Internal and External Analysis of Pak Electron Ltd

Pak electron ltd is the pioneer manufacture of electrical goods. It was establish in 1956 in technical collaboration with M/S AEG of Germany. In October 1978 the group was bought by Saigal Group of Industries. Since its inception, the company has always been contribution towards the advancements and development of the engineering sector in Pakistan by producing hundreds of engineer’s, skilled workers and technicians through its apprenticeship schemes and training program.

The products manufactured by PEL have always been of high standard and the name ‘PEL’ is synonymous with QUALITY all over 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, 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.

PEL PROFILE

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was bought by the Saigol Group of Companies. Since its inception, the company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality home appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programmers.

The company comprises of two divisions:

• Appliances Division
• Power Division

Appliances Division

PEL’s appliance division is the flag carrier of the Saigol group. This division of PEL consists of Home appliance manufacturing.

PEL 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 and today PEL holds approximately45% of air conditioners market share.

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PEL Refrigerators

The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL’s refrigerators are also in great demand. Today, PEL Crystal has 30% market share. Its cooling performance is tested and approved by Danfoss, Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland.

PEL Deep Freezers

PEL deep freezers were introduced in 1987 in technical collaboration with M/s Ariston of Italy. Due to their durability and high quality, PEL deep freezers are the preferred choice of companies like Lever Brothers.

POWER DIVISION

PEL Power Division manufactures energy meters, transformers, switchgears, Kiosks, compact stations, shunt capacitor banks etc. All these electrical goods are assembled 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 companies in Pakistan.

Over the years, PEL electrical equipment has had been used in numerous power projects of national importance within Pakistan. PEL has the privilege of getting its equipment approved and certified from well-reputed international consultants such as:

• Preece, Cardew and Rider, England
• Harza Engineering Company, USA
• Snam Progeti, Italy
• Societe Dumezm, France
• Miner & Miner International Inc. USA
• Ensa, France

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 partnerships with Copeland, Danfoss, Samsung and others 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.

TRANSFORMER

PEL has vast experience in design and manufacturing of standard and special purpose transformers up to 33kV and up to 6000kVA ratings.

PEL make oil immersed transformers with natural cooling are suitable for both indoor and outdoor installations. These are manufactured according to BSS-171, IEC-76 or VDE-0532 and tropical zed to meet adverse environmental conditions. All our transformers are offered with tabular tank, having a conservator and breather. However, hermetically sealed transformers are also manufactured up to 1000kVA ratings.

PEL transformers are available for various applications:

• Distribution transformers (pole mounted or pad mounted design)
• Auto transformers
• Furnace transformers
• Welding transformers
• Chokes for furnace transformers
• Any other special requirement

PEL’s transformers have been successfully type tested for Impulse voltage and short circuit tests at KEMA, (Holland), HV&SC Lab, Rawat (Pakistan), NIP (Pakistan) and UET (Pakistan).

ENERGY METER

Single-Phase Energy Meters:

PEL manufactures Electro-mechanical Energy Meters under license from ABB-USA. The quality of PEL meters has been certified by KEMA Laboratories (Holland) and conforms to IEC 521, SGS Yarsley, and U.K., has certified PEL Energy Meter plant for ISO 9002.

PEL type MC8 is a direct connection single-phase meter. The design and constructional features include overload compensation and temperature compensation, thus providing maintenance-free operation over a long period and accurate measurement of electrical energy. The frame is sturdy in construction and the covers are available in unbreakable polycarbonate plastic material.

Poly-Phase Energy Meters:

PEL type TBL is a direct connection poly-phase meter having improved load performance and precision accuracy over a wide load range. All meter parts are corrosion protected for long-term reliability. It has a magnetic bearing system that is self-cleaning, non-aging and tamper resistant. This ensures virtually frictionless operation of the rotor while withstanding abuse from surges and magnetic tampering. The meter is available with one-piece high impact polycarbonate cover. The terminal cover is extended type that completely shrouds the service cable.

History of Refrigerator

In 1748 Dr.William Cullen did first experiment in artificial refrigeration.

In the early 1800’s, Michael Faraday discovered the liquefying ammonia gas which causes cooling.

IN 1804, Oliver Evans, and American design the first refrigeration machine.

In 1834, Jacob Perkins, an American invented the refrigerator in London.

