HONDA

Honda atlas cars Pakistan

Contents

Introduction and a Brand Profile

Products and services they offer and product mix

Financial position of Pakistan

Competitive forces and Competition

Marketing and Development of HONDA

Brand Promotion and Strategies

INTRODUCTION:

Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and
the Atlas Group of Companies, Pakistan. The company was incorporated on November, 1992 and joint
venture agreement was signed on August, 1993. The ground breaking ceremony was held on April 17,
1993 and within a record time of 11 months, construction and erection of machinery was completed.
The first car rolled off the assembly line on May 26, 1994. Official inauguration was done by President of
Pakistan, Sardar Farooq Ahmad Khan Leghari. Mr. Kawamoto, President of Honda Motor Company
Limited Japan was also present to grace the occasion. The company is listed on Karachi, Lahore and
Islamabad Stock Exchanges. On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore,
and Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S
(Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all major
cities of Pakistan. Since the commencement of production in 1994, the company has produced and sold
more than 150,000 cars till Oct, 2008.All dealerships are constructed in accordance with the standards
defined by Honda World over. Percentage of local parts conforms to the government's policy. Local
vendors are continuously patronized to develop parts locally. The quality of local parts is thoroughly
checked to meet stringent international standards. We always strive to give outstanding service to our
valued customers. In addition to providing regular service to customers, the company also regularly
conducts Service Campaigns, to facilitate customer's need for service. This has given our customers
absolute confidence in our cars, clearly evident from the ever increasing sale volumes. It is the constant
endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1 Customer satisfaction. Honda Atlas
Cars (Pakistan) Limited is committed to meet customer expectations, and to provide good value for
money. Currently we are offering 8 different models of Honda CIVIC and CITY cars in wide range of
colors with unique technological and other features.

Slogan: “THE POWER OF DREAMS”

HONDS PROFILE

Honda Atlas Cars Pakistan Ltd.

Type Joint venture

Traded as PSX: HCAR

Industry Automotive

Founded 1992

Headquarters : 43-Km, Multan Road, Manga Mandi Lahore

Key people Hironobu Yoshimura, CEO

Products Automobiles

Parent Honda

Website https://www.honda.com.pk/

Contact Information

Tel.: 92-42 3538-4671 – 80

Fax: 92-42 3538-4691 – 2

E-mail: info@honda.com.pk
car bookings started at six dealerships in Karachi, Lahore, and Islamabad. Since then, our Dealerships
network has expanded and now the company has Twenty-Five 3S (Sales, Service and Spare Parts),
Fifteen 2S (Service and Spare Parts) and Six 1S (Spare Parts) authorized dealerships network in all major
cities of Pakistan. All dealerships have been constructed in accordance with the standards defined by
Honda, World over. Since the commencement of production in 1994, the company has produced and
sold more than 340,000 cars till August 2017. The company has always emphasized on the development
of local parts to reduce production cost. The local vendors are continuously supported to develop
technical and management skills to manufacture local parts of highest quality. The quality of local parts
is thoroughly checked to meet the stringent international standards. We always strive to give
outstanding service to our valued customers. The company regularly conducts Service Campaigns to
facilitate customer's need. This has given our customers absolute confidence in our product, clearly
evident from the ever increasing sale volumes. It is the constant endeavor of Honda Atlas Cars (Pakistan)
Limited to achieve No .1 Customer Satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to
meet customer expectations, and to provide good value for money. Currently, we are manufacturing
Honda Civic, Honda BR-V and Honda City in different variants and wide range of colors with advanced
features. Apart from that, we also offer CBU models of Honda Accord, Honda CR-V and Honda HR-V for
our valued customers

Area of Interest: Engineering Products (CARS)

“VISION”

To be the first preference at every level of car lovers, and be the market leader”

“MISSION”

A dynamic growth oriented company through excellence in quality, dedication to provide greater fuel
efficiency at competitive prices, and service ensuring attractive returns to equity holders, rewarding
associates according to their ability and performance, fostering a network of engineers and researchers
ensuing unique contribution to the development of the industry, customer safety, satisfaction and
protection of the environment by producing emission friendly green products as a good corporate
citizen fulfilling its social responsibilities in all respects.

