Zubair Project Atlas Honda

Atlas H onda onda Limited

COMPANY INFORMATION THE BOARD OF DIRECTORS Mr. Yusuf H. Shirazi

(Chairman)

Mr. Saqib Hussain Shirazi

(CEO)

Mr. Aamir H. Shirazi

(Director)

Mr. Motohide Sudo Mr. Sanaullah Qureshi Mr. Sherali Mundrawala Mr. Takemi Ishikawa Mr. Tariq Iqbal Ahmed

COMPANY SECRETARY Mr. Sohail Ahmed

AUDITORS Hameed Chaudhri & Company Chartered Accountants

LEGAL ADVISORS Mohsin Tayebaly & Co

BANKERS Bank Al-Habib Limited Credit Algricole Indosuez 1


Deutch Bank AG Emirates Bank International P.J.S.C. Habib Bank Limited Muslim Commercial Bank Limited National Bank Of Pakistan The Bank Of Tokyo Mitsubishi Limited United Bank Limited

REGISTERED OFFICE 1-McLeod Road, Lahore.

FACTORY F-36, ESTATE AVENUE, S.I.T.E., KARACHI 26-27 KM, LAHORE-SHEIKHOPURA ROAD, SHEIKHOPURA

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INTRODUCTION OF ATLAS HONDA LIMITED Atlas Honda limited is a joint venture between the Atlas group and Honda Motor Company, Japan. The company was created by the merger

of Punjdarya Limited Sheikhoopura successor to Atlas Epak Limited , Dhaka. Since taken over by the government of Bangladesh and Atlas Autos

Limited in 1991.

Both Both these these motorc motorcycl ycle-m e-manu anufact facturi uring ng concer concerns ns were were establ establish ished ed by the the Atlas Atlas group. group. Atlas manufactu ctures res and markets markets Honda Honda Atlas Honda Honda Limit Limited ed manufa motorcycles in collaboration with Honda Motor Company. The company company also manufactures shock absorbers under a technical assistance agreement with Showa Of Japan, world leaders in shock absorber company Honda motor cycles are by far the best selling motorcycle in the country with an unmatched reputation for high quality, reliability and after sales services.

Atlas Atlas has undert undertake aken n to develo develop p local local manufa manufactu cturin ring g capabi capabilit lities ies to the highest economically feasible level. While a major role in localization has been assigned to vendor industries, atlas has the countries largest in house manufa manufactu cturin ring g capaci capacity ty in the indust industry ry at its Karach Karachii and Sheikh Sheikhupu upura ra plants. To support the production facilities the company has established an R&D (research and development) wing and tool making facilities, which are growing rapidly in size and functions as the company expands.

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Atlas Atlas has manage managed d to execut executee nine nine joint joint ventur ventures es / techni technical cal assist assistanc ancee agreements between local venders and foreign manufacturer for transfer of technology. Atlas management is striving to modernize company operations by adapting applicable aspects of research and theory and more specially Honda’s unique philosophy of hard / soft technologies to the realities of Pakistani conditions. Comp Compan any y mana manage geme ment nt stru struct cture ures, s, syst system em,, and and proc proces esse sess are chan change ged d frequently to meet demand of customer needs, growth and new technology efforts are being made to develop participation of all levels of personal in deci decisi sion on maki making ng and and subs substa tant ntia iall and and effe effect ctiv ivee dele delega gati tion on has has been been established at levels where applicable. Various participation programs such as “AALA MAYAR ” Quality circles movements, launched in 1985, are strongly encouraged to allow constructive self expression and team work. The company training and development program encourage each member to develop himself and contribute to his full potential.

Atlas Honda is playing a pioneering role in creating conditions for easy and confident use of motorcycles all over the country.

A vast and growing network of over 1500 motorcycles sales service and spare parts dealers has been established. To backup the system, atlas has setup technical training statement centers in Karachi Lahore and Faisalabad, which which provid providee severa severall course coursess of varyin varying g durat duration ion,, and comple complexit xity y for motorcycles mechanics and users each year. Mobile training facilities take the latest know-how, technology and maintenance of motorcycles to major rural and urban centers around the country.

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VISION OF AHL Atlas Honda limited, being Japanese, always believe in quality leadership customer satisfaction and satisfaction of shareholders. The executives and managers at AHL are keen about the staff cooperation and dedication. That’s why promoting teamwork culture is the core activity of the company. The vision of AHL as follows:

“To remain a market leader in the motorcycle industry and emerge

as a globally competitive center of production and exports.”.

The above statement clearly predicts the overall scenario of the management at AHL.

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MISSION STATEMENT Mission Statement, the statement that further reveals the practicalities of any organization, comparable to its vision statement. The Mission Statement at AHL is highlighted below:

“To be a dynamic profitable growth oriented company through market leader leadersh ship ip excell excellenc encee in qualit qualityy and servic servicee optimi optimizin zing g value value for the shareholders and maximizing exports To give attractive return to business associates and shareholders as per their expectations. Be a respon responsib sible le employ employer er and reward reward employ employees ees accor accordin ding g to their their abilities and performance. performance. To be a good corporate citizen in order to fulfill its social responsibilities. To create and foster a network of researchers, engineers, who will make unique contribution to the development of motorcycle industry ensuring satisfaction of our valuable customers and protection of the environment by producing emission friendly green products. ”.

The Honda Company’s purpose is indispensable to all Honda associates, when it comes to understanding the reason for the existence of the company. Top management at AHL try to ensure that mission statement: a) Is appropria appropriate te to the the purpose purpose of of organizati organization. on. b) Includ Includes es commit commitmen mentt to comply comply with requireme requirements nts and to contin continual ually ly improve the effectiveness of quality management system.