In 1844, an American physician, Oliver Evinces built a refrigerator to make ice to cool the air.

In 1874, Raoul Picked of Switzerland, invented a a compressor system using sulphur dioxide instead of ammonia.

In 1876, German engineer, Carl Von Linden made the process of liquefying gas, basic refrigerator technology.

In 1915 Alfred Mellows starts to build first self container refrigerator for home use.

In 1920 there were some 200 different refrigerators in the market.

In 1922 Baltzar Von Platen and Carl Munters introduce absorption process refrigerator.

Refrigerator from the late 1800’s until 1929 used the toxic gases, ammonia and methyl chloride and Sulphur dioxide as refrigerant.

In 1931 the first air cooled refrigerator launched by Electrolux.

In 1947 GE launched two door refrigerators freezer combination.

In 1955 80% of American homes now have refrigerators.

Throughout the 1960’s to 1970’s house hold refrigerators were improved to better suit consumers.

According to the history channel, today refrigerators are “more energy efficient”

With the advancement of technology from this era to current era, now, there is quick change in the styles and quality.

Timeline of Air Conditioning Events

Here is a timeline of historical facts about the development of the air-conditioning industry you may find interesting and help you appreciate the impact this important industry has on our lives.

1882 — Thanks to Thomas Edison, the first electric power plant opens in New York, making it possible for the first time to have an inexpensive source of energy for residential and commercial buildings.

1889 — Central station refrigeration is used in large cities to preserve foods and documents.

1902 — Willis Carrier builds the first air conditioner to combat humidity inside a printing company. Controlling the humidity in printing companies and textile mills was the start of managing the inside environments.

1906 — Willis Carrier patents his invention calling it an “Apparatus for Treating Air.”

1906 — Stuart W. Cramer coins the term “Air Conditioning.”

1913 — The first international exposition devoted exclusively to refrigeration is held in Chicago.

1917 — The first documented theater to use refrigeration is the New Empire Theatre in Montgomery, Alabama. In that same year, the Central Park Theater in Chicago is built to incorporate the new technology: air conditioning.

1928 — The Chamber of the House of Representatives is air conditioned.

1929 — The Senate is air conditioned.

1930 — The White House, the Executive Office Building, and the Department of Commerce are air-conditioned.

1942 — The Potomac Electric Power Company (PEPCO) becomes the nation’s first summer peaking utility.

1946 — After World War II, the demand for room air-conditioners begins to increase. Thirty thousand room air-conditioners were produced that year.

1947 — Air conditioning becomes a bargaining issue when textile workers in North Carolina strike because of stressful heat and humidity in the workplace.

1950 — A major study shows that families living in air conditioned homes sleep longer in summer, enjoy their food more, and have more leisure time.

1953 — Room air conditioner sales exceed one million units with demand still exceeding supply.

1953The air conditioning and refrigeration institute is formed from two associations: the Refrigeration Equipment Manufacturers Association and the Air-Conditioning and Refrigerating Machinery Association.

1955 — Mass marketing of frozen dinners begins: ads promote “TV dinners.”

1957 — The first rotary compressor was introduced, permitting units to be smaller, quieter, weigh less, and more efficient than the reciprocating type.

1969 — Neil Armstrong and Buzz Aldrin walk on the moon in spaces suits with life support and cooling systems.

1977 — New technology allows heat pumps to operate at lower outdoor temperatures while heating on the reversed refrigeration cycle.

1987 — The United Nations’ Montreal Protocol for protection of the earth’s ozone layer is signed. The Protocol establishes international cooperation on the phase-out of stratospheric ozone depleting substances, including the chlorofluorocarbon (CFC) refrigerants used in some refrigeration and air conditioning equipment.

1990 — ARI, in conjunction with the U.S. Department of Energy, initiates the Materials Compatibility Lubricants Research (MCLR) program, which helps manufacturers to 21 accelerate away from CFC refrigerants.

1992 — The R-22 Alternative Refrigeration Evaluation Program (AREP) begins a four- year program to investigate alternatives to R-502 and HCFC-22.

1995 — Chlorofluorocarbon (CFC) production in the United States ends December 31.

1997 — North American Technician Excellence (NATE) formed to promote excellence in technicians who install and service air-conditioning and refrigeration equipment. The NATE-certified logo is synonymous with “The Best.”