Products and services they offer and product mix

Honda is one of the best companies in the world. In Pakistan Honda is contributing a lot towards welfare
of people. Honda has various products and special services for its customers. Honda is manufacturing
following products:

 Automobiles

o Accord

o Civic
o City and etc

 Motorcycles

 Power equipments

 Water pumps

 Power engines

Here we are discussing only automobiles that are Honda atlas. The company has provided many
comforts and specifications in its cars. Honda is offering many different models of Honda cars

Financial position of Pakistan:

The stock market has exhibited a growth of 36 percent post March 16. Foreign exchange reserves have
crossed US $11 billion. The commodity prices are reflective of an inherent demand in the economy. A
bumper wheat crop is being projected and it will provide a boost to demand. · The market value of
stocks decreased from 70.26 billion in 2008 to $23.49 billion 2008 $70.26 billion. · The Pakistani rupee
has depreciated since 2008 as a result of political and economic instability from Rs. 70.64 in 2008 to Rs.
81.21 in 2009.

· The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in
response to a balance of payments crisis

Competitive forces and Competition

Honda faces competition in the international markets from a number of brands such as ·

Toyota

Mitsubishi

Mercedes

BMW

However, Honda cars in Pakistan that had started its operations in Pakistan 1994 under a joint venture
with Atlas has been is enjoying the key position in 1300 c.c and above.

The main competitors of Atlas Honda in Pakistan are:

Indus Motors:

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 Company’s plant is
the only manufacturing site in the world where both Toyota and Daihatsu brands are being
manufactured.

Suzuki:

Suzuki is the leading name in small commercial vehicles and passenger cars. Suzuki commenced its
operation by assembling small 800 cc cars. Suzuki has so far a sole leader in 800cc and 1000cc passenger
cars as well as 1000cc jeep Potohar. But the emergence of so many competitors in the market will
definitely trigger a very hard time to Pak Suzuki. Suzuki has launched Mehran 800cc, Cultus 1000cc,
Baleno 1.3 & 1.6 Eli and Gxi, Bolan van & Ravi pickup 800cc and Potohar jeep. The total production
capacity of Suzuki Motors is about 50000 units and the total actual production in 1999 is 32,805. The
sales volume of Suzuki is highest among the competitors with 31,296 cars as per June 30, 2000.
According to Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) ,
Suzuki has achieved the 60 per cent deletion status in 800cc Mehran car. Localization in other products
like 1000cc Khyber 42 per cent, 1300cc Margalla/Baleno 32 per cent, 800cc pickup 50 per cent 10
passenger pickup 47 per cent and 1000cc Potohar jeep 40 percent.

Dewan Farooque Motors:

It is the major competitor which has commenced its operation with a wide range of products in
domestic automobile market. Dewan Motors is basically a collaboration with Hyundai and Kia, two
Korean auto manufacturers. The initial response to Dewan's offering in the market with record company
booking of its Santro Plus. It has launched its Kia classic 1300 cc car with sophisticated features. In future
wide range of models like Kia Shuma 1500-1800cc car, Kia Sportage 2000 cc sports utility are expected
to launch in the market. Dewan has also launched its 1.5 tons Shehzore, the assembly of Hyundai light
commercial vehicle has already started at the Sindh Engineering Plant in Karachi under contractual
agreement.

Daihatsu:

Daihatsu, another new player in the market with its Cuore 850 cc, increased the competition in the
market. Daihatsu and Indus Motor signed an agreement to launch the Coure in market. The project
worth Rs 750 million was developed at Port Qasim between Daihatsu and Indus Motor to produce
Coure. Daihatsu also heated up the competition in small car segments.

Porter's Five Forces Model:

Michael Porter identified five forces that influence an industry. These forces are: (1) degree of rivalry; (2)
threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier power. Like other industries
operating under free market, capitalistic systems, viewing the automotive industry through the lens of
Porter’s Five Forces can be helpful in understanding the forces at play. THREAT OF NEW ENTRANT:
Although Pakistani Market is dominated by protectionism but because of financial crisis a lot of
Automobile companies have their eyes on South –East Asia as a dumping site Honda motors company
must gear up for fierce competition. These new Entrants have sufficient capital and guts to start a price
war among the local industry.

Economies of scale:

Economies of scale no doubt reduces the cost of manufacturing but now days Customers Are Saving
Oriented Rather Consumption Oriented low price in this period of recession will not attract customer
the best way is to go for fuel efficient cars.