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c) Provi Provide dess a frame framewo work rk for for esta establ blis ishi hing ng and and revi review ewin ing g the the spec specifi ified ed objectives. d) Is communicated communicated and understo understood od within within the organizati organization. on. e) Is reviewed reviewed for continu continual al suitab suitability ility..

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COMPANY POLICY CUSTOMER Our customers are the reason and source of our business , it is our joint aim with our dealers to ensure that the customer enjoy the highest level of satisfaction from use of Honda motorcycle.

QUALITY To ensure that our product and service meet the set standards of excellence.

LOCAL MANUFACTURING To be the industry leader in indigenous of motorcycle parts.

TECHNOLOGY To develop and maintain distinct business advantage through continuous induction of improved hard and soft technology.

SHAREHOLDERS To ensure health and viability of business and the safeguarding shareholder by maximizing profit, payment of regular satisfactory dividend and adding values of the shares.

EMPLOYEE To enhanc enhancee and contin continuou uously sly update update each each member member’s ’s capabi capabilit lities ies and education and to provide an environment to encourage practical expressions 8


of individual potential in goal directed team efforts and compensate them attractively, according to their abilities and performance.

CORPORATE CITIZEN To comply with all government laws and regulations and to maintain high standards of ethics in all operations, and act as a responsible member of community.

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QUALITY POLICY 

Commitment to provide the high quality motorcycles & parts



Right work in first attempt and on time



Maintain and continuously improve quality



Training of manpower and acquisition of latest technology



Safe, clean and healthy environment



Market leadership and prosperity for all.

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PHILOSOPHY AT AHL The center center of AHL’S AHL’S philos philosoph ophy y is based based on the compan company’s y’s princi principle ple.. Underlying the company’s principle are two fundamental beliefs: 1. Respec Respectt for indivi individua duals ls and and 2. Thre Threee Jo Joys. ys.

1. RESPECT FOR INDIVIDUALS INDIVIDUALS At AHL individuals are counted as a member of team that is working for the achiev achieveme ement nt of specif specific ic targets targets.. So here here every every indivi individua duall from from the top management to the employees is categorized as an important part of the comp compan any. y. Also Also ever every y asso associ ciat atee is hono honore red d for for his his or her her effo effort rtss and and contribution. Associ Associate atess at Honda Honda are motivate motivated d to think think creati creativel vely y and act on their their judgment and initiative. All members at AHL are equally recognized, no discrimination is made on the basis of race, age, sex, religion, national origin, educational background and social and economic status.

2. THREE JOYS

AHL AHL beli believ evee that that each each pers person on work workin ing, g, or comi coming ng in touc touch h with with our our compan company y direct directly ly or throu through gh our products products,, should should share a sense sense of joy through the experience. This feeling is expressed as “ Three Joys”. AHL’S goal is to provide joys to those who:

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Atlas H onda onda Limited 

Produce their Products.



Sell their Products.



Buy their Products.

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CULTURE OF ATLAS HONDA During my stay at atlas Honda Limited Karachi I have found a unique blend of different valuable cultural variables that includes 

There is egalitarian system in the whole organization i.e. there are equal opportunities and chances of progress for all employees.



There is power delegation at every level.



There is lesser power distance between top-level management and lower level management for example each and every employee can have an easy access to even even the CEO of organization.



There is room for innovation. Each employee is encouraged to pave a better way for innovation.



Ther Theree is prac practi tica call impl implem emen enta tati tion on of TQM

(tot (total al qual qualit ity y

manage managemen ment) t) and contin continuou uouss improv improveme ement nt which wh inherited ted in whiich ch is inheri Japanese culture , in the form of KAIZEN ( a slight change towards improvement ) and AALA MAYAR. 

Ther Theree exis exists ts equa equali lity ty in over overal alll orga organi niza zati tion on,, whic which h is well well represented by the thing that the lower level workers and top level mana manage geme ment nt even even the the CEO CEO of the the orga organi niza zati tion on wear wear the the same same uniform.



Employees are very much cooperative with each other.



Management and employees are open to market challenges. challenges.



There are no unnecessary bindings of excessive rules and regulations.

13

Atlas H onda onda Limited 

There is effective interdepartmental communication between all the departments.



There are no communication gaps between top-level management and lower lever workers.



There is almost 100% job security for employees, so employees are devoted towards their jobs and are well satisfied satisfied with their jobs. There is almost zero percent job turn over.



Cust Custom omers ers’ satisfa sfact ctio ion n is the the majo majorr focu focuss of the the orga organi niza zati tion on.. omer s’’ sati Customer is king for the organization.

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DEPARTMENTS I have visited following departments of ATLAS HONDA LTD, Karachi.



Human resource



Finance



Maintenance



Vender procurement



Production



Information Information technology



Marketing

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HUMAN RESOURCE DEPARTMENT This department has three sections 1. Hu Huma man n reso resour urce ce 2. Admi Admini nist stra rati tion on 3. Indus Industri trial al relati relations ons

HUMAN RESOURCES

This section performs following functions 

Recruitment & selection of employees



Training & development of employees



Succession planning of employees

ADMINISTRATION


Facilitation of company guests and executives



Employees’ Mess management



Utilities administration



Miscellaneous administrative activities

INDUSTRIAL RELATIONS


To build a healthy cooperation between management and workers.

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FINANCE Atla Atlass Hond Hondaa has has a well well esta establ blis ishe hed d finan finance ce depa depart rtmen ment. t. It is tota totall lly y computerized .it has its own system which is prepared by IT department. Finance department has further following sections.



