Final Project of Business Policy and Strategy

Final Project

Submitted To

DR. ABDUL WAheed

Project by

Rida Yousaf L1F16MBAM0002

Mohammad Adnan L1F16MBAM0026

Syed Nouman Ali L1F16MBAM0077

Mohammad Tymur L1F16MBAM0084

Muhammad umar shakoor L1F16MBAM0120

Submission Date

June 24th, 2019

1
Final Project of Business Policy and Strategy

Table of Content

Details Page#
Introduction 3
Background of the organization 3
Product Line 3
Product List 3
Distributions 4
Clients 4
Competitors 4
Competitor Analysis 4
Research Problem 5
Objective of the Project 6
Methodology 6
Internal Factors Evaluation (IFE) Matrix 7
Why we give these weights and rates in strength 8
Why we give these weights and rates in weakness 9
External Factors Evaluation (EFE) Matrix 10
Why we give these weights and rates to opportunities 10
Why we give these weights and rates to threats 11
SPACE Matrix 13
COMPETITIVE POSITION 15
INDUSTRY POSITION 15
FINANCIAL POSITION 15
STABILITY POSITION 16
Rating scale for QSPM 16
QSPM Matrix 17
Explanation of QSPM Matrix 18
Recommendations & Suggestions 20

2
Final Project of Business Policy and Strategy

1. Introduction
1.1 Background of the organization:

Energy Solution PVT Limited (ESL) is basically a Power generation Company. ESL is a Company
run and managed by professionals having a cumulative experience of over 250 years in power
generation. Today it has become the trusted source of complete range of diesel and lean burn gas
generators using original Cummins engines from UK. Also they have a back from Sherazi Traders
who support them financially.

Also they use some different policies in which their business policy to increase their profits by fair
practices, in safety policy they said the safety of the employee as well as of the customer is first
even from this the company get affected, in HR policy they give welfare of employee also to his
family and their sales policy to provide better quality product to the customer to get high market
share.

1.2 Product Line:

 Residential Generating sets

 Commercial and Industrial Generating sets

 Lean Burn Industrial Generating sets

1.3 Product List:

In product they have several different types of generator sets:

 Aqsa APD 25 A

 Aqsa ADG 158

 Aqsa APD 110 A

 Aqsa AAP 8000 DE 3

 Cummins QSK 60 G

 Cummins QSV 91 G

3
Final Project of Business Policy and Strategy

1.4 Distributions:

Energy Solution Private Limited have two sole distributions of gas & diesel in which they have a
distribution of Cummins Pvt Ltd in gas and in diesel they have AKSA Pvt Ltd. Both of the
organizations have the best leading in the international ranking. And ESL sale more than 8000
units of diesel in the Pakistan from 1 kVA -100 kVA range. They only deals in that specify range
of the generator set in different sectors.

1.4 Clients:

The energy solution Pvt Ltd have many different clients which are following

 Coca Cola
 Agha Khan Hospital
 Bahria Town
 Bank Islami
 Atlas Honda
 Telenor
 Meezan Bank

1.5 Competitors:

Competitors of the energy solutions Pvt Ltd are following

 Leega
 Powerzone Generators Pakistan
 Enpower Generating Company
 A&J International

1.6 Competitor Analysis

ESL sale more than 8000 units of diesel in the Pakistan from 1 kVA -100 kVA range also they
have a boom from 2006 to 2016 and from 2016 they go from decline because of their
competitors. The reason of their boom is that they have a monopoly from 2006 to 2015 but after
2015 the local competitors jumped into this field because of this their sales start declining when
their competitors start providing the local generator set in market. Like low quality generators

4
Final Project of Business Policy and Strategy

which have some negative impact on the organization that the organization will suffer because of
their low quality but one advantage which they take is that they have low cost generator.

They capture their minor sector Lahore’s Power Generator but in case of high they don’t even
capture because the bigger organizations like Coca Cola always need to stand by power supply
because they don’t even bear the cost of one minute of loss of energy for their manufacturing.
The energy solution Pvt Ltd if provided the generator set of 1000000 to the market then their
competitor provide the generator set of 200000 so that was the reason they capturing the market.
Because the customer need the low cost generator set they don’t even want the quality because
they think if the generator don’t work properly they can easily replace it with new generator set
so that’s why they capturing the market at low cost.

Also the ESL have a directly proportional to electricity because their business depend on the
energy crisis so therefore they are directly proportional and that is the second reason because the
government recently come over the energy crisis in the Pakistan by which their sales become
decline. Also their sales team is not so appropriate who work better to capture the market
because they face many crisis related to their sales team

2 Research Problem:
 The problem which company tell us is that the revenues of the organization isn’t good
according to their expectation because their sales are not increasing...
 Sale is suddenly decrease but demand exit in the market.
 We have find problem through competitor analysis that the company sale price is high as
compare to competitor.
 Basically the Company import goods from Turkey, England and China so they are pay
almost 30% import duty on these product but these competitor manufacture and assemble
with in the Pakistan.

