Project Of Pel

STUDY OF MARKETING SYSTEM Of

Pak Electron Limited

Submitted By:

MBA (A)

Group (D) M Naveed Aslam

05 Madeeha Razzaq 85 Imran Naseem 40 Tariq Mahmmod 77 Sadia Riaz 21

Pak Electron Limited

76

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Uzma Khalid

Submitted To:

Dedication:

We dedicate our project to COMSATS And all the students of the university.

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ACKNOWLEDGEMENT: A million thanks to the Almighty, without whose support, there can be no work. I would also like to take this opportunity to extend my appreciation and gratitude to Mr.Zeeshan Ullah, without their counseling and parallel skills I would have never been able to prepare this report. We owe special thanks to PEL company for assistance, Development Work and data collecting. Finally we owe many thanks for the participation of all group members and their coordination to accomplish the task.

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TABLE OF CONTENTS: EXECUTIVE SUMMARY

06

VISION

08

MISSION STATEMENT

09

HISTORY OF PEL

10

PEL COMPANY STRUCTURE:

11

SITUATION ANALYSIS: Market Research

13

Porter’s Model

17

SWOT Analysis

20

OBJECTIVES OF PEL

26

STRATEGIC MARKETING PLANNING: BCG Matrix

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Strategies of PEL

29

COMPATITIVE ADVANTAGE

30

MARKET SEGMENTATION

31

TARGET MARKET

32

POSITIONING

33

MARKETING MIX: 4

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PRODUCT MIX Product Lines of PEL

35

Features of product line

40

Product life cycle

42

PRICING

44

PROMOTION: Promotional Strategies of PEL

47

Methods of promotion

47

Advertising

48

PLACEMENT

51

COMPETITION: Direct competitor of PEL

54

Indirect competitor of PEL

55

COMPARISON BETWEEN PEL & DAWLANCE

56

GROWTH RATE OF PEL

57

QUALITY AWARD

58

FUTURE OUTLOOK

59

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EXECUTIVE SUMMARY: PEL and PEL appliances fall under the Saigol Group of Companies. PEL has long been known in Pakistan as a company that produces quality products. PEL has created a brand loyalty among its users and the company credits that to its high quality and vast product range. PEL has been continuously adding new products to its range. As a result, PEL has registered a significant increase in its sales volume, during the last ten years. One sector in Pakistan that has grown considerably in the past is the Home Appliances Division. There is great competition in this sector and PEL has survived this competition with great flair. PEL enjoys good reputation in the market for its home appliances. PEL is in a growth phase in this sector. This sector carries a lot of potential and PEL can capitalize on this fact. My stay at PEL was very beneficial due to the fact that I got the opportunity to learn the trends in the market in this sector. The company takes it as a liability to take care of its employees. The corporate culture at PEL was very healthy and induced work habits. This atmosphere helped me in building self-confidence and belief. At PEL I had an opportunity to deal directly with the customers and find out their demands and problems associated with PEL. I got to know about the trend in the industry and also conducted a research through which I got a better understanding of the consumer buying behavior. I also got a chance to improve my decision-making skills. Further more, working at PEL also helped me in becoming a better time-managed person. I got to know the importance of teamwork at the work place. In the end, all the experience that I have gained during my stay at PEL has helped me a lot in becoming a better organized person and will definitely help me in becoming an even better person in the future. I can say this with out doubt that the values that I have gained while working at PEL will be applied to wherever I go to work in the future.

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“To excel in providing engineering goods and services through continuous improvement”

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 To provide quality products & services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources.

 To focus on personal development of our employees to meet future challenges.

 To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility

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Pak Electron Ltd. (PEL) was established in 1956 with the technical collaboration of M/S AEG Germany and is the oldest composite electrical equipment manufacturing unit in Pakistan. In October 1978 the company was taken over by the SAIGOL GROUP, which is one of the leading industrial and commercial groups of Pakistan. The products manufactured by PEL have always been of a high standard and the name “PEL is synonymous with quality all over Pakistan.” PEL, since its inception, has been acting as an institution working for the advancement and development of engineering and modern technology in Pakistan Since its inception, the company has been working for the advancement and development of engineering know-how in Pakistan. The company has produced hundreds of engineers and skilled workers and technicians through its apprenticeship schemes & training programs. PEL has been continuously adding new products to its range. As a result, PEL has registered a significant increase in its sales volume, during the last ten years In 1978, the Saigol Group of Companies purchased major shares of Pak Electron Limited. At that juncture, the company was only manufacturing transformers and switchgears. With the Saigols in management, PEL started expanding its product range by entering into Air Conditioner manufacturing. In 1981, PEL window type air conditioners were introduced in technical collaboration with General Corporation of Japan. In 1986-87, the company started manufacturing of refrigerators in technical collaboration with M/s IAR-SILTAL of Italy. In 1987, PEL deep freezers were also introduced in technical collaboration with M/s Ariston of Italy.

In 2006, the Company has started manufacturing of split type air conditioners of various capacities as the customer choice has shifted from window type to split type. The product has been well received in the market. This encourages the company to multiply its production in the coming year. Today, PEL has become a household name. Its products are not only in great demand in the local market but the Company has started exporting its appliances division products. 10

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Pak Electron Limited (PAEL or PEL) is the pioneer manufacturer of electrical goods in Pakistan. The company is listed on all the three stock exchanges of Pakistan. Its principal activity is manufacturing and sale of electrical capital goods and domestic appliances.But now, PEL is operating a single business entity without any division.

LAHORE FACTORY: In Lahore Factory, Refrigerators, Transformers, Energy Meters, and Switchgears are produced. Previously, Window AC and Deep freezers were also produced in Lahore Factory but PEL quit these operations. However, PEL has restarted the production of Deep freezers once again at Lahore factory. There are following departments in the Factory of PEL: • • • • • •

Production department. Research and development. Quality control department. Human resources department. Marketing department. Finance department.