First Mover Advantage: Honda motors have the First Mover advantage in case of Fuel Efficient Cars.
Honda R&D Department already achieved so much in this field depleting oil sources is a major problem
for every country now Toyota is looking for different options such as: Bio Fuels, Hydro Electric Power
Cars, Electric powered cars & Cow Dung. Access to Channel of Distribution and Relationships: Honda
Motor has the advantage of customer satisfaction and distribution channels. Honda Motor conducts
workshops and seminar for Dealer Staff so that the interaction with the customers shall be a pleasant
one. This Customer care leads to Customer Loyalty.

MARKETING AND DEVELOPMENT OF HONDA:

Honda Atlas Marketing Objective:

Honda Atlas Pakistan Limited as well established automobile companies in Pakistan they always keep
focus on that mission and vision in the same direction HACPL does target of goal achievement. The
standard of the HACPL according to marketing is very high. HAPL existence and central point of Honda
Atlas to sell dream Car because in Honda point of view “Power of Dreams” itself attracting the customer
for that need to build unique product. HACPL marketing objective has been targeting in terms of provide
satisfied customer service, make possible to keep in reach the product, and strive to give outstanding
service to valued customers. In addition to providing regular service to customers, the company also
regularly conducts Service Campaigns, to facilitate customer's need for service. This has given company
customers’ absolute confidence in their cars. In the constant endeavor of Honda Atlas company to
achieve No .1 Customer satisfactions with respect to loyalty of brand. Honda Atlas Company has been
committed to meet customer expectations, and to provide good value for money.

Honda Atlas Marketing Mix:

Marketing mix elements or 4p’s strategy of marketing is the essence of any business same like this
strategy of marketing mix apply in top listed automobile company overall the world Honda atlas these
key elements of marketing mix make the difference between Honda atlas and other automobile
companies, Honda atlas also comes up with a strategy to figure out which strategy is best for them given
the objectives and resources. They must also consider the strengths and weaknesses of the company as
well as opportunities and threats. To enhance the aptitude of the companies, a marketing mix strategy is
introduced. The marketing strategy will create lucrative marketing mixes for defined target markets.
Honda atlas has been enhancing their outcomes and marketing value by implementing the right
combination of the four P’s.

Product:

Honda Atlas has competitive edge to other automobile Companies in term of product quality.

Accord:

Witness the debut of the astonishing new Honda Accord: the outcome of our all-out pursuit of sedan
excellence, successfully uniting all contradictory elements. A bold exterior presence with a luxury air, yet
a sporty youthful feeling. An expansive upper-class cabin with comfortable travel space for five adults
and panoramic visibility. A larger body with sportier performance than ever before and powerful I-VTEC
engines designed for high fuel economy. A renowned global car with all advanced Honda technologies
for driving command, plus eco-performance for increased recyclability. And, Honda's world-leading
safety protection, which even extends to pedestrians and those in other vehicles. Experience its overall
quality, riding comfort, and details for yourself, and you'll know why the new Accord represents a
distinct "status upgrade" for the sedan.

Civic:

What moves you? What drives you? What excites you? Honda seeks the pinnacle of technology in
pursuit of answers. Now, we present a bold way to stir the body and soul, designed to quicken the pulse
at first glimpse, and stimulate the senses with each and every encounter. The sporty new Honda Civic
possesses rare spirit, and so do you. See, touch, feel, drive and discover.

City:

See it coming, like an arrow. Striking good looks, cutting-edge design, sharply focused tension. See it
shoot straight ahead. What is it? Discover the compact sedan breakthrough with strength to open a new
era and outlast fleeting trends. Sleek styling and strong performance, with swift, gutsy response to the
driver's pedal action. Class leading* spaciousness and relaxing ride for outstanding comfort. Imagine the
pride of driving and owning this distinctive new-generation standard. Get ahead in the new City. People
will be watching.

CR-V:

Dynamic styling appeal. Elevated SUV outlook. Premium driving refinement. And an exhilarating yet
stable feeling. The new Honda CR-V has all you want, and more. A spacious cabin and utilities, due to
packaging innovation. Plus, superb i-VTEC response, quietness, and safety. Discover delightful CR-V
driving. Now, all roads are exciting.