Finance



General ledger



Costing



Taxation



Sales



Payables



Payroll

FINANCE

This section deals with the •

Banking matters

•

Fund management

•

Import accounting.

COSTING

It is an important section of finance department, which deals with all costing matters including all material, labor, and overhead costs.

TAXATION

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It deals with all tax and custom duty related affairs.

PAYABLES

This section deals with the following activities. 

Vender payables



Utility payables



Insurance payables



Tax payables



Club payments



Other payable

PAYROLLS

This section controls the salary system of the organization. All the system is computerized. First of all the attendance of all employees is recorded and at the end of the month salary of all employees are paid after all deductions* * Tax deductions, absenteeism deductions and all other deductions

GENERAL LEDGER

Finally all the transactions are recorded in general ledgers. General ledger for each account is maintained maintained separately. separately. There is a computerize computerized d system, system, which then produce different statements.

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VENDOR PROCUREMENT DEPARTMENT

At present, 82 vendors are working with the company. This department performs following functions •

This department is responsible for all the relations and dealing with different vendors.

•

This department motivates vendors to produce excellent quality and train them to achieve the highest level of quality.

•

This department also deals with the CKD (complete ( complete knock down).

•

This This depart departmen mentt perform performss VIP (vendo (vendorr improv improveme ement nt progra programe). me). Under this programe, the department representatives go to the vendors and trai train n them hem for for new new meth metho ods to produ roducce bett better er qua quality lity at reasonable price.

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PRODUCTION DEPARTMENT It is very important department as it produces the main product of the comp compan any, y, whic which h will will even eventu tual ally ly gene genera rate te reve revenu nue. e. The The prod produc ucti tion on department has twelve different shops. Each shop is responsible for different production functions. These shops include •

Raw material shop

•

Cutting shop

•

Press shop

•

Dying shop

•

Welding shop

•

CKD shop

•

Switch assembly shop

•

Tire shop

•

Engine shop

•

Washing shop

•

Final assembling shop

•

Inventory shop

The The prod produc ucti tion onss depa depart rtmen mentt is very very effi effici cien ent. t. The The avera average ge per per motorcycle assembling time is four minutes. The production department of Karachi plant can produce 250 motorcycles per day.

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INFORMATION TECHNOLOGY DEPARTMENT Atlas Honda has a sophisticated IT system. All the departments are linked through network. Each and every department is computerized. This comput computeri erizat zation ion has reduce reduced d the burden burdenss on employ employees ees.. Particu Particular larly ly the employees of finance department have different soft wares to support their work. All these soft wares have been developed by company’s own IT department. Mostly soft wares are developed in-house and in some special cases outsourcing is also being used.

VISION STATEMENT OF IT DEPARTMENT I.T Depar Departme tment nt is dedica dedicated ted to provid providee reliab reliable le inform informati ation on base base using using most most modern technology to potential users at all levels. Our professionals individually and collectively, will constantly improve their competitive skills and excel in providing quality service covering all the aspects of the technology. By embarking into the digital age we will accelerate the positive effects and mitigate the challenges as knowledge grows when shared. We will innovate in a research-oriented manner with technologies to create our own future and value added activities for profitable relationships with our stakeholders, thus encouraging intellectual curiosity for our products, service and insight that will help people around the world, shape the ways business and education will be done in future. Our professionals and their competitive skills will be the hallmark, that combined with technology innovation, expert skills and teamwork, will keep us leaders in "CHANGE" to open new doors. doors.

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MAINTENANCE

This department is responsible for all the maintenance of the whole factory, offi office cess and and even even the the hous houses es of top top mana manage geme ment nt.. In orde orderr to provi rovide de effective, effective, efficient and timely maintenance maintenance this department has two type of information. 

It has Machine wise spare parts report



Machine and equipment list

Seventeen employees are there in this department. Three are engineers and others are workers. It provides two types of maintenance. 

Corrective/ Breakdown maintenance



Preventive maintenance

CORRECTIVE/BREAKDOWN MAINTENANCE The same same depart departmen mentt also also carrie carriess out Emerge Emergency ncy/br /break eakdow downs ns of machines & equipments and plant maintenance work. If any of the above problems occur then the concerned department sends a Work Request to this department, then this department resolves the problems according to the

Work Request.

PREVENTIVE MAINTENANCE MAINTENANCE

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In this maintenance system department tends to provide and follows a comprehensive preventive maintenance program. According to this program the department set a sequence of maintenance activities for all the machines of differe different nt produc productio tion n shops shops on contin continuou uouss basis. basis. Some machines es are Some machin checked on monthly basis and others are maintained on some other fix intervals in order to prevent any breakdown and to streamline the production process.

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MARKETING DEPARTMENT Marketing department is divided into three parts on behalf of its functions. •

Sale

•

Service

•

Spare parts

SALE It is an important division of marketing department. It is the profit centre of the company. It deals with three types of sales.

1. INST INSTIT ITUT UTIO IONA NAL L SALE SALE

The company provides the direct sale to the institutions. Company provides the motorcycle to following institutions. •

Police departments

•

CSD (canteen store department)

•

TCS (technology communication supplies)

•

Pesticide companies

•

Many others

2. INDI INDIVI VIDU DUAL AL SALE SALE

This is the usual sale to the individuals. This usually follows the following path.

Company

Dealer

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Customer


3.

EXPORTS

Company also exports CG 125 to Sri Lanka, Nepal and Bangladesh.