The company comprises two divisions:  Appliances Division.  Power Division.

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APPLIANCES DIVISION: PEL’s Appliances Division is the flag carrier of the Saigol Group involved in home appliances manufacturing.  Air conditioners.  Refrigerator.  Deep freezers.  Microwave oven.  Washing machine.  Generators.

POWER DIVISION: PEL Power Division manufactures energy meters,  Transformers  Switchgears  Kiosks  Compact stations  Shunt capacitor banks  Energy meters  Generators All these electrical goods are manufactured under strict quality control and in accordance with international standards.PEL is one of the major electrical equipment suppliers to Water and Power Development Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are the largest power utilities in Pakistan.Over the years, PEL electrical equipment has had been used in numerous power projects of national importance within Pakistan. In spite of stiff competition from emerging local and multinational brands, PEL Group's appliances and electrical equipments have remained in the spotlight due to constant innovation. Strategic partnership with multinationals of repute have enabled the PEL Group to incorporate new technologies into existing product ranges, thus giving the Pakistani market access to innovative, affordable and quality products.

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MARKETING RESEARCH: It is a set of activities which are performed for the purpose of getting customer knowledge in the form of Feedback to provide them ultimate satisfaction through improved and desired products. PEL is taking keen interest toward marketing research activates to know about customer desires. For this purpose, company is taking services from several research agencies. MRL (market research link) is one of these agencies providing their services to PEL and ensuring to provide authenticated results in the form of Feedback. PEL do not compromise on quality and customer satisfaction so the company provides 100% importance to the Feedback generated through research agencies. While conducting research for PEL, MRL also look forward to collect data about customer awareness towards new launched product.

FINDINGS AND ANALYSIS: Area

Valid

Missing Total

Frequency Defense 55 Cavalry Ground 28 Gulberg 19 Liberty 28 Abid Market 70 Allam Iqbal Town 18 Main Market 35 Moon Market 28 Link Road Model Town 19 Total 300 System 8 308

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Percent 17.9 9.1 6.2 9.1 22.7 5.8 11.4 9.1 6.2 97.4 2.6 100.0

Valid Percent 18.3 9.3 6.3 9.3 23.3 6.0 11.7 9.3 6.3 100.0

Cumulative Percent 18.3 27.7 34.0 43.3 66.7 72.7 84.3 93.7 100.0

Dominator Group (D)

Pak Electron Limited

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Valid

Missing Total

Frequency Below15000 22 15000-25000 47 250000-35000 59 350000-40000 125 upto50000 47 Total 300 System 8 308

Percent 7.1 15.3 19.2 40.6 15.3 97.4 2.6 100.0

Valid Percent 7.3 15.7 19.7 41.7 15.7 100.0

Cumulative Percent 7.3 23.0 42.7 84.3 100.0

BRAND PREFERENCE TOWARD DIFFERENT BRANDS

Brand Pre fe re nce (PEL)

Valid

Missing Total

1 2 3 4 5 Total System

Frequency 3 30 89 121 57 300 8 308

Percent 1.0 9.7 28.9 39.3 18.5 97.4 2.6 100.0

Valid Percent 1.0 10.0 29.7 40.3 19.0 100.0

Cumulative Percent 1.0 11.0 40.7 81.0 100.0

Brand Pre fe re nce (Dawlance )

Valid

Missing Total

1 2 3 4 5 Total System

Frequency 2 10 45 73 170 300 8 308

Percent .6 3.2 14.6 23.7 55.2 97.4 2.6 100.0

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Valid Percent .7 3.3 15.0 24.3 56.7 100.0

Cumulative Percent .7 4.0 19.0 43.3 100.0

Dominator Group (D)

Pak Electron Limited

Change your Life Brand Pre fe re nce (Othe rs)

Valid

Missing Total

1 2 3 4 5 Total System

Frequency 100 73 59 27 41 300 8 308

Percent 32.5 23.7 19.2 8.8 13.3 97.4 2.6 100.0

Valid Percent 33.3 24.3 19.7 9.0 13.7 100.0

Cumulative Percent 33.3 57.7 77.3 86.3 100.0

Brand Pre fe re nce (Haie r)

Valid

Missing Total

1 2 3 4 5 Total System

Frequency 156 124 8 5 7 300 8 308

Percent 50.6 40.3 2.6 1.6 2.3 97.4 2.6 100.0

Valid Percent 52.0 41.3 2.7 1.7 2.3 100.0

Cumulative Percent 52.0 93.3 96.0 97.7 100.0

WHICH BRAND DID YOU ALREADY HAVE?

Brand Alre ady Hav e .

Valid

Missing Total

Dawlance Waves PEL Haier Others Total System

Frequency 104 54 92 7 43 300 8 308

Percent 33.8 17.5 29.9 2.3 14.0 97.4 2.6 100.0

Valid Percent 34.7 18.0 30.7 2.3 14.3 100.0

Cumulative Percent 34.7 52.7 83.3 85.7 100.0

WHY DID YOU BUY IT?