Price:

BRAND MODEL PRICES

CR-V 2.4 Liter PRs: 5,299,000

CIVIC I-VETIC MANUAL PRs: 1,619,000

I-VETIC AUTOMATIC PRs: 1,739,000

VTI-ORIAL MANUAL PRs: 1,794,000

VTI-ORIAL AUTOMATIC PRs: 1,869,000

ACCORD I-VTEC PRs: 5,699,000

CITY MANUAL PRs: 1,249,000

AUTOMATIC PRs: 1,379,000

Brand Promotion and strategies:

Honda Atlas (Pakistan) always strives to give outstanding service to valued customers. In addition to
providing regular service to customers, HONDA also regularly conducts Service Campaigns, to facilitate
customer's need for service. This has given to customers’ absolute confidence in Honda cars. Honda also
participates in promotion of that product. Honda Atlas has a rapidly and quickly promote products more
than its competitors.

Place / Physical Distribution:

Honda Atlas Network of dealership has expanded and now company has twenty-one 3S (Sales, Service
and Spare Parts) and thirty 2S (Service and Spare Parts) Pit shops network in all major cities of Pakistan.
LOCATION 3S DEALERS 2S DEALERS

Marketing Operations/ Function of Marketing Department:

Marketing operation functions is the very essential tool and it is excellent essence of any business same
as this strategy imply by Honda Atlas Company to its authorized Dealer. It is dealing with brand loyalty of
Honda products my concern exists between dealers and customers. Honda Atlas also depends on 3S but
also facilitating with separately 2S as well (Service and Spare Parts). This offer of facilities Honda Atlas
Motor compares to the Total Quality Management style of Honda Atlas Itself. These 3S and 2S always
monitor by Honda Atlas itself that what’s going on in which Direction? These 3S and 2s has been
facilitating through Dealers. Let we discuss these three elements simultaneously:

Sales:

The HACPL’s Sales Deals by its authorized Dealers. The dealers engaged in providing facilities the
customer to buy Honda Brand(s). Honda Atlas Company has given dealership authority approximately
sixteen Dealers (cars) all over Pakistan. All of the sales strategies followed by Honda Atlas Itself and it
are directly involving and time by time Honda Atlas keep attached with each sector, do analysis the
sales, performance of the dealers most importantly after sales, customer satisfaction report. Sales
facilities part of Honda Atlas is to facilitate its loyal customer and overcome customer’s ambiguity,
buying conflict and provide them maximum information before purchase. Honda Atlas is also very
conscious in sales as well as Customers Satisfaction. All the authorized dealerships in Pakistan are a
source of customer satisfaction. The after sales are supported by the immaculate service and the
availability of spares at competitive prices for every car sold. To facilitate the customers for any
assistance they require, Honda Atlas has a separate department, called Customer Relations, at the head
office. This department is supported by the subsequent Customer Relations Officers at all dealerships.
The purpose of Customer Relations Department and Customer Relations Officers is to enable our
customers in getting any sort of help required by them.

Services

The product sold is not means that close the window for customer now, it is beyond that further after
sales customer has largely engaged to deal in service and Spare parts aspect. HACPL is a customer
service conscious company, for which it is always looking for avenues to develop further relations with
the customers who have already purchased the Product. Honda Atlas considers purchase of any product
as the beginning of relations with customers. To prolong this relationship and encourage the customers
to keeps on coming to the dealers, providing customer service the reason for this facility is to stress on
the importance of periodic maintenance. Periodic maintenance is essential for every existing if this is
performed regularly as per the maintenance schedule the car is trouble free and life of car increases by
many years. For these free services the labor is not charged, whereas the customer has to pay for only
the consumable like engine oil, oil filter, etc. HACPL is providing regular trainings to the dealers'
technicians. The trainings cover all aspects of the cars and related Products including the periodic
maintenance, diagnostics, trouble shooting and repairs according to HONDA standards. From this we
want to facilitate the customers in maintaining their cars in top-most condition and enjoying the
comfort and performance of the luxury vehicles they own. It is our endeavor to have uniform service
standards made available at all dealerships in accordance with the international Honda standards. We
consider the properly maintained vehicles not only to be a source of satisfaction to our customers; they
also increase the sale value of their car.