1998–Research for the 21st centaury a multi-year, million-dollar research program for air-conditioning and refrigeration equipment begins. The objective is to decrease building energy usage while improving indoor air quality.

1998 — Shipments of unitary air conditioners and heat pumps set a record of more than 6.2 million Units.

1998 — After receiving five annual awards from the U.S envoi mental protection agency for contributions to environmental protection, ARI was awarded a Best of the Best award for continued environmental concern.

Organizational Departments

Finance department

Marketing department

Sales department

Trading department

Consumer marketing department

Credit control department

Customer service department

Human resource management department

Distributions department

Quality control department

Department working

Finance Department:

Finance department provide money for the working of the organization. Pel company’s department borrows loan mainly from national bank and settle terms and conditioned of the interest and time period of returning the load with it. when the sale is made the company firstly return the loan with interest.

Human Resource Department:

Human resource department of the Pel Company is very much conscious of hiring the employees for the company. The standards he set for hiring the new poople.HRM department of the company mainly makes the external recruitment .this is usually done through news paper web sites extra.HRM department also set salaries, packages and TA, DA allowances.

Marketing Department:

Marketing department is the back bone of any firm. marketing department generally analyze the needs and wants of the customer. Then this department tells about the customer needs to the company which in tern launches the products according to the needs of the customers. Marketing department is responsible for making strong advertisement for the products.

Sales Department:

Sales department is responsible for making sales of the product.

This department generally takes orders from the market, gives information to the credit control department. Area credit control department gives information to the head office. Head office discuss situation with the finance department and then at last finance department gives authority to area credit control department to settle term and conditions with dealers.

Customer service center department:

This department is very much important for the company because its makes the good will of the company. It provide services to the customers who have their clams and makes the customer loyal. It also gives the feed back to the head office to provide the required spare parts.

Consumer Marketing Department:

Consumer marketing department gives packages to the person who has low income to attract them to purchase their products. They have their own area offices. This department works under credits control departments.

Trading Department:

This department is involved for importing products. This department imports the required products according to the demand of the customer such as split unit. This department is controlled by its head, which works directly under the head office. This department sends terms and condition of trade to the head office and finance department for the financing.

Production Department:

Production department is involved only producing the products. This department purchases raw material from the suppliers. Then pass the raw material from various dyes machines, modelling machines etc; from the assembly line according to the required shapes of the products.

Distribution department:

This department distributes the final products from the production department to the dealers and then ultimately to the consumers. This department is only responsible for distributing products according to the requirement and demand of the sectors.

Managerial Functions

Planning

Refrigerator:

Planning is very much important function of the management.PEL company makes the planning regarding refrigerator by observing the market. How much a company can sales in a particular segment’s there any chance of growth is also in the planning of the company refrigerator.

Split Unit:

The company planning regarding split unit firstly is the observation of

the market. Then after observation how much to import the split units. Finance and

trading department also give suggestion for planning regarding split unit .Then set their

plans according to the requirement.

Organizing

Refrigerator:

The organizing regarding refrigerator how to make availability of refrigerator assured. Taking in the account the policy regarding refrigerator of the company how much to produce and when to produce etc…Almost all the department are involved in organizing and also how much margin to give to the dealers.

Split Unit:

While organizing the company takes into account that the last year sales and how much to sale in a particular area. Mainly quality control, finance department and trading department are involved in organizing for how much to import, when to import,where to import etc…

Leading

Reference:

Head office mainly leads all departments regarding refrigerator .All

the sub ordinate department officers lead the related department and employees and loyal

to the head office for their working. Their is check and balance situation for every

department.

Split Unit:

Head office mainly leads all the related department of the split units. Trading department is mainly the leader in split unit case for importing it and direct reliable to the head office. For leading it also give its requirement to its head office for finance and for the quality control of the product.

Controlling

Refrigerator:

Controlling is the main functions after making the pervious steps. Managers of the each department control its own department working and are liable to the managing director. There is check and balance situation. In controlling, monthly and annual basis analysis are made. How much sale is made and for the betterment of the product research and development department then do its job.

Split Unit:

In controlling of the split units, trading department mainly control the import of the splits units. it checks the quantity of the units and quality control department checks the quality of the split units before launching it in the market.

