product distribution and each step of the value chain adds value to cost as well as consumer. 20

3.2.5 Ismail Industries Brands Tree:

Figure 6-1 Ismail Industry CBU

Figure 3-2 Candy Land SBU

Figure 3-3 Bisconi SBU

21

3.2.5.1 CandyLand CandyLand is one of the business units of Ismail industries which have highly advances and sophisticated technology and therefore the CandyLand is the only one in Pakistan in confectionary manufacturer to invest in such an extensive range of machinery. Companys commitment to its consumers is reflected through its continuous expansion and to build high customer expectations and striving to exceed them every time; they are continuously working hard. 3.2.5.2 Bisconni Bisconni is another strategic business unit that manufactures an extensive variety of biscuits and cookies. This business unit of Ismail industries is also continuously expanding its range of products and recognized itself as a major player in the biscuit industry in Pakistan in a very short span of time.

3.2.5.3 SnackCity Snackcity is their latest expansion in food items which is another strategic business unit of Ismail Industries. They have invested in the worlds best equipment to produce potato chips and other savory snacks. Though snackcity was incorporated in June 2006 but their products have gained popularity and status amongst its consumers in a very short period.

22

3.2.6 Backward Integration Strategy of Ismail Industries: Previously, for packaging their products they have different vendors but recently they felt that they can do it by their self and they have launched their plastic division to fulfill their packaging needs through Astro-Pack. The reason for this backward integration is also customer focus because they want the adequate and quality products to serve to their customers timely. 3.2.7 Plastic Division of Ismail Industries Limited - Pakistan Astro-Pack is one of the eminent pioneers in inventive solutions to hard packaging needs of the mounting market of Pakistan. Today's stretchy packaging companies require special films to tender the best solutions to meet new packaging challenges that now come into view because of high tech and faster converting and packaging machines. Their products include new generation of films, but today they have become a necessity, especially when quality conscious customers can not afford to have sealing failures or weak tear resistance. Their CPP twistable grade films are best suited to replace PVC based films, which are a possible health hazard, when used in food items. Lamination grade films add to the ultimate seal strength and improve gloss in a laminate.

3.2.8 Products Following Products are currently available at Astro-Pack, but custom made films for unique applications are also made to fulfill the customers needs. Films Type
Lamination Grade Metallizable Grade Twistable Grade White Opaque Grade

Code
APL APM APT APW

Standard Gauges
20, 25, 35, 50 Microns 20, 25 Microns 33, 38 Microns 25, 50 Microns
Table 3-2 Asto Pack Details

Applications
F/F Lamination Metallization Candy wrappers F/F Lamination

23

3.2.9 Technology Astro-Pack has invested in the latest technology without compromising the quality of end products. The total production system ensures that parameters are closely monitored to keep the consistency of the product. The auxiliary equipments / testing equipments have also been selected to match the quality of the plant. They have been acquired from the best machinery manufacturers in the world. Their plant is backed by the support and expertise of GRUPPO COLINES. Their technical and marketing teams have been trained in Italy at their training centers and facilities. Astro-Packs world-class technology has capability to produce special films from three layer structures to five layer high barrier films, depending on the unique requirement of the consumers product.

3.2.10 Philosophy of Business Astro-Pack believes in up to date and depth study of new trends and new product developments. They are fully aware that the recent developments in converting and induction of high speed machines has left very little room for packaging materials that have low performances. Today's converter or customer cannot afford to compromise on quality. They strongly believe that "customer is a king " and to grow, they need to keep their selves in line with their "needs" and "wants". They realize that in the present competitive market, their customers deserve to get the best, in terms of quality, so that they have minimal wastage of time and materials. After all it adds up to more profits....!

24

3.3 House of Habib:The history of the House of Habib goes back to middle of the previous-to-last century when Esmail Ali of Jamnagar, India, set up a small utensil factory in Bombay. His son Habib Esmail, born in 1878, founded the House of Habib. Habib was very young when his father died, forcing him to join the business of his uncle Cassum Mohammad. Cassum Mohammad was the owner of Khoja Mithabai Nathoo, a merchant, and a manufacturer of copper and brass utensils. It was because of his association with Mithabai Nathoo that Habib Ismaeel came to be known as Seth Habib Mitha. The House of Habib holds many distinctions in Pakistan's history. Habib Bank was shifted to Pakistan on the personal bidding of Quaid-e-Azam Mohammad Ali Jinnah. He came to the aid of the nascent state "even before the Govt of Pakistan was ready to issue appropriate government paper" with a Rs 80 million loan when the Reserve Bank of India failed to deliver Pakistan share of Rs 750 million held by it. It is said that Mohammad Ali Habib gave a blank cheque on Lloyd Bank to the Quaid-e-Azam who wrote Rs 80 million in it. The Habib family set up offices in Vienna and Geneva as early as 1912 and incorporated Habib and Sons in 1921, which dealt in brass, metal scraps and gold with "Lion of Ali" & Zulfiqar embossed on it. The Habib Bank still uses this as its insignia.