5
Final Project of Business Policy and Strategy

3 Objective of the Project:

The main objective of the project is to find a strategy

 That decrease the cost

 Capture the local market
 Increase the sale level again

4. Methodology

Research project was conducted at Energy Solution PVT Ltd to solve their issues for that project
the methodology we used is hybrid method because we did both qualitative as well as
quantitative methods. Qualitative method was used to analyze the problem by collecting primary
data such as interviews from marketing manager of the company also from the finance manager
of the company. A qualitative analysis was conducted on the data and on the basis of results to
solve the problem and Quantitative method for collecting the data about their components which
they required for the assembling unit and costs of these products available in Pakistan.

6
Final Project of Business Policy and Strategy

1. Internal Factors Evaluation (IFE) Matrix

Weighted
Key internal factors Weighs Rates Score
Strengths:
Durable & reliability 0.2 4 0.80
Market position (Market Share) 0.2 3 0.60
Financial position 0.15 4 0.60
Customer loyalty 0.05 3 0.15

Weaknesses:
No Manufacturing unit in Pakistan 0.15 1 0.15
Highly Expensive 0.12 1 0.12
No health benefits for employees 0.1 1 0.1
Advertisement spending 0.03 2 0.06
Total 1.00 2.58

Why we give these weights and rates in strength:

Weights.

It’s a business of machines. So, if the generator is durable and reliable than customer purchase a
product. That’s why we give 0.2 weights.

In generator industry market position is very important. Because if you didn’t have good market
share, than your all investment is in vague. That’s why we give 0.2 weights.

In this industry heavy investment is required. So financial position is important. We give weight
0.15.

7
Final Project of Business Policy and Strategy

Customer loyalty is not that important. If a customer purchase generator than he is not expected
to made purchase in near future. We give weight 0.05.

Rating:

Company is providing best generator in the market in terms is durability and reliability. That’s
why give rate 4.

Company has a good position in market but its facing severe competition from competitors due
to market position is known its minor strength that’s why we give 3 rate.

Financial position of company is strong because it is backed by atlas Honda. That’s why we give
4 rating.

As I said in weights explanation, customer loyalty is not that important in this industry. That’s
why we give 3 rating.

Why we give these weights and rates in weakness:

Weights

Manufacturing unit in Pakistan is very important. If we have no unit, than we have to import and
pay taxes on it. So we give 0.15 weight.

Generators are mechanical gadgets and need a lot of technical expertise after including all things
they become expensive. So we give weight 0.12.

As this is a technical work, so there are chances of accidents. So we give importance and give
0.1 weight to health benefit of employees.

Advertisement spending is not important in this industry. They contact personally to the
companies. We give 0.03 weight.

Rates:

Company has no manufacturing unit in Pakistan so they have to pay custom duties on importing
generator which increase their cost that’s why we give 1 rate.

As I said above they pay custom duties which increase their cost which is not good for company
so we give 1 rating.

8
Final Project of Business Policy and Strategy

Company has no good name in giving health benefit to employees. We give 1 rate.

Advertisement spending is not important in this industry. But company contact personally to
customers. We give 2 rating.

Explanation:

The ESL company ltd. have a total weighted average score of 2.58 which is above average it
means that a company is doing well but it can still improve its internal situation. So in the last we
provide some strategy that improve the internal business process.

9
Final Project of Business Policy and Strategy

2. External Factors Evaluation (EFE) Matrix

Key external factors Weight Rate Weighted
score
Opportunities:
Business increase in Pakistan so every organization 0.2 4 0.8
need backup. (Increase Demand)
If we install manufacture unit in Pakistan we 0.15 3 0.45
received benefits from Govt.
Residential generator manufacturing with in 0.2 3 0.6
Pakistan
financing by commercial banks rose 40 per cent 0.05 1 0.05
Threats:
Competitor are strong (in Residential Sector) 0.1 3 0.30
Inflation rate increasing day by day 0.1 2 0.2

Resolving Energy Crises with in the Pakistan 0.08 1 0.08

0.12 2 0.24
Solar Panel business Arises
Total 1.00 2.87

Why we give these weights and rates to opportunities:

Weights:

As business increasing in Pakistan so this is good opportunity for industry to grow. Because
business needs backup of electricity in case of load shedding. So we give weight 0.2.

Government is providing tax benefits is generator companies established generator unit in

Pakistan. So we give weight 0.15.

10
Final Project of Business Policy and Strategy

Due to load shedding in Pakistan residential generators demand is increasing which is good for
industry. We give weight 0.2.