Strategic Management Model

Environmental Scanning

Environmental scanning is the monitoring, evaluating and discriminating of information from the external and internal environment to keep people within the corporation. The company scans the environment in the following way:

General Forces:

It includes:

Political & Legal Forces:

PEL Company is very much conscious about the political and legal environment of the country. The company changes its labor wages which is registered whenever a govt. changes the labor laws.

Technological Forces:

PEL Company tries to adopt the future technology for using in the product. They always keep in view the technology for increasing the quality of the product for their customers. On the basis of modern technology, company is the market leader regarding the appliances.

Economic Forces:

Economic forces means change in disposable Income, flections in the market, inflation, change in rate of interest etc…Company always keep in mind the economic conditions of the country and sets its prices accordingly.

Social Cultural Forces:

It includes environmental concerns, work life quality attitudes and also work force diversity etc…PEL Company keeps in view the social culture changes of the country and sets its target accordingly.

Task Environment:

It Includes:

Customers:

PEL Company customers include various government organization such as wapda and Karachi power company regarding power divisions.PEL Company has also an internal and external customers.

Internal customers are those who are the employees of the company which don’t makes big affect on the sales. External customers are those which are the outsides the company such as general pubic except employees.

Suppliers:

PEL Company has its suppliers regarding its appliance division are Abdullah and Heartz, Star enterprises, Pals codes system. Etc…and have its suppliers regarding split unit from china.

Competitors:

PEL Company has its competitors like Dawlance, Waves, LG, Haier etc. PEL Company makes close analysis of its competitors to understand its strategies and to overcome its deficiencies.

Public Pressure Groups:

There is no public pressure group which affect the working of the company because PEL Company makes product by viewing all its aspects which don’t affect the societal environment of the economy.

Internal Environment

Structure:

Company has very systematic structure; the information flows from top to low bottom and from bottom to top mean mechanistic style have rigid chain of command.

Culture:

The company has strong culture. Employees work in teams and have set great expectation and values for the incoming employees.

Resources:

It includes:

Assets

Heavy Machinery, Skill full Employees etc…

Skills

Labour skills, employee skill etc…

Competences

Quickly responsible to competitors

Knowledge

Half and annually based training.

Strategy Formulation

Mission

Objective

Company has its objective regarding refrigerator to be number 1 in the market in the coming three years. Company also set the objective to make the split units in the factory in future.

Strategy

Company has a comprehensive master plan to achieve its mission and objectives. Company is trying to stabilize its market share regarding its refrigerator and split unit and also want its growth in the future.

Policies

Company has its policy to maintain the quality of its products at lower cost and provides the consistent value satisfaction to the customer.

Strategy Implementation

Strategy implementation is the process in which strategy and policy are put into the action through the development of program, budgets and procedures.

Program

Program is the statement of the activity of the steps needed to accomplish a single use Plan.PEL Company has a program to make split units in its own factory.

Budgets

A budget is a statement of the corporation program in term of money. In Planning and controlling list the detail cost of each program. Company set a budget for making split unit in its own company and it’s also for having advertising.

Procedures

Sequential steps to complete program known as procedure. Company’s program for making split units includes procedures .How much to purchase from supplier at which cost.

Evaluation & Control

It is the process in which cooperates activity and performance results are monitored so that actual performance can b compared with the desired performance.PEL Company makes the evaluation by acquiring the information at all level from managers. And then they take the step for controlling the situation if it is not matching with the desired performance.

Business Analysis

SWOT Analysis

SWOT stands for strength and weakness of an organization in the light of opportunities and threats outside the organization.

Strength

Refrigerator:

Company has its strength in refrigerator.

Customer loyalty

Trade and experienced staff

Usage of Vinyl coating material

Compressor quality (DAN FOSS Germany)

Splits Units:

Company has its Strength in Split Units.

Low cost from others

Better cooling

Low power consumption

Weakness

Refrigerator:

Company has its weakness in refrigerator.

No uses of compressor drain try

No use of drain tries

Splits Units:

Company has its weakness in Split Unit

Cooling problem

Opportunity

Refrigerator:

Company has the opportunity

Can increase it sales due to loyalty

Can import due to its name

Splits Units:

Companies have the opportunity

To make split units

Control prices

Can increase its market share

Threats

Refrigerator:

Companies have the opportunity

Competitors can produce similar products

New foreign companies

Reduction of prices

PEST ANAYLSIS

Political

Political or legal forces means law and order situation in the country. Country’s policies for the trading companies. Political and legal situation regarding PEL Company is stated as

Refrigerator:

Registered Labours

Increase wages when govt. changes Labour policies

No political affects

Splits Units:

No pressure from political parties

Economical

Mean economic condition of the country such as change in dispose bale income, fluctuation in market, inflation rate etc…Company sets the prices according to the economic situation of Pakistan.