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Pak Electron Limited

Change your Life Brand Purchase Due to (Quality)

Valid

Missing Total

3 4 5 Total System

Frequency 2 42 256 300 8 308

Percent .6 13.6 83.1 97.4 2.6 100.0

Valid Percent .7 14.0 85.3 100.0

Cumulative Percent .7 14.7 100.0

Brand Purchase Due to (Brand Name )

Valid

Missing Total

3 4 5 Total System

Frequency 21 59 220 300 8 308

Percent 6.8 19.2 71.4 97.4 2.6 100.0

Valid Percent 7.0 19.7 73.3 100.0

Cumulative Percent 7.0 26.7 100.0

Brand Purchase Due to (Fe ature s)

Valid

Missing Total

2 3 4 5 Total System

Frequency 2 27 65 206 300 8 308

Percent .6 8.8 21.1 66.9 97.4 2.6 100.0

Valid Percent .7 9.0 21.7 68.7 100.0

Cumulative Percent .7 9.7 31.3 100.0

Brand Purchase Due to (Re /Frnds)

Valid

Missing Total

1 2 3 4 5 Total System

Frequency 16 49 152 81 2 300 8 308

Percent 5.2 15.9 49.4 26.3 .6 97.4 2.6 100.0

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Valid Percent 5.3 16.3 50.7 27.0 .7 100.0

Cumulative Percent 5.3 21.7 72.3 99.3 100.0

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Threat of Substitute

Bargaining Power Of Buyers

Bargaining Power Of Suppliers

Dawalance

NEW ENTRANTS

The final out come of the research was that PEL has lost its competitive edge when it comes to other brands. I shall now discuss why is this so in the light of the Porter’s Five Forces Model. These five forces are following.  The risk of new entry by potential competitors  Rivalry among established firms  The bargaining power of the buyer  The bargaining power of the supplier  The threat of substitute products

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DIRECT COMPETITORS The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is market leader in the refrigerator and PEL is still on second number. But in window room air conditioner (WRAC) the PEL is market leader REFRIGERATORS. Total market sale of refrigerator in 2003 was 367000 units. Last year sale was 256900 units. These figures show 30% market growth. But the average growth was 13% to 17%. And the PEL sale growth is 70%, which is a great achievement.  Dawlance is a market leader in refrigerator with 46% share.  PEL has 32% market share.  Waves has 11% market share.  11% shares are others. WINDOW AC. PEL is a market leader with a market share of about 60% in local manufacturing industry. And overall has 35% market shares for this product.  LG has about 32% market share and stands on number two.  And rest of the manufacturers have 23% marker share.

Indirect Competitors: The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi, Sabro, Nobel and others Chinese brands available in the market. The PEL has no big threat from all these companies. But the Sabro pioneer for introducing the split air conditioner in Pakistan. Now days the sabro has lost its market share to other companies for the business of Split AC.

RISK OF NEW ENTRY BY POTENTIAL COMPETITORS •

High Investments.

Threat for new entrants is high in this industry, partly due to the fact that this industry is a lucrative industry and is very attractive for foreign companies. But in order to 18

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really make a mark in this industry, you need to have strong investment and funding. For this matter, PEL is at risk of the influx of foreign investments in this sector.

•

Foreign Brands.

Foreign brands like LG, Sony, Samsung, Mitsubishi and Haier etc. are a big threat for local brands. The quality and brand image of foreign brands is high as compared to local brands. Foreign brands have captured the market of split AC and television. LG and Sony are the market leader in television sector. Local brands can’t compete with these companies in this sector.

THE BARGAINING POWER OF THE BUYERS Company’s buyers are the people who ultimately purchase and consume its products. If there are so many brands and products available in the market at different prices, the bargaining power of the buyers will be high because they have many alternatives, they can demand to lower the prices. On the other hand if there are few brands or companies in the market, then the buyers will be in a weak position to bargain. As a result, the company can raise its prices and earn greater profits. If we see the Pakistani industry the bargaining power of the buyers is very high because a variety of products are available in the market at different prices. So the buyers can choose the product according to his requirements.

THE BARGAINING POWER OF THE SUPPLIERS: Suppliers can be viewed as a threat when they are in few numbers in the market. In that case, the suppliers are able to force up the price of inputs. The after effects of that can result in the reduction in the quality of inputs. If the suppliers of PEL Company are weak then company will force the suppliers to reduce the prices of input and demand for higher quality. If the suppliers are selling the products that have very few substitutes and are differentiated from others, then the suppliers are always in good bargaining position.

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SUBSTITUTE PRODUCTS There is no real substitute for the products of this industry. Refrigerators and deep freezer have there own attributes. Cold stores can be substitutes for these products, but these substitutes are more costly and can’t be easily approached.

The strengths, weaknesses, opportunities and threats of PEL are discussed below:

• Strengths: PEL has the following strengths.  Brand Name  Strong Dealer Network  Quality Products  Best Sales Services  Market leader in WRAC  Number 2 in Refrigerators in Pakistan  Strong Management Team  Distribution of Authority  Research and Development Department  Free Customer Service Brand Name: PEL has created a strong brand image in the mind of the customers through higher quality and low prices. The customers of PEL always prefer its home appliances like Window AC, split AC and refrigerators, during the time of purchase. PEL is a popular company in Pakistan and every one knows about the PEL products and its brand name. That’s why PEL is a market leader when it comes to Window AC.

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Strong Dealer Network: It is also the plus point for PEL that it has developed a strong dealer network in the market. The dealers always try to sell the PEL products to the customers because, the company for its products, gives them a high margin. The management of PEL also provides more incentives to their dealers than their competitors. Dealers are very conscious about the PEL products and always guide the customer in buying the PEL products. Quality Products: PEL is also in a strong position because it provides superior quality products to customers. So it gives an edge to company over its competitors. Due to best quality, guarantee of products of PEL is more than its competitors. Best Sales Services: PEL provides the after sale service to customers which increases the customers satisfaction. The biggest strength of services department is that it handles a complaint within 24 hours in any part of the country, that helps in increasing the satisfaction level of customers. Market leader in WRAC (Window Room Air Conditioner): It is also strength of PEL that it is a market leader in WRAC. Costumer always gives preference to PEL in window AC market because of low price, high quality and durability. Number Two in Refrigerators in Pakistan: After the Dawlance refrigerators, PEL has the second position in the refrigerators market. PEL is gradually coming up in refrigerator market and increasing its market share. Due to improved quality, innovative features and good sales services PEL is becoming the first choice for customers. Strong Management Team: It is another plus point that PEL has a strong management. Its employees are competent, efficient, skilled and knowledge. They always cooperate with the 21

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top management in achieving of goals that are assigned to them. Employees are well aware about the company objectives and are committed to the development of company. Distribution of Authority: Top management of PEL delegates the power to the subordinates for achieving the marketing objectives in a specified time period. So every manager has an authority to take decisions to achieve the goals of company. In this way they save the time and react quickly. Research and Development Department: PEL has a strong research and development department that is continuously trying to develop new features for the products. R&D department spends huge amount of money for the development of new products. Free Customer Service: PEL provides free customer service for one year to its customers. The customers who buy the PEL products become brand loyal due to this facility.