FUNCTIONS PERFORMED BY SALE SECTION

The The sale sale sect sectio ion n of the the mark market etin ing g depa depart rtme ment nt perf perfor orms ms the the foll follow owin ing g functions •

Forecasting of sale

•

Booking of motorcycles through dealers

•

Managing the payment

•

Manage the dealership network

The company follows the policy of advance booking which means company first receive the payment and then produce the product according to demand and this is the reason that the company has a very low amount of receivables and most of the receivables r eceivables are based on the sale made to institutions.

SHOW ROOM

Sale section also deals with the showroom. There is only one company owned showroom in Karachi and this showroom is meant only for the display of motorcycles. In the past the company used to sell the motorcycles from the showroom but now a days company doesn’t sell the motorcycles through its showroom. But in some special cases the company sells the motorcycles from showroom to the persons that have relationship to the company employees.

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SPARE PARTS This This is anot anothe herr impor importa tant nt divi divisi sion on of the the mark market etin ing g depa depart rtmen ment. t. Basically company doesn’t consider it as profit center rather a supportive sectio section n to produc producee better better custom customer er servic service. e. It has separa separate te distri distribut bution ion system and different parts dealers in different regions.

SERVICE The second major section of the marketing department is service section. The service section deals with •

Antenna or service dealers

•

Warranty and training centre

ANTENNA OR SERVICE DEALERS

These are the authorized dealers of the company. The company provides them autonomy while dealing with the claims and these dealers have the auto autono nomy my to repl replac acee the the defec defecte ted d part part with withou outt cons consul ulta tati tion on with with the the company. company. Company provides two free tunings after the sale of motorcycle motorcycle.. Basi Basicc reas reason on for for the the esta establ blis ishm hmen entt of thes thesee deal dealer erss is to sati satisf sfy y thei their r customer and increase the customer loyalty.

WARRENTY CENTRE

In Karachi the company has a well-established warranty and training centre. this this cent centre re hand handle less the the serv servic icee sect sectio ion. n. Wa Warra rrant nty y and and trai traini ning ng sect sectio ion n performs the following functions 26


•

Deals with the claims

•

Training to different service dealers

CLAIMS

The company has a policy that customers’ claims will be settled if these are made within the six months or 1000 km coverage (whatever occurs first) warranty conditions.

TRAINING

Warranty center not only provides training to their antenna and service dealers but also the mechanics of ordinary workshop in order to develop the skilled four stroke mechanics. Company organizes the workshops on regular basis and invites antenna and service dealers from all over the Pakistan to participate in these workshops and training program.

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MARKETING MIX There are four elements of marketing •

Product

•

Price

•

Place

•

Promotion

PRODUCT Atlas Honda has two basic products •

Honda CD 70

•

Honda CG 125

Both of them are the four stroke motorcycles. Both the products have a good repute in the market and that is the reason that Honda has approximately 63% market share now a days. The basic reason of the success is the quality maintained by the company throughout its career. These two models of HONDA are being manufactured in Sheikhupura and Karachi. Each plant has a capacity to produce 250 motorcycles per day, but still the market demand is not being fulfilled. In order to increase market share marketing department perform following activities •

New model

•

Changes in design

•

In-house production

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NEW MODEL

In order to get more market share atlas Honda has been introducing new models over the time. The latest model was launched launched by company company in 1992199293. Previously there was a small fuel tank but in the new model company intr introd oduc uced ed a larg largee fuel fuel tank tank as comp compare ared d to the the prev previo ious us one. one. But But the the company always maintained the quality of its motorcycle.

CHANGES IN DESIGN

There was a great demand from the customers to launch a new model but it is a difficult job to launch a new model so in order to fulfill the customer wants the company has a policy to change the stickers of fuel tank and side covers and some other nominal changes in indicators headlights etc. time by time, in order to satisfy customers needs. But the engine and other main accessories are the same.

INHOUSE PRODUCTION

At the outset of company 90-95% parts were imported from Japan and were assembled in Pakistan. With the passage of time company introduced the concep conceptt of localization. Comp Compan any y enco encour urag aged ed the the loca locall vend vendor orss and and suppliers to produce the parts of motorcycle according to the level of Honda international. So in order to maintain the quality, the parts made by local vendors were approved by the Honda international and then they were used in local production. So now Atlas Honda has managed to localize almost 89% of the parts. parts. Still 11% parts parts are being being importe imported d from Japan. Japan. Atlas Atlas Honda also provides assistance to their vendors to maintain high quality. They send their engineers to check the quality and to train the vendors in 29


order to produce the required qualitative product. This all is done under the head of marketing department.

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COMPETITORS BRANDS & MODELS Yamaha

Yb-100 Excellence Yama-4 Suzuki

SD-110 SD-Flash Sohrab

JS-70 JC-125 (china) •

Pak hero

PH-70 •

Hero

RF-70 RF-125 •

Star

DS-70 C-70 (CBU) •

Lifan

LF-70 LF-150 •

Jailing

JH-70 (Remot-Self) JH-70 (Without)

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PRICE Atlas Honda has two products and their prices are as under Honda CD70

Rs. 58500

Honda CG 125

Rs. 73000

The company uses the single price strategy. It means the product has the same price all over the Pakistan. Initial Initially ly Atlas Atlas Honda Honda was the only only produc producer er of qualit qualitati ative ve four-st four-strok rokee moto motorc rcyc ycle le in Paki Pakist stan an.. So they they were were taki taking ng the the adva advant ntag agee of this this monopo monopolis listic tic situat situation ion and using using the price price skimmin skimming g strate strategy gy and were were charging higher prices. Till 17th may 2003 company had the high prices for its motorcycles. Due to these high prices the competitors found a gap and entered into the market with low prices and start capturing market share. After the intense research work Atlas Honda was in a position to reduce prices. The major objective to reduce the prices was to increase the market share and to utilize full production capacity. So company has reduced Rs. 10,000 in HONDA CD70 and almost Rs. 5000 in CG 125.