Refrigerator:

Middle and upper class

Generally in inflation situation buying power decreases

Reduction of prices

Reduce of quality

Splits Units:

Cost of product is main thing

Social

Refrigerator:

Employees Work in Shifts.

No Women in Work Force.

Employees are well settled according to the culture

Split Unit:

Socially no affect

Technological

Refrigerator

Technology Affects The Working OF A Company.

Company Adopts Modern Technology

Receives Feedback.

Split Unit:

Use of modern Of Technology.

Quality Checking.

POTER’s 5 Model

Bargaining Power of Supplier

Bargaining power of PEL Company’s suppliers is comparatively low due to the large number of supplier such as Abdullah and hearts, Pals Codes system etc…

Bargaining Power of buyer

PEL Company have high bargaining power as compare to suppliers due to presence of many suppliers.

Threat Of New Entrant

There is always a threat of new entrant. PEL Company is facing a threat from foreign a local companies.

Existing firms

PEL Competitors like Dawlance, Waves and LG can reduce its appliances products prices.

Threat Of Substitute Product

Dawlance, Waves, LG etc…can produce substitute products at low rates which is threat for the company.

BCG Matrix

Refrigerator:

Refrigerator is placed in star box because it has high share and market growth. Refrigerator has 45% of the market share and also increasing its market growth.

Split Unit:

Split unit is also placed in star box due to high market share and market growth. Split unit has 30%of the market share and continuously increasing market growth.

Marketing Research

Pictures

Marketing MIX

PRODUCT

PRICE

PLACE

PROMOTION

Product

Product is a thing that satisfies customer demands. Pel Company is very much conscious to make the products which satisfy the customer needs.

Company makes the product:

According to the needs of the customer

What kind of size and model they want

What kind of features and functions they want

What kind of packaging they want

Price

Price is very much important because it attracts the customer in first look. PEL Company is very much conscious about price.

Company sets the prices of the products by

Analyzing the market situation

Actual cost of the product

Marketing expenses of the product

Profit margin of the company

Comparison to other home appliances

Setting deal with dealers

Place

Place plays a very important role for any company’s product. If the product is not rightly placed, company will suffer from loss.

Company places its product:

According to the requirement of customer and market

In more populated area of the city

Against competitors products

More convenient to the customers

Promotion

Once company makes the product, it needs promotion for the awareness of the customers. Unless a company will not arrange for promotion a products can’t succeed.

PEL Company promotes its product through:

Bill Boards

Internet

News paper

Brushers

Television

ISO Detail

There are some requirements that the PEL Company fulfill to get the ISO certificate.

International Standard Practices

Total Quality Management

Good Management practice

Key Force

Competitive

Teamwork

State Of The Art Production

Commitment For Quality

Efficiency Monitoring Process

Zero Defect

Group Profile

In 1948, The Saigols Migrated From Calcutta

Initiated Their Business In Lyallpur(Later Named Faisalabad)

Under The Banner Of Kohinoor Industries Ltd.

Kohinoor Textile Mills.

Pak Elektron Ltd.

Kohinoor Power Company Ltd.

Kohinoor Energy Ltd.

Kohinoor Motor Works Ltd.

Saigol Computer Pvt. Ltd.

Saritow Spinning Mills & The Azam Textile Mills.

Completely Import & Export

Imports

Refrigerator:

In refrigerator there is Usually No Import because the PEL Company manufactures it own refrigerator.

Some Time PEL Company Import Spare Parts on the Requirement of need.

Split Unit:

PEL Company Import split unit From China.

It completely import the splitunit because they do not manufacture the split unit.

Export

In split unit there is no export because PEL Company totally import the split unit.

Future Plans & Prospects

There is only one future plan and that is:

They want to manufacture the split unit in own company.

Suggestions & Recommendations

After the visit of the PEL Company and check the complete management functions we suggested to the PEL Company to do

1. More aggressive advertisement

2. To manufacture the split units in their own company