• Weaknesses of PEL: Like other companies PEL has some weaknesses. If PEL overcomes these weaknesses then it can become a market leader in home appliances. PEL looses some competitive edge in the following areas:  Financial Problems  Lack of advertisement  System variations  Lack of Product range  Less Utilization of capacity Financial problems: Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that creates problem of cash flow because when the

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stocks are not sold and the production is in process for 24 hours a day then the company faces such problems. Lack of advertisement: It is a second major weakness of PEL that it is not a vigorous advertiser. Only recently has PEL invested a considerable amount in advertisement, but when we look at its competitors, PEL still has to do a lot in this sector. System variations: It is also the main weakness of PEL that there is a rapid change in polices of selling the products. That creates problems for the selling team to sell the products to the dealers because the top management requires urgent amount of money. Thus the products are sometimes sold on hard cash that reduces the prices of products that creates problems for the management. Lack of Product Range: PEL has introduced more products of consumer items but there are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Less utilization of capacity: Due to lack of finance a company cannot utilize all its resources on its full capacity. It increases the cost of products per unit that decreases the profit margin of each consumer item. Sometimes, the company cannot allocate the resources according to the requirements of the production department, which later on becomes a problem for the complete utilization of resources.

• Opportunities for PEL: For PEL, there are more opportunities for expansion in business. Following are the opportunities for the PEL.  Exploration of market in Pakistan  Increase in product range 23

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 Export opportunity  Increase in production capacit Exploration of market in Pakistan: PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL has introduced its products in many cities of Pakistan but there are so many places that are yet to be exploited. Increase in Product Range: PEL can increase its product range that will be more profitable for the company. There are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Export opportunity: PEL has also the opportunity to export their products in other international countries like UAE, SAUDI ARABIA, and other Arabic and African countries. Increase in production Line: Company can also increase its production line at the maximum level that will increase the efficiency of the employees and will also reduce the total cost.

• Threats for PEL: Following are the main threats for the PEL:  Strong competition  China’s product introduction in the market  Price war  Slow growth rate in Pakistan  Instability of government  Tax department  World Trade Organization Strong competition: There is very strong competition in the home appliance division. Every company adopts different strategies for selling of the products. It reduces the

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profit margin of each company and increases the bargaining power of the buyers who will demand higher quality of products at lower cost. China’s product: China’s products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. China products stress the indigenous companies to lower the quality and prices that will not be profitable in the long run. Price war: As there is stiff competition in the home appliance market that will cause the price war. Slow growth rate in Pakistan: There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the company. Although, this industry is in the growth phase, but the speed of the growth is very slow. Instability of Government: The rapid changes in governments will become a threat for the companies because every government adopts new policies for the industries. So it increasesthe uncertainty for the investors who want to invest heavy amounts in their new projects. Tax department: Tax department is another major threat for the company that will restrain the business expansion. There is a most complicated tax procedure operating in the country that creates hurdle in the production and smooth functioning of different companies in Pakistan. World trade organization: World trade organization will give the permission in 2005 to each company of home appliance to export their products after paying less duties or duty free products. That will increase the pressures for the indigenous companies to reduce the prices and 25

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increase the quality. It will increase the competition among the foreign companies and indigenous companies.

The objectives and mission for which the company is established are as following: •

To carry on the business or businesses of manufacturing, selling, installing, maintaining designing and dealing in all kinds of electrical equipment.

•

To carry on any business whether manufacturing or otherwise which maybe found convenient to undertake in connection with or in addition to any of these objectives mentioned above.

•

To do all such things that are incidental for the attainment of the above objectives or any of them.

•

To produce high quality and standard products.

•

To produce equipment to be used in numerous projects of national importance.

•

To secure a high share / quota of WAPDA’s demand for power products.

•

To produce skilled workers and technicians through its apprenticeship schemes and training programs for engineers and technician 26

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BCG stands for Boston consulting group. It is a portfolio planning method that evaluates the company’s strategic business unit .Using this model an organization classifies each of its separate business units (SBU) according to two factors: Market share relative to competition and growth rate of the industry in which SBU operates When these factors are divided into high and low categories, a 2 x 2 grid is created as displayed in following figure:

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STAR: Star is a business unit that has large market share in fast growing industry. Such unit requires more investment to generate more cash. If due to more investment it will become successful and become cash cow and it will reach at maturity stage. For star product the strategy is called harvest  Refrigerator of PEL is the product having high market share and high annual growth rate.

Cash Cow: It is the business unit sometimes known as problem child. It has a large market share and low annual growth. Each cash cow requires little investment and it generates more cash that can be used for investment purpose in other business units. For cash cow the strategy is called HOLD, you must preserve market  Split air conditioners is the product of PEL having high market share and low annual growth rate.