Spare Parts:

The Spare parts element is heavily concern and involved with brand loyalty of Honda cars because cost
of spare parts also consider when customer want to buy the car, customers are also price conscious,
availability of spare parts and as well as quality of spare parts. Honda spare parts are expensive because
they have to import those form Malaysia. Honda Atlas always follow those strategies which they can
gain customer most attention to its brands. Honda Atlas always make possible to be genuine and look
genuine. Honda attract its customer in under the statement that “Buy Honda genuine parts from Honda
dealers and enjoy 6 month's Honda Warranty, the Honda warranty can vary product to product and
contribute to the country’s economy and enjoy the satisfaction of using 100% genuine Honda Parts. But
if customers buy the parts from open market; most probably is that customer may be buying smuggled
parts and thus committing a moral crime and robbing your country from precious revenue, customer
may unable to claim but if customer buy from Honda authorized Dealer so the part will be 100%
genuine, customer has no need to buy from open market, the trust between customer and Honda
Dealers become long lasting etc. It is the Honda Atlas’ aim to be No.1 in customer satisfaction in all three
S, Sales, Service and Spare Parts and two S in the same time.

PRODUCTIONS/ OPERATIONS:

Process Design:

Honda Atlas Cars (Pakistan Ltd. has a separate production department which is headed by Vice President
(Production). A Japanese person is currently working on this seat. The production department has a
number of sections such as:
 Vendor Section

 Engine Section

 Welding Section

 Maintenance Section

 Paint

 Vehicle quality control.

These along with some other sections are arranged in four groups, each one headed by a Gm. For
Example, there is one GM for welding, paint and maintenance.

Plant Capacity

Currently the plant has the capacity of 35 vehicles per day which is lower than that of Toyota. As for as
the production level is concerned, it varies from time to time. It was 15 cars per day when I visited the
factory. This shows that the plant is being underutilized. There may be several reasons for this under-
utilization such as:  Weak economic condition of the country.

 Problems with cotton crop.

 High price of Honda Cars.

 Decrease in purchase of cars by large companies.

 Presence of Toyota  Decrease in the purchasing power of potential customers.

Machinery:

A brief list of machinery used in HACPL is given below:

 Boilers

 Compressors

 Water treatment plant

 Ovens (for backing the body of cars)

 Spot welding guns.

 Two-post lifts

 G-SWAT/ B-S / S Side Slip / Shower testers Important Parts: Various parts of engine

 Brakes

 Seats

 Lights

 Cooling System
 Tiers

 Rims

 Fuel tank

Production Process:

In order to fulfill requirements of widely diversified needs of the market, HACPL has developed its
production facilities from a dedicated engineering set up to a highly flexible and wide range production
system comprising of following activities Shown in chart. Production Procedure

1. The production procedure starts from welding. This is done with the help of special machines. In this
way the basic frame is manufactured and is transferred to panting section.

2. The painting section is equipped with modern machinery. Here, the process starts with wiping,
cleaning and degreasing of frame which is followed by Phosphating and ED coating. Now the frame is
backed in special ovens. After backing, following coat are applied:

 Base coat

 Final coat

 Clear coat (for shining)

3. After painting, the frame is shifted to assembly line. Here ornamental parts such as lights are fixed
followed by heavy parts like engine, tiers seats, wind shield, etc. The procedures at assembly line can be
understood by figures mentioned earlier.

4. After passing through assembly line, the car moves to "vehicle quality department". Here, different
tests are applied. Currently, HACPL is using three QAEs (Quality Assurance Equipment) which are
mentioned below:

 "G-SWAT" (Geometrical Static Wheel Alignment tester) for alignment.

 "B-S tester" for testing breaking force and speed meter.

 "S-S tester" for testing side slip:

After applying these test, the car is driven and a 1-km "test course". Here the noise and performance of
car a different road conditions are tested. Finally, a "shower test" is applied to find leakages if any.

5. In this final stage, pre delivery inspection (PDI) is made and a sticker is attached. Now, the car is ready
for shipment.

Quality Control

A lot of importance is given to “quality control" in HACPL. The personal of HACPL is highly qualified in
this regard. When purchase material arrives, thorough checking of that material is made. If any
deficiency is found, then it is reported. If the deficiencies are beyond the acceptable level, then the
material is returned to supplier according to terms & conditions of the contract. However, the chances
of such happenings are very less because HACPL has very tight purchasing policy and it has no
compromise on quality. Similarly, the finished product is tested before delivering it to the customers in
order to assure the quality standards. On the whole, the quality control / quality assurance personnel
are continuously engaged in improving quality to need the requirements of each customer individually
and the market as a whole. HACPL is successfully using "Kaizen" system for quality control. Employees
are encouraged to improve quality and reduce cost. Every month, about 20-25 prizes are given on
showing good performance. HACPL is ISO 9002 certified. It was the winner of "Best Quality Award for
Asia" in 1996, 1997 & 1998.

