Agriauto Industries Limited (AIL) Report

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STRATEGIC MANAGEMENT Agriauto Industries Limited (AIL)

Table of Contents
Introduction3

Vision..4 Quality Policy.4 Revision of Vision..4 Company Values.4-5 Long Term Objectives5 Product List.6 Company Strategies7 Major Customer .8 Distribution Network.....9 Business Growth....9 Market Segment10 Product Share10 External Assessment.11 EFE Matrix12 Internal Assessment..13 IFE Matrix.14 SWOT Matrix15 BCG Matrix..16-17 SPACE Matrix..18 IE Matrix ..20-21 Quantitative Strategic Planning Matrix .22 Recommendation

Introduction

Agriauto Industries Limited (AIL) is a public limited company, incorporated in 1981 and quoted on the stock exchange.

The company is one of the leading automotive components manufacturers in the private sector in Pakistan. Agriauto industries Ltd. is an important part of House of Habib group. Technical collaborations with leading international companies have added to the companys technical versatility; Agriauto is the sole manufacturer of Gabriel brand shock absorbers and struts in technical collaboration with Gabriel Ride Control products, (USA). Agriauto have also our technical collaboration with Kayaba Japan and through this collaboration; we are manufacturing shocks and struts for Toyota Corolla, Daihatsu Cuore, Baleno and other cars.

The product range covers both original equipment manufacturers (OEM) and after- market. The company follows international standards i.e. B.S.S., S.A.E., ASTM, JIS, ISO 9001:2008 and ISO/TS 16949:2009 as the basis of quality control program.

Agriautos production lines are backed by well-equipped quality lab and have persistently sought to consolidate technological and product excellence. Quality control is maintained at all stages of manufacturing.

Existing Company Vision

Become a world class manufacturer and supplier of high entry barrier automotive components & providing competitive returns to all stakeholders.

Quality Policy
Excellence in manufacturing of automotive parts through continuous improvement in people, systems and technology to meet at all times the customers needs of quality, volume & timeliness.

Recommended Vision:
Become a world class manufacturer and supplier of sheet metal and machining components & providing competitive returns to all stake- holders.

Revision of Vision:
Company has emphasized in old vision to develop high entry barrier automotive components while in actual company is manufacturing sheet metal parts for Dawlance which is manufacturer of home appliances, company is also manufacturing sheet metal parts as dual source for Indus motor, these parts are small in size and are not fulfilling requirement for statement of high entry barrier.

Company Values: Respect:

Interact respectfully with all people, living creatures and things; it increases their life & contribution.

Sense of Urgency:
Do it now; velocity creates winners; prioritize to be effective; focus on customers needs.

I am we:
Complementing and strengthening each other we can do anything: together we win: communicate effectively.

Leap:
Bench mark; think high and pursue it; Monitor your progress frequently.

Innovate:
Pursue knowledge; embrace changes; quest for simple, innovative solutions; conscious concern for improvement

Listen:
Listen with all senses open; be accessible, be receptive; hearing is learning and knowledge

Cost down: Drive cost down for competitiveness; add customer value not cost. Shun Bureaucracy:
Make things happen; no buck passing; results are important not reasons.

Fairness:
Merit is the only criteria; create win-win situations.

Be Bold: Take timely decisions; delegate authority & empower; exhibit entrepreneurship; own mistakes, praise others. 1Q, S, 5S: Create wah work environment, and wow service & quality; safety is a pre-requisite to work Long term Objectives

Develop parts for 2 wheeler & 4 wheeler segment at OEM & replacement market.

Upgrade plant facility Develop high value tractor parts. Gross profit of 15 20% in new products. Extensive training with Kayaba Japan to develop human resource

PRODUCTS Shock & Strut Steering Box

Cam Shaft Sleeve

Gasket Instrument Panel

Company Strategies for 2010 -2015

Explore new business in 2 wheeler segment; TAA with SHOWA Japan for Atlas Honda Ltd. Joint venture with SUMMIT Thailand for press parts. Modernizing of plant facility. Extensive training with Kayaba Japan to develop human resource. Initiation of succession planning for development of 2nd Tier management & retain talented human resource.

MAJOR CUSTOMERS

Indus Motor Company

Pak Suzuki Motor Company

Atlas Honda

Hino Pak Motor Company

Yamaha Motors

Millat Tractors

Adam Motor Company

Nissan

Delta Motorcycle

Karakoram Motor Company

FIAT

Mazda

Dawlance

DISTRIBUTION NETWORK BUSINESS GROWTH MARKET SEGMENT

PRODUCT SHARE

External Assessment

Opportunities:
1. 2. 3. Country laws encourage import of vehicles, Agriauto can develop shocks & Strut for imported vehicles such as: Vitz, Platz. Increase in new entries of motor cycle assembler and CNG Rickshaw encourage Agriauto to provide them Shocks assembly. Localization of new Suzuki & Toyota cars Swift and Corolla provide opportunity to Agriauto for development of body parts.

Threats:
1. 2. 3. Increase in price of raw material cause decrease in profit. Decrease in OEMs production due to higher prices (4 wheeler and two wheeler) effect on sales of dependent industries. Customers new policy of developing dual source of critical parts effect on sales.

EFE MATRIX

S/NO.