Question Mark: It is the business unit that has a low market share and high annual growth. These business unit requires resources to grow market share but if they succeeded that will become STAR. For question mark the strategy is called BUILD, you try to make up the market share.  Washing machine and microwave oven are the products of PEL having low market share but high annual growth

Dog: Dog is the business unit that has small market share as well as low annual market growth rate. A company normally would be unwise to invest substantial funds in SBUs in this category. Marketing strategies for dogs are intended to maximize any potential profits by minimizing expenditures or to promote a differential advantage to build market shareAnd the company can diverts or liquidate the dog product  Deep freezer is the product of PEL having low market share plus low annual growth share.

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Question Mark

Star .

Dog

Cash Cow

Deep freezer of PEL has low market share in low market growth rate. So it regarded as a dog. So company should drop this product.

STRATEGIES OF PEL AS MARKET CHALLANGER In competitive environment challengers strategies are very significant to survive in the market. Firms in this category can adopt one of the following strategies:The leader is attacked but it is very risky and high payoff.Company can attack unprogressive and under financed firms, it is less risky and less payoffIt can also attack on small local and regional firms, it is neither risky nor high payoff

Choosing A General attack strategies: Frontal attack: The attacker matches its opponent price, product, advertisement and distribution. The principle of force says that side with greater manpower (resources) will win Flank Attack: The attacker can attack along two dimensions: • Segmental. • Geographical • Technological leap fogging: Challenger patiently researches and develops the next technology then launches its attack Guerrilla Warfare: It consists of small but continuous attacks to harass and demoralize the opponents. 29

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Encirclement attack: It involves launching grand offenses on several fronts attack on every feature of opponents products As far as PEL is concerned, it uses technological leap fogging strategy to attack. PEL is launching products having several innovative features to differentiate its product from competitors ♦ Water dispenser refrigerator is the product having innovative feature of getting cool water without opening refrigerator ♦ 6- Series refrigerator is the product having differential feature of light bulb in freezer PEL Genset Aircon Power Electric generator is the product having following differential features: Performance capable of running following items continuously for 10 hours. One 1.5 ton split One television Six tube lights One computer One fridge Five fans One deep freezer

The main compatitve advantage of PEL is it is pioneer company of PAKISTAN. PEL companies engaged in same business of Home Appliances. However, PEL is also making Power Products like Energy Meters, Transformers, Switch Gears etc. PEL is pioneer of eletrical appliances in Pakistan as it started its activities in 1956. PEL was taken over by Saigol Group of Companies. PEL is awarded SuperBrands Pakistan 2007-08. The Brand Ambessdor of PEL is Hadiqa Kayani which is famous singer of Pakistan.

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Segment marketing offers several benefits over mass marketing. The company can more easily select the best distribution and communication channels and it will also have a clear picture of its competitors.Market segmentation refers to the different areas of the population that companies can aim their products towards. The market segment that PEL has chosen to aim is the quality conscious people.

Segmentation

Geographic

Psychographic

Demographic

Behavioral

Geographic Segmentation: PEL is doing mass market which is not limited to one county but all over

the world.

The main target of PEL is Pakistani market.In Pakistan,PEL is available at every city because its very famous and good product of market.

Demographic Segmentation: PEL divide its market on the basis of following characteristics of population •

Age group:

Earlier PEL used to segments its market among people age ranges from 35----45years.But Now PEL focus between the age group ranges from 25----35 years.

• Gender group: For the segmentation, the company is recently focusing on young graduate girls and the latest ad of PEL reveals the fact in which famous singer Hadiqa is representing young college girl.

Psychographic Segmentation: 31

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Income group:

PEL is offering its several products to different income groups of society •

In case of Generators, company focuses on elite class.

•

In case of refrigerators, split air conditioners, washing machines, deep freezer.

•

Televisions Company focus on middle class.

•

In case of Microwave oven, the company focuses on elite and middle class.

Behavioral Segmentation: We provide a quality product for our customers. It is purely base on local demands and needs, and we sure that our product will be appreciated by that people who are quality conscious.

It is the segment for which the seller designs particular marketing mix. Target market Strategies: Following are the target market strategies:  Aggregation strategy  Single segment strategy  Multiple segment strategies

Aggregation strategies: In this strategy total market is treated as a single segment and single market mix is developed to reach the customers in the entire Market.The company offers a single marketing mix.

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Position is the way a firm’s product, brand or organization is viewed relative to the competition by current and prospective customer. Positioning is a firm’s use of all the elements at its disposal to create and maintain in the minds of a target market particular image relative products. PEL has different positioning levels for different products, In case of refrigerators the company is challenger of DAWLANCE. In case of air conditioners company is challenger for WAVES and MITSUBISHI. In case of televisions company is challenger of LG and some other companies.

PEL doing the mass marketing and using only one marketing mix for the complete Pakistani market. :

Product is “heart” Price

Promotion

Place (Distribution) 33

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Product mix is a set of all products that are offered for sale by a company. Product mix consists of both breadth and depth.

BREADTH: Breadth is a measured by the total number of product line offered by a company.

DEPTH: Depth is the variety of sizes, colors and models offered within each product line

PORTFOLIO OF PEL PEL divides its portfolio in two divisions •

Appliances division.

•

Power division.