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COMPETITORS’ BRAND PRICES Yamaha

Yb-100 Excellence Yama-4

Rupees 61800 62500 63300

SD-110 SD-Flash

64000 76500

JS-70 JC-125 (china)

43500 62000

PH-70

42500

RF-70 RF-125

46000 70000

DS-70 C-70 (CBU)

40400 52000

LF-70 LF-150

40000 85000

Suzuki

Sohrab

Pak hero

Hero

Star

Lifan

Jailing

JH-70 JH-70 (Remot (Remot-Self -Self)) 46000 JH-70 (W (Without) 42000

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PROMOTION Promotion mix is •

Advertisement

•

Sales promotion

•

Personal selling

•

Publicity

ADVERTISEMENT

Atl Atlas Hond Hondaa uses uses the the prin printt medi mediaa as well ell as elec lectro tronic nic medi mediaa for for adve advert rtis isem emen ent. t. In prin printt medi mediaa the the comp compan any y give givess adve advert rtis isem emen ents ts in newspapers and it also uses billboards on the road side for the promotion of the product. On electronic media, company gives their advertisement on GEO channel during during hourly hourly news. news. Compan Company y has a contra contract ct with with AdCom AdCom (adver (advertis tising ing agency) for all of its advertising activities.

SALES PROMOTION

Atlas Honda also promotes its product through different sales promotional activities. •

Company sponsors different functions and activities in main cities.

•

Comp Compan any y provi rovide dess rewa reward rdss and and ince incent ntiv ives es to thei theirr deal dealer erss on achieving targets. Company send their successful dealers to different trips all over the world.

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PERSONAL SELLING

The The comp compan any y does does pers person onal al sell sellin ing g as well well,, not not to indi indivi vidu dual alss but but to institutional customers.

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DISTRIBUTION Atla Atlass Hond Hondaa gain gained ed good good mark market et shar sharee due due to its its stron strong g dist distri ribu buti tion on network. For distribution atlas Honda has divided the whole country into two regions. 1. Sout South h regi region on 2. Nort North h regi region on

SOUTH REGION

It includes following territories •

Karachi (Karachi region covers whole Sindh province)

•

Quetta (This covers whole Baluchistan province)

NORTH REGION

It includes following three territories •

Multan (Its includes all lower Punjab cities)

•

Lahore (It covers cities from upper Punjab)

•

Rawalpindi (It covers Islamabad and NWFP.)

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“5S” DEALERS This is a new emerging trend set by atlas Honda. Now days the company is emphasizing on “ 5S” facilities to their customers through “ 5S dealers”. 5s stands for the following five facilities 1. Sale 2. Service 3. Spar Sparee par partts 4. Spec Specia iall sale sale 5. Seco Second nd hand hand sale saless

SALE

It includes only the sale of new motorcycles.

SERVICE

It includes includes after sale service to the customers customers like Warranty Warranty claims, Tuning of motorcycles, Repair of motorcycles m otorcycles etc.

SPAREPARTS

Company provides spare parts facility to their customer . SPECIAL SALE

It deals deals with with the credit credit facili facility. ty. In specia speciall sale, sale, the dealer dealer provid provides es the cust custom omer er with with cred credit it faci facili lity ty at his his own own beha behalf. lf. Atla Atlass Hond Hondaa does does not not provide any support for credit sale.

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SECOND HAND SALE

Dealer also deals in second hand Honda motorcycles. The company wants that the customer might not switch to other brand even in second hand motorcycles.

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SALES PROFILES

MARKETING PERFORMANCE HIGHLIGHTS OF 2002 / 2003

SALES CATEGORY

200 1 /20 02

2 00 2/20 03

di diffe re renc e

%

7 68 00

101 8 00

2 500 0

33

INSTITUTION

8 40 0

1 14 0 0

30 0 0

36

POLICE

2 30 0

-

-2 30 0

-

EXPORT

2 50 0

38 0 0

13 0 0

52

9 00 00

117 0 00

2 700 0

30

MARKET

TOTAL

39


SALES TRENDS

ATLAS HONDA LTD SALES TREND 2001/02-2002/03 150,000

100,000

50,000

0 HONDA

YAM A AH HA

SUZ UKI

CHINESE

2001/02

90,064

22,024

8,062

8,000

2002/03

117,209

28,000

14,000

36,000

40


SALES GRAPH

ATLAS HONDA LIMITED SALE 1999 ~ 2003 130000 110000 90000 70000 50000 30000 10000

1999~00

2000~01

2001~02

2002~03

CD70

43073

57791

62828

80000

CG125

15524

20330

27236

37000

TOTAL

58597

78121

90064

117000

CD70

41

CG125

T OTAL


MARKET SHARES 2 WHEELER MARKET SIZE IN PAKISTAN 2002-2003

BRAND HONDA YAMAHA SUZUKI CHINESE TOTAL

JULY~JUNE 2002-03 117000 28000 14000 36000 195000

42

60% 14% 07% 18% 100%


FINANCIAL FINANCI AL ANALYSIS ANALYSIS In order to know whether a firm is using its resources efficiently or not, financial analysis is necessary. The information derived from these types of analysis is used to determine the overall financial position of the company. I have calculated certain ratios which will be helpful helpful to determine the existing financial position of AHL.