3.3.1 Companies hold by house of habib:

The Habib group today consists of:

Finance division - Bank AL Habib, Habib Metropolitan Bank, Habib Bank AG Zurich, Habibsons Bank, Habib African Bank, Habib Overseas Bank, Habib Insurance Limited,

Motors - Indus Motors Company and Agri Auto 25

Manufacturing - Shabbir Tiles and Ceramics, Thal jute, AuVitronics, Thal Engineering, DYNEA Pakistan Limited, Baluchistan Laminates, Noble (PVT) Limited, Pakistan Papersack Corporation Ltd., Horn Plastics Canada

y y

Retail - Makro Habib Limited. IT - Noble Computer services.

3.3.2 Indus motors history: 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 Companys 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. 26

3.3.3 Auvitronics History:-

AuVitronics Limited (or AVT as it is commonly referred) was established as a public limited company by House of Habib in July 1983. AVT is the pioneer in using modern technology for the production of audio/video cassettes in Pakistan. It is also the industry leader. AVT enters the next century by diversifying into plastic moulding parts and subassemblies, in technical collaboration with a Malaysian company, for the automobile industry. The company has over 300 employees. AVT takes pride in providing significant employment to females, which comprise over one third of the work force. 3.3.4 Vertically Integrated Auvitronics for Indus Motors:

Auvitronics Ltds core business was media production in which they were making Audio and video cassettes afterwards when these data carrying technologies were diminishing Auvitronics started new ventures to explore. In 1993 when Indus motors commissioned Its plant at port qasim auvitronics relaunched itself as plastic molding company with same equipments but different dyes. Now a days 70% of Indus motors Plastic, asbestos and other molded items are supplied by Auvitronics Ltd.

27

Products Supplied by AVT to Indus motors:-

y y y y y y y y y y

Lamps Outer Mirrors Bumpers Exterior Ornamentation Grill, Cowl Top & Wheel Cap. Decorative Parts Steering Wheels Garnishes Scuffs & Mirrors Handle Assembly Inside

3.3.5 AgriAutos:

Agriauto Industries Limited is a public limited company incorporated in 1981 and quoted on the stock exchange. The company is one of the leading automotive components manufacturers in the private sector and the first company in Pakistan to acquire TS16949 certification. Technical Collaborations with leading international companies have added to the company's technical versatility. The product range covers both original equipment manufacturers (OEM) and after market. Quality control is maintained at all stages of manufacturing. The company follows international standards i.e. B.S.S., S.A.E, ASTM, JIS, ISO & TS-16949, as the basis of quality control program. Agriauto's production lines are backed by well-equipped standard room and have persistently sought to consolidate technological and product excellence. Agriauto is a part of the prestigious House of Habib Group.

28

3.3.6 Vertically Integrated Agri autos For Indus Motors:Agri autos was basically formed in 1981 to manufacture Tractors and other heavy drilling,construction machinery . Later on House of Habib utilized its capabilities for manufacturing automobile parts for Indus motor. Products Supplied by AVT to Indus motors:y y y y y y Shock absorbers. Cylinder sleeves. Gaskets. Camshafts. Door locks and hinges. Steering box.

29

REFRENCES

Ashay Desai et al (2001) The evolution of vertically integrated organizations: the role of historical context. Vol. 39 Iss: 3, pp.233 243

Astropack, Cast polyproplylene films. Corporate Website http://www.astropack.com.pk/

Candyland Ismail Industries Limited Corporate Website http://www.candyland1.com/candyland/IsmailIndustriesLimitedReadMore.aspx

Chenab Limited Corporate Website http://www.chenabgroup.com/chenab.html#

D. Lee Heavner (2004) Vertical enclosure: vertical integration and the reluctance to purchase from a competitor. Vol. 52, No. 2 pp.179-199

House of Habib, Corporate Website. http://www.hoh.net/avt.htm

Kathryn Rudie Harrigan (Oct., 1984), Formulating Vertical Integration strategies: Vol. 9, No. 4 pp. 638-652

Kathryn Rudie Harrigan (1986) Matching Vertical Integration Strategies to Competitive Conditions Volume: 7, Issue: 6, Publisher: John Wiley and Sons, Pages: 535-555

RTM Yarn Corporate Website http://www.rtmyarn.com/ctm/ctm_profile.html 30

Toyota Indus Motor Company Limited Corporate Website http://www.toyota-indus.com/

Werner Z. Hirsch (1950) Toward a Definition of Integration Vol. 17, No. 2 (Oct.,), pp. 159-165 (article consists of 7 pages)

Wernerfelt et al (1986) Technical Change, Competition and Vertical Integration

31