PORTFOLIO OF APPLIANCES DIVISION Following are the products of appliances division:  Air conditioners  Refrigerator  Television  Microwave Oven  Washing machine  Generators

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BREADTH

DEPTH

REFRIGERATORS:

MODEL

SIZE

1. PREMIER SERIES:

PC 20185

15Cft

PC 20165

14Cft

PC 2017

16Cft

PC 2500

10Cft

PC 2300

8Cft

2. CRYSTAL SERIES:

PC 2012

10Cft

PC 2010

8Cft

PC 2009

7Cft

3. 6-SERIES: 35

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PC 6400

12Cft

PC 6300

11Cft

PC 6200

10Cft

4. MINI-SERIES:

PMR 110-S PMR 11

PMR-111 (DS)

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MICROWAVES:

MODEL

PMO 1052

SIZE

2CF

TG (Silver)

PMO 23

1.5CF

Manual (Silver)

PMO 20

1CF

Touch (White)

PMO 23

2CF

TGS (Silver)

WASHING MACHINES: :

MODEL 37

SIZE

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Magic Clean

10KV

(PWM-7700)

Magic Clean

5KV PWM 0510

AIR CONDITIONERS:

MODEL

SIZE

Silver Line (QB)

1,1.5 & 2ton

High Vita

1.1.5

(HV7)

& 2Ton

WAC

1.5Ton

(19K) Floor Standing Air Conditioners

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WATER DISPENSORS:

MODEL

PLS 691 SL

SIZE

360x390x1035

(Silver & White)

PLS 681 SL

385x395x1025

(Silver)

PORTFOLIO OF POWER DIVISION These are following products of power division.

BREADTH

DEPTH 39

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TRANSFORMER :

25 KVA 50 KVA

100 KVA 1250 KVA

ENERY METER:

VOLTAGE

220-240V

CURRENT (NOMINAL)

SWITCH GEARS :

10, 20,40A

CURRENT (MAXIMUM)

40,

60,

80,100A

GENERATOR:

Model No. PG5040D

Capacity 5.2KVA

FEATURES OF PRODUCT LINE Air Conditioners: PEL window-type air conditioners were introduced in 1981 in technical collaboration with General Corporation of Japan. Ever since their launch, PEL air conditioners have a leading position in the market. PEL air conditioners cooling performance has been tested and approved by Copeland and ITS USA. With the shift of users preference from window type to split type air conditioners, PEL has started manufacturing split type air conditioners

Refrigerators: The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL refrigerators are also in great demand. Today, PEL Crystal has 38% of total market share. Its cooling performance is 40

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tested and approved by Danfoss, Germany and its manufacturing facility is ISO 9001 certified.

Deep freezers: PEL deep freezers were introduced in 1987 in technical collaboration with M/s Ariston of Italy. Due to several reasons the production of deep freezers was stopped but now company is restarting its production again.

Microwave Oven: PEL the trustful company name in home appliances all over the country, now introduced all new models of "PEL Power Wave" Microwave Ovens. Now PEL customers can have four models of PEL Power Wave in which they can enjoy the grilling feature as well. PEL Microwave Ovens are available in different sizes, inner cavities (steel & painted) and features.

Washing Machine: PEL introduced washing machine in 2006 first time and it got appreciative response from customers, Now it is being produced by the company on large scale and due to its improved quality its sales volume is increasing.

Generators: Generator is another product of PEL that is used to generate electricity. It is very famous product in elite class. It has several features as self start, no noise, digital display panel, dual exhaust system (environment friendly), special air cooling system, continuous 10 hours running at 3 KV.

PRODUCT LIFE CYCLE

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Sales and Profits ($)

Sales

Profits Time Product Development

Introduction

Growth

Maturity

Decline

Losses/ Investments ($)

A product life cycle consists of aggregate demand over an expected period of time for all brand comprising a generic product category. A life cycle can be foraged by plotting aggregate sales volume for a product category over time usually years Stages of product life cycle: Management must be able to recognize what part of life cycle its product is in at any given time. The completive environment and marketing strategies that should be used ordinarily depends on the particular life cycle stage There are four stages of product life cycle and explanation of each is given below Introduction: This stage some times known as pioneering stage in which a product is launched into the market in a full scale marketing program it has gone through product development, including idea generation, idea screening, prototype and market tests. For new products normally there is very little direct competition.  GENERATORS are on introduction stage. Growth: Growth stage also called market acceptance stage. In this stage sales volume and profits rises and competitors enter the market. At the end of growth stage , profit starts to decline. 42

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 Water Dispensers are on growth stage.

Maturity: During Maturity stage, sales continuous to increase but at decreasing rate. When sales level off, profits of both producer and middlemen decline. The primary reason is intense price competition  Refrigerators of PEL on the maturity stage. Decline: This stage is inevitable. In this stage profit and sales volume of the product both decrease rapidly and finally its life comes to an end. Longest life cycle: As far as PEL is concerned, the longest product life cycle is of crystal classics refrigerators having three years duration. Shortest life cycle: Life cycle of crystal classic 2009 refrigerator is the shortest among the portfolios of PEL appliances.

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Price is a strong element in the marketing mix. It has a direct impact on the customer, business. To the consumer, the price is a major indicator of the quality of good and an important factor in making decision about it’s purchase In deciding the price the business management must consider the kind of competition in the market for the good, the elasticity of demand for product, its cost of production etc As far as PEL organization is concerned, sets its prices of product line regarding the competition in the market. Prices of product line varies from product to product, some of its product’s prices are set on quality base PEL organization is very well aware of the limited buying power of the average population of Pakistan so to uplifting their living standard & trying to meet their expectations regarding necessities of home appliances. So company tries to focus on this portion of society, while setting the prices.