PLANNING AND DEVELOPMENT:

Currently, Honda Atlas Cars (Pakistan) Limited is not in a position to make major changes in its cars. Only
minor changes can be made here and decisions about these changes are made at the top level.
Marketing & Production people play an important role in this regard.

Research & Development Department:

The role of research and development is to introduce innovative ways to achieve the objectives
especially through production facilities. Unfortunately, there is no research and development
department in HACPL. This function is performed by Honda Motor Company, Japan. All major changes in
models of Honda cars are introduced there. Employees of HACPL are sent to Japan, where they are
trained according to new conditions. Later on, these changes are introduced in the models offered in
Pakistan.

Deletion Program:

“Deletion is to replace the imported parts of vehicles with the parts either manufactured in house or
purchased through local vender industries.” Honda Atlas Cars (Pakistan) Limited is perusing a realistic
and progressive deletion program for indigenization of assemblies, parts and components. This
dynamics program is being implemented through in-house assemblies and manufacturing operations,
and is being supplemented by vendor development. HACPL is almost same as that of its major
competitor, i.e. the manufacturer of Toyota Cars. Efforts are being made by top management to
increase this percentage.

Achievement of Objectives through Operations:

The production department of HACPL is playing a vital role in achieving the overall objectives of the
company through efficient utilization of resources. ·

HACPL is achieving production efficiency through:

 Evaluation & improvement of quality control.

 Training of production employees.

 Modernization of plant and machinery. ·

Similarly cost minimization objective is being achieved through:

 Deletion program
 Avoiding poor quality products, which are a loss for the company. As mentioned earlier, HACPL is
achieving excellent quality levels through giving training to personal plus proper use of technology.

Inventory:

Inventory is a stock of any things held to meet future demand. Inventory is created when the rate of
receipts exceeds the rate of disbursements. It is depleted when disbursement exceeds receipts. There
are three types of inventory:

 Raw material inventory

 W.I.P. inventory

 Finished goods inventory

The basic objective of any firm is to minimize total inventory cost (ordering & carrying). The same is the
case in Honda Atlas Cars (Pakistan) Limited. In HACPL, the whole inventory system is computerized.
Following are the advantages of this computerized system.

 Updating records.

 Providing management reports.

 Automating the recording process.

 Re-computing decision parameters.

In HACPL, the inventory basis and audit reports are prepared.

Reason for P-System:

1. Administration of the system is convenient because replenishments are made at fixed intervals;
Employees can set aside a day or part of a day regularly to concentrate on this particular task.

2. Order for multiple items from the same supplier may be combined into a single purchase order. This
approach may result in a price break from the supplier and saves the buyer some paperwork, thereby
reducing ordering costs, suppliers also may prefer combined orders because all items in the order may
be shipped at the same time, reducing transportation costs and increasing vehicle utilization.

3. The inventory position, IP, needs to be known only when a service is made.

Safety Stock

HACPL maintains a safety stock of 2 to 3 months. The reason for maintaining a safety stock is as Follows

 To protect against shortage that occur due to suppliers.

 To protect smooth and continuous operations. In HACPL, the inventory is held in the following forms:-
 Inventory of imported parts.

 Inventory of local parts.

In order to avoid stock out, they have more safety stock of imported parts as compared to that of local
parts.

Shortage of Inputs

There is special warehouse for the purpose. Both imported and local parts are stored here. The boxes of
parts are placed at approximate distance and forklifts can easily move within the warehouse. The results
in convenient movement of parts from warehouse to assembly line etc.

Storage of Output (Cars)

There is no proper warehouse for parking of cars moving out of assembly line. A place has been assigned
for this purpose but there is no roof over it. Actually these can be serviced when they arrive at the
showrooms of dealers so management of HACPL does not feel any need of having a covered place for
these cars.

Aggregate Planning

Aggregate planning is a statement of production rates, work force level and inventory holding based on
estimates of customer requirements and capacity limitation.