TYPES OF FINANCIAL RATIOS

Diff Differ eren entt rati ratios os can can be calc calcul ulat ated ed from from fina financ ncia iall stat statem emen ents ts.. Majo Major r categories are as follows. A. Liquid Liquidity ity ratio ratioss B. Levera Leverage ge ratios ratios C. Activi Activity ty ratios ratios D. Profitability ratios

LIQUIDITY RATIOS

It measures the firm’s ability to meet its short-term obligations as they come due. If a firm is unable to pay its current liabilities through its current assets it can become insolvent in future. This ratio includes: 1) Working Working Capital Capital = Current Assets-C Assets-Curren urrentt Liabilities Liabilities

2002

2001

Rs. 347,904,000

Rs. 327,842,000

Working capital of AHL has increased in 2002 as compare to 2001, which is a good sign for the company. It means firm has enough cash to meet its short-term obligations. 43


2) Current Current Ratio Ratio = Current Current Assets Assets / Current Current Liabilities Liabilities

2001

2002

1.48

1.38

A little bit decrease decrease has occurred occurred in year 2002 but still it is not good as it is above 1.s

3) Qu Quic ick k (Aci (Acidd-Te Test st)) Rati Ratio o = Curr Curren entt Asse Assets ts – Inve Invent ntor ory y / Current liabilities

2001

2002

64.8 %

83.5 %

It also shows an increase as compare to previous year, so AHL has enough cash available to pay all its current assets.

Cash Ratio = Cash Equivalents + Marketable Securities / total assets

2001

2002

15.7 %

32 %

cash ratio has gone up in 2002. it’s a good indicator but company can earn more by investing it in some other activities.

LEVERAGE RATIO

It measures a firm’s long-term solvency problems whether a firm is able to pay its long-term debts or not. This includes following Ratios:

4) Debt Debt – Eq Equi uity ty Ratio Ratio = Curr Curren entt Liab Liabil ilit itie iess + Long Long Term Liabilities / Stock Holder’s Equity 44


2001

2002

0.57

0.616

This ratio has gone up from previous year. It is a good indicator as this ratio is going up. It means company is making progress.

5) Debt Ratio Ratio = Total Total Liabili Liabilities ties / Total Total Assets Assets

2001

2002

55%

56%

This ratio is almost same in both years. it means there is stability . this is a good indicator.

ACTIVITY RATIO

It indica indicates tes how effici efficient ently ly manage managemen mentt utiliz utilizes es its assets assets in genera generatin ting g revenues. It can be measured by:

6) Total Total Asset Asset turnover turnover = Sales Sales / Total Total Assets Assets

2001

2002

3.16

3.015

Ratio has decreased from previous year. Fixed Asset turn over = Sales / Fixed Assets

2001

2002

10.46

10.31

It has approximately the same as in 2001. AHL is more efficiently utilizing its fixed assets, as fixed assets are more productive. So it is a good sign.

7)

Inven ventory tory Tur urn n over ver Rati atio = Cos Cost of Goods oods Sold old / Inventory 45


2001

2002

7.92 times

10.36 times

There is increase in this ratio, which shows shows good performance. It shows that company has increased its sales in this year to a great extent.

8) Average Average age of Inven Inventory tory = 365 365 / Inventory Inventory Turn Turn Over Over

2001

2002

45 days

35days

It shows that after how many days inventory is being sold out. It has also reduced to 35 days in 2002, which shows that AHL is making progress. This is because the sales have gone up in year 2002.

PROFITABILITY RATIOS

It measures the overall record of management in generating profit. If a firm does not earn adequate profit, its long run survival will be threatened.

9) Gross Gross Profit Profit Margin Margin = Gross Profi Profitt / Net Sales Sales

2001

2002

9.7 %

13.31

This ratio has increased in 2002. It means that management is efficiently controlling its variable cost, and the efficiency of the firm is increasing as the gross profit margin is increasing.

10)

Operating Pr Profit Ma Margin = EBIT / Net Sa Sales

2001

2002

4.69 %

7.48% 46


It has increased in year 2002 it shows, AHL has a good control over its expenditures.

11) 11)

Net Net Pro Proffit Margi rgin = Net Net profi rofitt af after ter Taxe Taxess / Net Net Sale Saless

2001

2002

2.5%

4.9 %

Net Profit Margin has also increased. Profit margin is almost double in 2002 than in 2001. it shows that company is on its way to progress. If a company is not able to earn profit, it will be no longer in the industry. It shows the strength of the company.

12)

Return on on to total as assets = Net Pr Profit / Total As Assets

2001

2002

7.91%

14.76 %

It measures the firm’s ability to utilize its assets to generate profit. It has been increased in year 2002; it means that the productivity of assets to generate profit has been increased. Same assets are now generating more profit.

13)

Dividend pa payout Ra Ratio = Di Dividends / Ne Net Pr Profit af after

Taxes

2001

2002

44 %

40.9 %

Dividend pay out ratio has been reduced but it cannot be a bad indicator always. Profit may be reinvested which is a good approach by management to be successful in long run.

47


SWOT ANALYSIS STRENGTHS Atlas Honda Ltd. has following strengths.

QUALITY PRODUCT

Atlas Honda Ltd. has quality products, which is one of its major strengths.

GOOD IMAGE

Company has a good and favorable image in the market and in the mind of customers.

EXCELLENT SERVICES

Company provides excellent services (after sales services) to its customers.

FINANCIAL STRENGTH

Atlas Honda ltd. is financially strong company which is its another strength.

INTENSIVE DISTRIBUTION NETWORK

Company has intensive distribution network (dealers) through out the country which is it strength. 48


COMMITTED EMPLOYEES

Company has committed and devoted employees that are loyal to the company, which is another strength of the company.

FOUR STROKE TECHNOLOGY

Four-stroke technology is being used in Honda motorcycles that is again another strength of the company. This is the latest technology being used in this industry.