Due to increase of business in Pakistan banks rose their financing to generator industry. We give
weight 0.05.

Rates:

Company is planning to established generator plant in Pakistan so company response is good.

We give rate 4.

As I said above company is planning to established generator plant in Pakistan so company is

eligible to tax benefits. So we give rate 4.

Company’s response is also good in capturing residential sector. We give rate 3.

As company is backed by atlas Honda so they don’t need as much financing. We give rate 1.

Why we give these weights and rates to threats:

Weights:

Due to energy crisis in Pakistan, investors jumping in this industry and competitors are
increasing day by day. We give weight 0.1.

Inflation rate increasing day by day in Pakistan. As we know generators are bit expensive so
customer ignore this product on their priority products. We give weight 0.1.

Government is keen to resolve energy crisis in Pakistan. Generator industry monitored this
progress closely. We give weight 0.08.

There is a new competitor in the industry to overcome energy crisis is solar panel business which
is not good for industry. We give weight 0.12.

Rates:

Company response is good in tackling residential generator competitors by establishing

generator plant in Pakistan. We give rate 3.

11
Final Project of Business Policy and Strategy

Inflation rate is not in control of company. But after establishing generator plant in Pakistan they
can reduce their import duties which ultimately decrease their per unit cost. We give rate 2.

As government is keen to resolve energy crisis. So company should make plans to stay in the
business. We give rate 1.

Solar panel is a new competitor in the business. Company plan to provide low cost and quality
product to overcome this threat. We give rate to this is 2.

Explanation:

The External factor analysis show us the ESL get score from External factor
evaluation method is 2.87 which is above average it means that a company is doing well but it
can still improve its external situation. So in the last we provide some strategy that improve the
internal business process.

12
Final Project of Business Policy and Strategy

3. SPACE Matrix
Internal Strategic Position External strategic Position
Competitive Position Industry Position
Market Share (Residential
Sector) -3 Profit potential +7
Brand name -2 Competition +4
X-axis

Customer loyalty -3 Ease of entry into market +2

Product quality -1 Growth potential +6
Control over suppliers and
distributors -4 Financial stability +4
TOTAL -10 TOTAL +23
AVERAGE -2 AVERAGE +4.6
Financial Position Stability Position
Financial position +5 GDP -5
Debt to equity ratio +6 Inflation -4
Profit-Earnings Ratio +5 Taxation -6
Y-axis

Return on Equity +5 Barriers to entry -5

Inventory turnover +5 Law and Order Stability -2
TOTAL +27 TOTAL -22
AVERAGE +5.4 AVERAGE -4.4
TOTAL X-axis Score (-2)+(+4.6) = + 2.6
TOTAL Y-axis Score (+5.4)+(4.4) = + 1

13
Final Project of Business Policy and Strategy

SPACE Matrix
FP
Conservative Aggressive
+5
+4
+3
+2
+1

CP IP
-5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5

-2
-3

-4

Defensive -5 Competitive

SP

TOTAL X-axis Score (-2)+(+4.6) = + 2.6

TOTAL Y-axis Score (+5.4)+(4.4) = + 1

14
Final Project of Business Policy and Strategy

COMPETITIVE POSITION:

Market share in residential sector is somehow good. There are a lot of competitors in the market
which are providing generators at low cost. We give rate -3.

Company has a good brand name in the market. Because they sell aksa and Cummins generators
in Pakistan which has good generators. We give rate -2.

Customer loyalty is not that important in this industry. But company customers come again when
they purchased product one time from ESL. We give rate -3.

Company is providing best quality product in Pakistan. We give rate -1.

Control over supplies is not control in the company because they import generators. We give rate
-4.

INDUSTRY POSITION:

Due to energy crisis in the Pakistan, industry has a good profit potential. We give rate +7.

There is a competition in the market but we give rate +4 because we didn’t face severe
competition in selling of higher end versions of generator.

There is not ease to enter in the industry. It requires a lot of investment and technical expertise.
We give rate +2.

There is lot of potential in industry growth due to energy crisis in Pakistan. We give weight +6.

Financial stability require in the industry. We give weight +4.

FINANCIAL POSITION:

Financial position of the company is good it is backed by atlas Honda. We rate +5.

Company has established almost on equity based because it is backed by atlas Honda. We give
weight +7.

Profit earnings ratio is good in the company because company earning good profits by selling
generators. We give weight +5.

15
Final Project of Business Policy and Strategy

Return on equity is also good because there is energy crisis in Pakistan which forced big
companies to maintain backup. We give weight +5.

Inventory turnover is also good. Because company provide quality generator. We give weight
+5.

STABILITY POSITION:

GDP is not good of the country its means countries economic development is not good which is
not good for the business. We give rate -5.