Production Plans

The production plans are prepared for three months based on the customer’s orders and uncertainty in
demand,

Work Force Level

In HACPL, work force schedules are arranged on the basis of production plan. If demand is high, then
extra workers can be hired on contract basis or the existing permanent employees can be employed in
extra work to meet the targets. When I visited the factory of HACPL, the daily production was 15 cars.
For this reason, there was a single shift except for maintenance department.

Material Management

Material management concerns short-range decisions about supplies, inventories, production level,
staffing patterns, schedules & distribution is as follows:

Purchasing: Purchasing in the management of the acquisition process, which includes deciding which
supplies to use, negotiating contract and deciding whether to buy locally or centrally. Purchasing must
satisfy the firm’s supply needs and support the firm’s production capabilities. In HACPL, the whole action
can be described under following headings. HACPL imports materials from the parent Honda Motor Co,
Japan in the CKD (complete Knocked Disk) form. HACPL also purchases materials from the Local Vendors

Supplier Selection:

HACPL prefer those suppliers who fulfill the following requirements:

 Provide best quality material at low cost.

 Shorter Lead Times

 Provide material to production plant of HACPL. (I.e. provide material at destination).

 On time delivery

These are the reasons which forces HACPL to go for local contracting.

Procedure for Returning of Low Quality Material:

HACPL has its own quality standards regarding materials. HACPL has not any habit of accepting Low
Quality Raw Material at low rates. HACPL returns the low quality materials to the supplier according to
the terms and conditions of the contract.

Supplier Relations:

HACPL, Vendor Development is mainly entitled with the responsibility of establishing working
relationship with all the agencies (Vendors) involved in Supply if materials. Similarly, HACPL has formal
relationships with the local vendors.

Distributors:

To store the finished products, (Honda Civic & Honda City), HACPL uses both FORWARD, BACKWARD
placement. HACPL has a country-wise network of Sales Dealers who are actively engaged in promoting
the image of HACPL and its cars. The details of HACPL’s dealers have been mentioned earlier.

Transportation Mode:

HACPL has a habit of using only one mode if transportation (i.e. Highway) for the both inputs and
outputs. The logic behind this mode is low cast and flexibility of shipping to almost any location in
Pakistan. Currently, HACPL has no transportation fleet of its own. Nearly five transportation companies
are performing this function on contract basis. NLC is also included in these companies.

Total Quality Management:

(T.Q.M.) T.Q.M. stresses three principles:

 Customer Satisfaction

 Employee Involvement

 Continuous Improvement

Attaining quality in all areas of a business is a difficult task. It is necessary for an organization to provide
its customers with best or even consistent quality products in order to survive in the environment. The
success of any business depends upon how accurately the company perceives the expectations of
Customers plus its ability to bridge the gap between consumer expectations & operating capabilities. In
HACPL the concept of T.Q.M. is more common. This can be explained as follow:

Customer Satisfaction:

HACPL’s employees try at their level best in satisfying the customers & hence stepping forwards the
objective of the company. The contribution of Marketing & Production department is very important in
this regard. These departments continuously go for the ways to improve the features of existing HACPL’s
products and hence satisfying the customers.

Employee Involvement:

HACPL’s management considers its employees a great asset. The employees along with sales dealers are
part of the large “Honda Family” and they form an integral part of policies and decisions that help shape
the future of the company.

The management of HACPL considers the proposals/Suggestions of its employees up to a great extent.
It appreciates the employees in this regard through Monetary or Non-Monetary benefits. Management
of HACPL put great emphasis on creating and maintaining an enterprise environment in the company
that maximizes the interest and motivations of its employees which is very vital to enhance labor
productivity and efficiency.

Training of Personnel:

HACPL puts great emphasis on training and development of employees to help them realize their full
potential. Employees from all departments especially form production; finance and marketing attend
training courses in their respective fields. This has greatly contributed in improving employee’s
performance and efficiency at all level.

Continuous Improvement:

The Management of HACPL has a view of continuous improvement in order for the better Utilization of
resources and improving Honda brand image in the market. HACPL is trying at its level best to introduce
and implement better quality control procedures, redesigning the production process, automating the
whole plant etc. Employee’s involvement is playing vital role in this regard.