AVAILABILITY AVAILABILITY OF PARTS

The Spare Parts OF the motorcycles are easily available all over the country which is another strength of the company.

LARGEST SERVICE NETWORK

The company has has the largest service network through out the the country.

RESEARCH AND DEVELOPEMENT DEVELOPEMENT

The company has an R&D department which suggests the production department to use latest technologies.

MARKET RESEARCH Company has a sophisticated market research system. With the help of this system company is able to get knowledge about competitors activities and market trends.

49


LATEST PRODUCTION FACILITIES

The company has latest production facilities which increases the production level and quality.

INNOVATIVE CULTURE CULTURE

The culture of the company is very rich which is supportive for employees to innovate new ways to improve the things.

VENDOR IMPROVEMENT PROGRAM

Company has a vendor improvement program. With the help of this program company is able to convince vendors to produce better quality for the company productions.

LOCALIZATION

Till now company is in a position to localize its productions up to 89%. Almost 89% of parts to be used in production are in house.

LESS EMPLOYEE TURN OVER

Employee turn over is very less at Atlas Honda ltd. this shows that the employees are well satisfied with their jobs.

50


WEAKNESSES HIGH PRICE

The price of Honda motorcycle is relatively higher than others.

LACK OF NEW MODEL

Company has not introduces any new model with major changes from a long time.

LESSER PROMOTIONAL ACTIVITIES

Compan Company y has lesser lesser promot promotion ional al activi activitie ties. s. Usuall Usually y it do not use electronic media to promote the motorcycle but now company is adopting the strategy to use the electronic media m edia as well for promotion.

51


OPPORTUNITIES

“5S” CONCEPT CONCEPT

New concept of “5S” is an opportunity oppo rtunity opportun ity for company to develop. With this new concept con cept company com pany has introduc int roduced ed two new than sales, concept company introduced introdu ced new “S” other other than sales, spar sp are e parts pa rtss and and serv servic ice. e. Thes Thesee are ar e spec specia iall sale saless and and seco second nd hand hand sale sale.. spare are part are According to this new idea dealers will help the customers to replace their second hand motorcycle with new one and customers can get motorcycle on credit as well.

POOR QUALITY OF CHINESE BRANDS

Chinese brands that are available in the market are not comparable with HONDA motorcycle in quality terms. So the poor quality of Chinese brands is an opportunity for the company as the company believes that people using Chinese brand will eventually switch back towards HONDA because of relatively poor quality of Chinese brands.

GOVERNMENT GOVERNMENT RULE OF LOCALIZATION LOCALIZATION

Recently government of Pakistan has passed a rule for the motorcycle industry in Pakistan. According to this rule, within few years only that motorcycle company will be able to sell their brands which will localize its production at a rate of 5% to 10 % each year. HONDA has localized its production up to 89% till now. So the company is leading the industry in this regard. This is an opportunity for company as it has more government support because of this reason (localization).

52


THREATS MARKET CONDITIONS OF KARACHI

Karachi is most populated city of Pakistan. So it is a huge market for the company. But now a days snatching of new HONDA motorcycle is very common in Karachi. Because of this reason people are reluctant to buy new motorcycle. So it is a great threat for the company.

NEW CHINESE BRANDS

There are more than 15 Chinese brands of motorcycle available in the market. These are competing HONDA in price terms very badly. So it is a threat for the company.

53


SURVEY (DURING

MY STAY STAY AT

ATLAS HONDA

LTD.

I

HAVE CONDUCTED A SURVEY

(RESEARCH)

.)

UNDER THE SUPERVISION OF NATIONAL MANAGER SALES AND MARKETING MANAGER

MARKETING RESEARCH PLAN

Objective: What is the impact on sales sales of different different brands of Motorcyc Motorcycles les after price reduction?

Topics:

Dealer Related: 

How much price has been reduced?



Why prices have been reduced?



Impact of price reduction on sales?



Is there any chance for further price reduction?

Public Related: Why do people prefer to buy specific brand of motorcycle?

54


METHODOLOGY I have conducted interviews of dealers and customers based one the questionnaires given here. I have gone to dealers’ outlets in order to get forms filled by the dealers and went to different markets in order to approach customers.

TARGETED LOCATIONS

My main main targ target et mark market et for for deal dealer erss was was “Akb “Akbar ar Road Road”” and and for for custom customers’ ers’ identi identifica ficatio tion, n, we have have chosen chosen Zainab Zainab market, market, Tariq Tariq Road, Road, Akbar market and Karachi University.

TIME FRAME

I have spent three weeks for this research project.

55


QUESTIONNAIRES QUESTIONNAIRE QUESTIONNAIRE (FOR DEALERS) 1. Name of Dealer______ Dealer____________ ___________ ___________ ____________ ___________ ___________ ___________ __________ _____ 2. Name of dealershi dealership/out p/outlet__ let_______ ___________ ___________ ___________ ___________ ___________ ____________ _______ _ 3. Since Since how long are you in this this industry__ industry________ ___________ ___________ ___________ ___________ _______ _ 4. Had you been been dealing dealing in other brands__ brands________ ____________ ___________ ___________ ___________ ________ ___  

Yes No

5. If yes, what are those those brands____ brands__________ ___________ ___________ ___________ ___________ ___________ ________ ___ 6. Why have you you chosen chosen this specific specific brand brand to deal in______ in____________ ___________ __________ _____ 7. What What stra strate tegy gy have have you you used used to cope cope with with the the decr decrea ease sed d pric prices es of the the motorcycle

industry?

_______________________________________________________________ 8. What was your old price and what is your new price?____________________ 9. To what extent would you like to further reduce your prices? ______________ 10. How much your sales have been changed? 