Inflation in the country ultimately decreasing the purchasing power which is not good for
business. We give weight -4.

Taxation is the worst effect on business which ultimately decreases the sales. Due to tax
company is forced to increase unit cost. We give weight -6.

There are barriers to entry in the industry. Heavy investment is required to enter in the industry.
We give weight -5.

Law and order stability situation isn’t effect the business. We give weight -2.

Explanation:

The ESL the space matrix we have get positive average score on X-axis is
2.6 and Y-axis is 1. We our score get the aggressive strategy. In which we are want to start
assembling unit within the Pakistan or Manufacturing unit in the Pakistan. So we going to
product development strategy, because if we made product within the Pakistan we save almost
30% import duty. So we choose two options that are one is make assembling unit in Pakistan or
manufacturing unit in the Pakistan.

So in the last we make QSPM Matrix to find that both of two strategy which is best for us.

Rating scale for QSPM

0 = Not applicable 3=Reasonably attractive

1 = Not attractive 4=Highly Attractive
2 = Somewhat attractive

16
Final Project of Business Policy and Strategy

4. QSPM Matrix

Strategy 1 Strategy 2
Assembling Manufacturing

Opportunities Weight AS TAS AS TAS

1. Business increase in Pakistan so every
0.2 1 0.2 3 0.6
organization need backup. (Increase Demand)
2. If we install unit in Pakistan we received benefits
0.15 2 0.3 4 0.6
from Govt.
3. Reduction in sales tax on local supply of Gas
0.2 1 0.2 3 0.6
Generators
4. financing by commercial banks rose 40 per cent 0.05 2 0.1 4 0.2

Threats Weight AS TAS AS TAS

1. Competitor are strong (in Residential Sector) 0.1 2 0.2 4 0.4

2. Govt. Ruling (Import Taxes) 0.05 1 0.05 4 0.2

3. Resolving Energy Crises within the Pakistan 0.1

4. Solar Panel business Arises 0.15

17
Final Project of Business Policy and Strategy

Strategy 1 Strategy 2

Assembling Manufacturing

Unit Unit

Strengths
Weight AS TAS AS TAS
1. Durable & reliability 0.2 2 0.4 4 0.8
2. Financial Position 0.2 4 0.8 2 0.4
3. Market Position 0.15
4. Customer loyalty 0.05
Weaknesses Weight AS TAS AS TAS
1.No Manufacturing unit in Pakistan 0.15

2.Highly Expensive 0.07 2 0.14 4 0.28

3.No health benefits for employees 0.15

4.Advertisement spending 0.03

TOTALS 2.39 4.08

Explanation of QSPM:

This information should be taken directly from the above matrices named as IFE & EFE which
tell us about internal and external factors of the organization.

In QSPM column of attractive scores we give them score between1 to 4. Basically in SPACE
matrix we get result for the aggressive strategy therefore on the basis of SPACE matrix we chose
product development. In product development we have two multiple strategies either we go for
assembling unit or manufacturing unit.

The weights which we assign to those matrixes is related to the existing industry of generator set.
The weights are presented in a straight column just to right of both matrixes.

18
Final Project of Business Policy and Strategy

The attractive score which we assign them indicates the relative attractiveness of each strategy
considering a single external and internal factor of the industry. These attractive scores we
assigned to each strategy to indicate the relative attractiveness of one strategy over others
considering these particular factors which we written in IFE and EFE matrixes. In above the total
attractive score tell us the relative attractiveness of every alternative strategy, considering the
impact of external and internal critical success factors. The highest value of total attractive score
tell us that this is the more attractive strategy alternative. The places which are empty tell us that
they have no impact on the strategy formulation so therefore we don’t even consider them in
strategy choice.

After all the multiplication of the factors with their weights and rates which we assigned them we
get the total of both strategies alternatives. In this evaluation we get the total of both strategies in
which we have the more value of the manufacturing unit so the strategy for the organization to
go for the manufacturing unit. While before we have decided to go for the assembly unit but after
the evaluation of QSPM we easily be able to know that we are wrong at that stage because the
evaluation tell us that company have to go for the manufacturing unit with the help of total
attractive scores.

19
Final Project of Business Policy and Strategy

Recommendation & Suggestion

According to our analysis we recommend the company will follow the strategy to applying the
manufacturing unit in their organization because in QSPM matrix we get high score of this
strategy which is 4.08 as compared to the other strategy which is for assembling unit which is
2.39. So therefore we suggest them to install the manufacturing unit in Pakistan at where the cost
of land is minimum like we have some different special economic zone available in Pakistan
which given by the government on which we have some tax exemptions. By this we can save the
30% of our import duty with help of this our cost become decrease with the percentage of 0.30.
Also the labor cost is minimum as compared to the other countries.

Thank You

20