Internal costs include in prices: 12-

Raw Material Labor Charges

3-

Factory Overheads

4-

Advertisement Cost

5-

Governmental Duty

6-

Excise Duty

7-

Company's Profit Margin

PEL PRICE LIST Model

Prices (Rs)

REFRIGERATOR SLIM LINE 2009-VCM

15500

2010-VCM

16500 44

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2012-VCM

18000

2009-STAR PLUS

16000

2010-STAR PLUS

17000

2300-STAR PLUS

17500

2500-STAR PLUS

18500

2300-PREMIER

17900

2500-PREMIER

18900

WHITE BODY 20140--Crystal Classic

20500

20145-Crystal Classic

21000

20165-Crystal Classic

22500

2017-Crystal Classic

25500

20140-Premier

21000

20145-Premier

21300

20165-Premier

23000

2017-Premier

25000

6 SERIES 6200

20000

6300

20500

6400

21000

MICROWAVE OVEN PMO-20 Manual

4200

PMO-20 Touch

4700

PMO-23 M

4900

PMO-23 TG

5800

PMO-23 TGS

6300 45

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PMO-36 TG

7000

PM0-36TGS

7400

PM0-52

7400

WASHING MACHINE PWM-508

5500

PWM-510

5700

PWM-7500

7500

SPLIT AIR CONDITIONER 1 TON

19400

1.5 TON

25900

2 TON

36700

GENERATORS PG 5040-D

74000

Promotion is an essential for increasing the demand of the product. Promotion includes advertising, personal selling and sales promotion. The seller informs the customers through news papers, television and posters about the product available in the market.

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PRMOTIONAL STRATEGIES OF PEL: PUSH STRATEGY: It is promotion program primarily aimed at dealers in which company focuses to sell the product. In past PEL used this strategy to increase their sales volume by giving more and more incentive to the dealers PULL STRATEGY: It is another promotional program primarily aimed at final consumer. Now a days, PEL is using PULL strategy by improving product quality For example: PEL is using the imported DANFOSS compressors in its appliances.

METHODS OF PROMOTION: An organization adopts one or more of the following methods which are very common now a day in uplifting its performance:  Advertising  Personal selling  Sales promotion  Public relations PRMOTONAL BUDGET:  PEL spends 3% of sales on promotion.

•

ADVERTISING:

Advertising is non personal communication paid for by a clearly identified sponsor promoting ideas, organizations or products. The most familiar outlets for ads are the broadcast and print media. : The company highly believed in advertising. The company is expanding a lot of money on different advertising media which are: -

Television

-

Hording 47

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Neon Sign

-

Stickers

-

Banners

-

Point Of Sale

-

Calendars

-

Wall

-

Clocks

-

Brochures

-

Key Chain

-

Billboards

Organizing advertisement: A firm can manage its advertising program through following ways:  By developing an internal advertising department  By using an outside agency  By using a combination of above both

ADVERTISING THROUGH PRINT MEDIA: PEL

is

conducting

advertising

through

advertising

department.

performed hot

by

its internal It

is

publishing ads in

selling

magazines.

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ADVERTISING THROUGH ELECTRONIC MEDIA: PEL is conducting its advertising campaigns through advertisement several outside agencies. PEL sister concern “Red Communication” is the main advertising agency used for the purpose of making ads according to changing trends of market and considering ethical issues. Latest ad of PEL is designed by this agency by focusing on a college girl and its requirements from technology and PEL is providing the appliances which is fulfilling theses requirement. Advertising duration: For refrigerators and air conditioners:

from March to June

For oven and washing machine:

from November to March

.

SALES PROMOTION: Sales

promotions

sponsor-founded,

demand-stimulation

activity

designed

supplement advertising and facilitate personal selling. PEL uses out door activities:  Exhibitions  Road shows  Promotion schemes etc.

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PUBLIC

RELATIONS: Public relations encompass an wide verity of communication effort to contribute to generally favorable attitude and opinions towards an organizations and its products. PEL also engaged in public relations activities just to create a soft image in the hearts people.

SOCIETAL MARKETING: Firm that sufficiently extents the breadth and commitment dimensions of its marketing goals to fulfill its social responsibility are practicing what has become known as the societal marketing. In these days PEL is giving donations for rehabilitation of earthquake affected areas. The company has donated several necessities for the help of earthquake affected people. PEL uses to collect zakat funds on the behalf of several charity institution as Shokat Khanam hospital Installment Facility:

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PEL gives installment faculty to all government employees, all of the account holders of Banks Alflah Limited and bank of Punjab

This element of marketing is concerned with all those activities with are related to move the product or service from seller to buyer. PEL uses place strategy which ensures that product is available to consumer at the right time when they are needed (time utility) At the place where they are demanded (place utility) in the form or shape they are required (form utility) and the ownership of goods is transferred with less financial risk (possession utility) A product reaches customer through a channel of distribution. This channel might be short or much complex involving many kinds of middlemen but PEL uses short channel of distribution to minimize the expenses and ensure timely supply of goods to end user

DISTRIBUTION CRITERIA: PEL has the head office in Lahore and it also has 22 sub-offices in different cities of Pakistan and they have different sales manager in each city. Every manager is responsible to maintain strict control over the market they are assigned. The company estimates its sales volume by the past sales made by dealers and expected future demand of authorized dealers The volume of productions which is to be produced is also calculated by the same methods that is the sales target given to the dealers for the year The Company imports raw material for their products. They believe that the imported raw material is of superior quality. They are importing raw material from different countries which are: -Germany 51

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-Japan The parts which are imported: 1-

Compressor

2-

Copper Pipe

3-

Insulation Chemicals

4-

Crystal sheet

5-

Thermostat

6-

Monogram

7

Bulb

The parts which are locally manufactured: 1-

Gas Kit

2-

Handle

3-

Knobs

4-

Wheel

5-

Wracks etc.

DEALERSHIP PROCEDURE: PEL bases on dealers for its sales and ultimate production. That is why they have a very strict system of giving dealership and a very efficient procedure of allotting target to each and every dealer. The company makes a contract with every dealer for the

period of one or more years depends upon the relation with company and efforts put by the dealers in specific territories. Following are the considerations which company looks for while allotting dealership.