RESEARCH & DEVELOPMENT DEPARTMENT:

The role of research and development is to introduce innovative ways to achieve the objectives
especially through production facilities. Unfortunately, there is no research and development
department in HACPL. This function is performed by Honda Motor Company, Japan. All major changes in
models of Honda cars are introduced there. Employees of HACPL are sent to Japan, where they are
trained according to new conditions. Later on, these changes are introduced in the models offered in
Pakistan.

Stage 2 The Matching Stage

The strategy is defined as the match an organization makes between its internal resources and skills and
the opportunities created by its external factors. The matching strategy formulation framework consists
of five techniques that be used in any sequence:

 The SWOT matrix

 The SPACE matrix

 The BCG matrix

 The IE matrix
 Grand strategy matrix.

These tools rely upon information derived from input stage to match the external opportunities and
threats with internal strengths and weaknesses. nIn this project, we will be using only the SWOT matrix
for the determination of then alternative strategies.

The SWOT matrix

A scan of the internal and external environment is an important part of the strategic planning process.
Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W),
and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of
the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information
that is helpful in matching the firm's resources and capabilities to the competitive environment in which
it operates. As such, it is instrumental in strategy formulation and selection. The following diagram
shows how a SWOT analysis fits into an environmental scan:

SWOT Analysis of HONDA Atlas Cars

STRENGHTS

1. Brand image

2. Offering Global models

3. Smoother drive as compare to its competitors

4. Timely new models

5. Decentralized environment

6. Advance Technology

7. Safety

8. Environment Friendly

9. Customer loyalty

10. Highly loyal, committed and motivated employees

11. Greater fuel efficiency

12. TQM

13. Friendly working environment

14. Advertisement

15. Strong human resource

16. Reliability

17. CSR

18. Strong R & D

WEAKNESS

1. Dealership Network

2. Resale value

3. Maintenance cost

4. Costly Spare parts

5. Limited product line

6. Shortage of trained technicians due to Complex sensor technology

7. Lack of utilization of capacity

8. Market share and profitability

9. High cost production.

OPPURTUNITY

6. People’s awareness about Global Warming

7. Customer desire for hybrid and fuel efficient vehicles

8. Increase in technology in automobiles forces customers to return to dealer for service

9. Introduction of ethanol fuel in Pakistan

10. Increase in demand of small vehicles

THREATS

11. Recession in the economy

12. WTO (World trade Order) opening local markets for global competition

13. Entry of reconditions cars 14. Political instability

15. Tightening monitoring Policy

16. Energy crises

17. Depreciation of rupee against dollar

18. Increase in Petroleum and steel prices.

19. Inflation

20. Declining quality of the infrastructure in the country.

Stage 3 The Decision Stage

QSPM (Quantitative Strategic Planning Matrix): In order to reach a decision based on objectivity and
priority based analysis, one of the most frequently used techniques is the QSPM. This technique enables
us to measure the attractiveness of feasible alternative actions. QSPM objectively indicates which
alternative strategies are the best QSPM uses input from stage

1 and matching results from stage 2 analyses to decide among alternative strategies. Like other strategy
formulation analytical tools, QSMP requires good intuitive judgment. In the stage 3 of Honda Atlas Cars,
there were three alternative strategies that we found very attractive. The data collected from the
external and internal audit, and the matching done from the opportunities, threats, weaknesses and
strengths brought us to consensus of selecting these alternative strategies. We selected three strategies
in total;

1. Increase in the number of Dealership network

2. Product Diversification

3. Attaining economies of scale

The increase in the number of dealership network was chosen because; Honda had a smallest dealership
network against his competitors Indus motors and Pak Suzuki. Honda is unable to access a number of
potential customers due to a small dealer ship network. The next alternative strategy that was built with
a consensus was to do product diversification. Honda has a small market share as compared to Indus
motors and Pak Suzuki. One of the major reasons was the product diversification by its competitors. If
Honda is able to do product diversification, it can increase its sales; capture the market share on the
bases of strong brand image and customer loyalty. Attaining the economies of scales was another highly
preferred alternative strategy that could help the company to increase its income and improve its
performance. Honda has done expansion of its company, but it has not been using its plants up to its
required optimal capacity. Due to this the company is facing high cost as well. So if the company mass
produces the cars and use the plants to its maximum capacity, it will be able to decrease the cost. The
only variables affecting this strategy are the marketing promotions done by the company, and sale of
the manufactured cars. Alternative strategies Increase in the number of Dealership Network Product
Diversification Economy of scale