KEY EXTERNAL FACTORS Opportunities Country laws encourage import of vehicles, Agriauto can develop shocks & Strut for imported vehicles such as: Vitz, Platz. Increase in new entries of motor cycle assembler and CNG Rickshaw encourage Agriauto to provide them Shocks assembly. Localization of new Suzuki & Toyota cars Swift and Corolla provide opportunity to Agriauto for development of body parts. Threats

WEIGHT

RATING

WEIGHTED SCORE

0.2

0.6

0.15

0.3

0.25

Increase in price of raw material cause decrease in profit. Decrease in OEMs production due to higher prices (4 wheeler) effect on sales of dependent industries. Customers new policy of developing dual source of critical parts effect on sales

0.2

0.8

0.13

0.39

0.07

0.07

Total

3.16

Total weighted score of 3.16 is above the average of 2.5, so Agriauto industries is doing well, taking advantage of external opportunities and avoiding the threats facing the firm. There is still room for improvement.

Internal Assessment Strength:

1. 2. 3. 4. 5. 6. 7. 8. Technical collaboration with Kayaba Japan and Gabriel America. Group Company of House of Habib. ISO 9000 and TS16949 certified. Having Research & Development facility. Enough capacity to meet customer requirements. Company is equipped with latest technological machineries. Single source in Pakistan for manufacturing of Shocks & Struts for all OEMs. Good financial position.

Weaknesses:
1. 2. 3. 4. Demand of product depends on OEMs not directly to the consumers. Slow moving products are still producing which effect on flexibility and cost. High employees turn over due to distance and location of factory which is at Hub Chowki Baluchistan. Strong influence of labor union.

IFE MATRIX

S/NO.

KEY EXTERNAL FACTORS

WEIGHT

RATING

WEIGHTED SCORE

Strength Technical collaboration with Kayaba Japan and Gabriel America. Group Company of House of Habib. ISO 9000 and TS16949 certified. Having Research & Development facility. Enough capacity to meet customer requirements. Company is equipped with latest technological machineries. Single source in Pakistan for manufacturing of Shocks & Struts for all OEMs.

0.07

0.28

2 3 4 5

0.06 0.07 0.06 0.11

3 3 4 3

0.18 0.21 0.24 0.33

0.08

0.32

0.15

0.6

Good financial position. Weakness Demand of product depends on OEMs not directly to the consumers. Slow moving products are still producing which effect on flexibility and cost. High employees turn over due to distance and

0.09

0.27

0.12

0.24

0.04

0.08

location of factory which is at Hub Chowki Baluchistan.

0.05

0.05

Strong influence of labor union.

0.1

0.1

Total

2.9

Total weighted score of 2.9 is above the average of 2.5, so Agriauto industries is doing well but still need to improve the performance to meet the weighted score of 4.0

SWOT matrix suggets following strategies: Market development Market penetration

Product development Forward integration

Retrenchment

BCG MATRIX

Division
1 2 3 4 5

Plants
Shocks & Struts Press Parts Tractor 2- Wheeler Others ( Door Hinges) Total

Sales (Million)
3292.57 47.45 233.47 331.07 93.84 3998.39

Sales (%)
82.35 1.19 5.84 8.28 2.35 100.0

RMSP
0.80 0.20 0.70 0.70 0.30

IG Rate (%)
12% 5% -3% 15% 6%

Stars Industry Sales Growth Rate

Cash Cows

Dogs

Relative Market Share Position

BCG matrix suggested following

strategies for each division: * Backward, forward, horizontal integration, Market penetration, market development & Product development for Division "1 & 4" * Market penetration, market development and product development for division "2 & 5"

* Product development, Retrenchment for division "3"

SPACE MATRIX

CONSERVATIVE

FP

AGGRESSIVE

Market Share
6

Backward, Forward, Horizontal Integration

Market Development Product Development

5

Market Penetration

Market Development

Related Diversification

Product Development

Diversification
4

CP

IP

-7

-6

-5

-4

-3

-1

-1

-2

-3

-4

-5

-6

COMPETITIVE

DEFENSIVE

Backward, Forward, Horizontal Integration

Retrenchment
-7

Market Penetration

Diverstiture

Market Development

Liquidation

SP

Product Development

FP 7 Growth Potential Profit Potential Financial Stability 6 Technological Changes 4 3 3 Market Share Product Quality Product Life Cycle

IP -1

SP

CP

ROI

Leverage

Inflation rate Demand Variability Competing Products Price Range Capacity Utilization

-2

Liquidity

-4

5 Working Capital 6

Extent Levraged Resource Utilization Ease of entry into mkt Productivity, Capacity Utilization

Customer Loyalty 5 -4

-2

Cash Flow

Inventory TurnOver

Competitive Pressure 4

-5

Technological Know-How

EPS

Entry Barriers 5

-3 Control Over Suppliers & Distributors

4 Exit Barriers Risk Involved in Business 6

-5

Total Value Average

37 5.3

Total Value Average

33 4.7

Total Value Average

-34 -4.3

Total Value Average

-21 -3

Calculation IP + CP 4.7 + (3) 1.7

FP + SP 5.3 + (4.3)

Conclusion The industry is financially strong and has achieved major competitive advantages in a growing and stable industry