Previous average sales________________________________ sales_______________________________________ _______ sales_______________________________________



New average sales________________________ sales__________________________________________ __________________ sales__________________________________________

11. What impact does it has on the prices on second hand motorcycles? Models

1999

2000

2001

2002

Before reduction ____

____

____

____

After reduction ____

____

____

____

Difference

____

____

____

____

12. How do you see se e the o see the future of your brand and other the otther her brands_______________ 56


QUESTIONNAIRE QUESTIONNAIR E (FOR CUSTOMERS) QUESTIONNAIRE CUSTOMERS)) CUSTOMERS

1. Name of respondent______________________________ respondent____________________________________________ ______________ respondent____________________________________________ 2. Which Motorcycle do you have___________________________________ 3. Which Motorcycle did you had before this one_______________________ 4. Why have you kept/replaced the previous one _______________________ 5. Why have you decided to buy this brand? __________________________ 

Friends/Relatives Friends/Relativ ess suggestion Friends/Relative



Your own decision

6. If it was your own decision, why have you decided this brand 

Brand loyalty



Better quality



Lesser price



Design Design



Economy



Others

7. Are you satisfied with this brand? brand?  

Yes No

8. If no, why______________________________________ why____________________________________________________ ______________ why____________________________________________________ 9. If you have to buy another motorcycle, will you choose the same brand again? 

Yes

57

Atlas H onda onda Limited 

No

10. If no, why______________________________________ why____________________________________________________ ______________ why____________________________________________________ 11. Please rank these brands in preference order (most preferred at # 1 and least preferred at last) Yamaha ______

Suzuki ______

Pak Hero ______ Hero ______

Sohrab ______

Honda ______

Super star ______ Jinan ______

Star

Lifan ______ ______ Jialing Jialing______ ______

______

12. Suggestions for improvement, if any ______________________________

58


RESULTS SAMPLE SIZE (I have chosen sample on the basis of random method) Dealers

=

13

Customers

=

30

DEALERS

Among these 13 dealers, I have chosen four HONDA dealers and nine dealers of other brands including Chinese.



Deal Dealer erss who who have have ever ever deal dealtt in some some othe otherr bran brands ds

=

07 (54% (54%))



Deal ealers ers who hav have nev never deal dealtt in some ome other ther bran brands ds

=

06 (66% (66%))



Dealers who have been switched from HONDA to some other brands =

01

REASONS:

There was no sale of HONDA in Karachi market before price reduction, so he has decided to deal in some other brand. 

Dealers who have switched from some other brand to HONDA. =

01

REASONS:

He has felt that in near future HONDA will capture the motorcycle market, so he has left the dealership of VESPA and started dealing in HONDA.



Impact of price reduction on sales of new Motorcycle:

HONDA = Sales have increased increased by 3 to 4 times after the the price reduction. OTHER BRANDS =

Sales have decreased by one half. 59




Impact of price reduction on the prices of second hand Motorcycle:

Prices of all models of HONDA (from 1999 to 2002 model) have gone down by Rs.7,000 to Rs.10,000. There is no specific market price for second hand motorcycles of Chinese brands.



Future of different brands:

According to different dealers point of views, the HONDA may remain market leader but the market will be in the hands of the brand, which will be able to provide better quality at reasonable prices and will be able to provide services as well. Almost more than 80% of Chinese brands will be out of the market in near future just because of poor after sale service.

60


CUSTOMERS Customers using HONDA

=

22 (73.33%)

Customers using YAMAHA

=

03 (10.00%)

Customers using SUZUKI

=

01 (03.33%)

Customers using other brands*

=

04 (13.34%)

Total number of customers

=

30 (100%)

*All Chinese, Vespa and Kawasaki. Custom Customers ers who are satisfi satisfied ed with with HONDA HONDA

=

22(100 22(100%) %)

Custom Customers ers who are not satisf satisfied ied with with HONDA HONDA =

00(0%) 00(0%)

Users of HONDA HONDA who want to repeat repeat the same brand =

21(95.45%) 21(95.45%)

Users of HONDA who don’t want to repeat the same brand =

01(05.55%)

Reasons

The person has told that he will not repeat Honda because he want to have some new motorcycle at lower price, so he will like to have some Chinese motorcycle because of its low price.

Ranking of different Brands by Customers Position

Number one

Brand

=

Number two Number three

HONDA =

=

61

YAMAHA SUZUKI


SUGGESTIONS BY CUSTOMERS:

Duri During ng this this rese resear arch ch proj projec ectt we have have foun found d some some majo major r demands from customers. Few of them are as follows. 

Customers are very happy because of the price reduction by HONDA. But customers still want further price reduction by the company.



It is a major demand from the customers that now company should introduce some major change in model.



Cust Custom omers ers want want the the comp compan any y to intro introdu duce ce some some new new mode models ls in addition with CD 70 and CG 125.

62


FINDING AND SUGGESTIONS I have found the following things important during this project 

The company should try to improve the relations with dealers, as some dealers are not satisfied and happy with some of the company’s policies.



It is a better time to introduce some new model. There is an intense competition in the market so major change in model will pave a better way for the company not only to maintain the existing shares but also to increase the number of market share.



Company should increase its capacity in long run and in short run company should start night shifts to fulfill the increasing market demands of their products.



Company should develop proper measures to eliminates the rumors from the market regarding the company and its dealers



Company should control the prices of the motorcycle in the markets. We have observed some dealers at our own, selling the motorcycles to the customers above the market price. Although the company has already a system to control the price but it is not sufficient.

63

Zubair Project Atlas Honda

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