Considerations for allotment of dealership: These points are specially considered while allotting dealership:  FINANCIAL BACKGROUNDS/RESOURCE:

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Financial background is the main point of consideration for allotting dealership PEL does not allow credit facility to its dealers they have to pay advance payment to get delivery of goods.  LOCATION OF OUTLET:

Another major consideration in getting the dealership is location of outlets. The selling point should in the existing market place and it should be easily accessible by customers  EXPERIENCE AND KNOWLEDGE OF DEALER:

The dealer should have a fair assessment and knowledge about the particular territory. He should be conscious of his good points in persuading the customers to purchase the goods  DEALERS ATTITUDE: The attitude of the dealer should be polite to the customers so that he may convince them.  GOOD WILL: Company prefers the dealers having well repute in the market and dealers are very good in the eyes of customers

In this modern word, it is very hard to survive in the market due to swear competition between the companies. Every existing product in the market has its substitute or similar product. 53

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“Competitors are the companies that satisfy the same customer needs and wants.” To explain the competition we can classify the competitors in two ways which are given below:

 Direct competitors  Indirect competitors DIRECT COMPETITORS The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is market leader in the refrigerator and PEL is still on second number. But in window room air conditioner (WRAC) the PEL is market leader  REFRIGERATORS: Total market sale of refrigerator in 2006 is 2924905 units. Last year sale was 2091779 units. These figures show 30% market growth. But this is not the exact figure of growth rate it varies from year to year. DAWLANCE is a market leader in refrigerator with 46% share. PEL has 38% market share Waves has 10% market share. 6% shares are others  WINDOW AIR CONDITIONERS: PEL is a market leader with a market share of about 60% in local manufacturing industry. And overall has 35% market shares for this product. LG has about 32% market share and stands on number two.And rest of the manufacturers have 23% marker share.  SPLIT AIR CONDITIONERS: The main competitor of PEL in Split air conditioner is DAWLANCE. Other competitors are MITSUBISHI and HAIER  MICROWAVE OVEN: In case of Microwave Oven DAWLANCE is the main competitor of PEL. But the company claims to be the leader in this product line. 54

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INDIRECT COMPETITORS The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi, Sabro, Nobel and others Chinese brands available in the market. The PEL has no big threat from all these companies. But the Sabro pioneer for introducing the split air conditioner in Pakistan.

COMPETITION STRATEGIES COMPETITIVE POSITION: According to AURTHER D. LITTLE a company will occupy one of the following competitive position strategies:

 Dominants: At this position a firm controls the behavior of other competitor and has a wide choice of strategic option.  Strong: At this, a firm can take independent action without endangering its long-term position and can maintain its long-term position regardless of the competitor’s action.  Favorable: This firm has an exploitable strength to improve it position.  Tenable: This firm is performing at a satisfactory level to warrant continuing in business.  Weak: At this position, a firm has unsatisfactory performance and an opportunity to improvement.  Non-viable: At this position, a firm has unsatisfactory performance with no opportunity to improvement. 55

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PEL occupies the strong position in the market because, it has very good market share of 38%. PEL is the market CHALLANGER.

COMPERISION BETWEEN DAWLANCE AND PEL DAWLANCE

PEL

INNOVATION: The innovation process of

The innovation process of the PEL is high but

Dawlance is very high and

not like the Dawlance their position in the

Quick.

Market.is good.

MARKET LEADER: PEL is also the market leader Dawlence is the market leader

but it comes after the Dawlance and doing

and still maintains its first

a very good job in the market.

position in the market

PRODUCT RANGE: Product range of the PEL is nearly 10 to Dawlance have a very good

15 which is also showing a good ratio of

product range all Product range

the products of the PEL have also very good

is nearly 20to24.

position in the market

All the products of the Dawlance are doing very good job in the market

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In 2006-07, your Company has maintained the growth pattern of last 5 years. Gross sales at Rs. 13.07 billion and Profit after tax of Rs. 582 million show an increase of 18.42% and 31.67% respectively. Summary of key financial results is given below: Financial Results (Rs. in Million)

200607

200506

13,077

11,042

Profit before tax

707

516

Profit after tax

582

442

6.87

5.04

6.65

4.82

Gross Sales

Earnings per share (Basic) Rupees Earnings per share (Diluted) Rupees Graph - Gross Sales

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PEL was 16th Company in Pakistan which got ISO 9002 Certification in 1997, since then PEL Management is applying this International Standard Practices for Effectively Managing Quality of Products and Services that Company Offers. The International Standard Practices in PEL have been Upgraded as per the Revised ISO 9001 Standards and its Scope of Application is expanding ever since and Top Management is Committed to make PEL a Total Quality Management (TQM) Company. In this Company Quality is the Subject of Management at all Levels. We focus on continuous improvement in our Systems thus establishing Good Management Practices that ensure Product and Services Standards, we are committed to and making continuous efforts in developing and strengthening our internal and external customers and suppliers, employees training and development and their participation are the KEY forces which are Increasing the Organization's Capabilities thus making it more competitive and fast growing Company. And thus going for State-of-the-art production facility reflects management Vision and commitment for Quality. Having around Fifty years of Manufacturing experience with a cooperative and dedicated employees and now coupled with efficiency monitoring processes and Data Analysis enable management to take Preventive Actions before things really go wrong. Elimination of wasteful activities, practices, processes, norms and behavior are the top management's priorities that need to be managed so that the philosophy of ZERO DEFECT can be taken on board. 58

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Benchmarking with National and International repute Organizations will be in our road to manufacturing excellence to prove PEL as a World Class Manufacturer.

Future Outlook: The economy is expected to perform well in the next year however it is exposed to certain challenges like current account deficit, lower exports, increased competition in the international market and lack of technological advancement as compared to competing nations. It is still hoped that national economy will continue to grow and rising prosperity will bring expanding opportunities for the Engineering Industry

and

for

your

Company.

The company will continue to focus on cost effectiveness, quality standards and best after sales services to our valued customers. We expect to go farther, faster and higher than we have ever been in serving the interests of our customers, shareholders and employees.

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