Semester project strategic management (70415)

Strategic Business Plan
Semester Project
Strategic Audit &
Business Plan for
Ghandhara Nissan
Limited

Conducted By
Name of Student: Muhammad Asif Khan
Student ID: MB-2-05-51271
Semester: Fall-2015
Campus: PAF-KIET (City Campus)

Current Situation
Past Corporate Performance:
• Ghandhara Nissan Was established as a private limited company in
August 1981 to import and market Nissan vehicles in Pakistan.
• It also has been marketing Nissan Diesel Trucks assembled in the
country. It was converted into a public limited company in May 1992
to undertake production of Nissan Vehicles.
• The company has a very low market share and its products are not
doing so well in Pakistan market from its beginning.

Current Situation
Past Corporate Performance:
• The reasons to which this state is attributed include lack of
financial resources, internal strife in the company, and
restructuring efforts.
• To handle this situation the company is considering to have
their loans converted into equity, or to sell the stakes to a
new group so that outstanding loans could be paid or
rescheduled. The problems of Nissan are further aggravated
by stiff competition from the large car market covered
mainly by Toyota and Honda.

Current Situation
Present Status:
To analyze the past performance of the Ghandhara Nissan Limited
the following evaluation has been done from their last year financial
report displayed for the stakeholders:
Return on Investment (ROI)= Net Profit After Tax
Total Assets
= 508,867,000
3,571,264,000
= 14.24%

Current Situation
Present Status:
Return on Equity Net Profit after (ROE)= Net Profit after Taxes
Shareholder’s Equity
= 508,567,000
1,274,111,000
= 39.90%

Current Situation
Present Status:
Earnings per Share (EPS)= Net Profit after Taxes – Preferred Stock Dividend
Avg. number of Common Share
= 508,867,000 – 90,005,000
45,002,500
= Rs.9.30
OR
Return on Share (ROS) = Net Income after Taxes
Number of Common Stock
= 508,867,000
45,002,500
= Rs.11.30

Current Situation
To analyze company’s long term investment ability:
Leverage Ratios:
Debt to Asset Ratio = Total Debt
Total Assets
= 1,248,858,000
3,571,264,000
= 0.3496

Current Situation
To analyze company’s long term investment ability:
Leverage Ratios:
Debt to Equity Ratio = Total Debt
= 1,248,858,000
1,274,111,000
= 0.980
Long term Debt to Capital Structure = Long Term Debt
= 435,544,000
1,048,195,
= 0.415

Ghandhara Nissan Limited
Balance Sheet:
As on June 30, 2015
Assets:
2015
Common
Size 2014
Common
Size
Difference
(+ or -)
Non Current Assets:
Property, Plant, and Equipment 1,749,285 0.49 1,764,038 0.51 (14,753)
Intangible Assets 88 0.00002 118 0.00003 (30)
Long term Investments 192,630 0.05 152,630 0.04 40,000
Long term Loans 6,477 0.0018 4,864 0.00 1,613
Long term deposits 16,633 0.0047 8,031 0.0023 8,602
Total 1,965,113 0.55 1,929,681 0.56 35,432
Current Situation
Common Size Statements and comparison with last year:

Current Assets:
Stores, Spares and Loose tools 50,174 0.014 44,055 0.05 6,119
Stock-in-Trade 623,847 0.17 692,474 0.66 (68,627)
Trade Debts 345,727 0.10 395,583 0.12 (49,856)
Loans and Advances 40,212 0.01 25,541 0.01 14,671
Deposits and Prepayments 39,094 0.01 15,721 0.00 23,373
Other receivables 30,749 0.01 49,102 0.01 (18,353)
Short term investment 30,092 0.01 38,109 0.01 (8,017)
Taxation-Net 117,341 0.03 96,070 0.03 21,271
Bank Balance 328,915 0.09 148,618 0.04 180,297
Total 1,606,151 0.45 1,505,273 0.44 100,878
Total Assets 3,571,264 1.00 3,434,954 1.00 136,310

EQUITY AND LIBILITIES:
Share Capital And Reserves:
Share Capital 450,025 0.13 450,025 0.13 -
Share Premium 40,000 0.01 40,000 0.01 -
Unappropriate Profit 784,086 0.22 334,375 0.10 449,711
Total Equity 1,274,111 0.36 824,400 0.24 449,711
Surplus on Revolution of fixed Assets 1,048,295 0.29 1,054,188 0.31 (5,893)

Liabilities:
Non Current Liabilities:
Liabilities against assets subject to finance lease
45,635
0.01
13,006
0.0038
32,629
Long term deposits
9,611
0.01
10,611
0.0031
(1,000)
Deferred Liabilities
111,969
1.98
94,795
0.03
17,174
Deferred Taxation
268,329
1.59
158,039
0.05
110,290
Total
435,544
7.46
276,451
0.08
159,093

Current Liabilities:
Trade and other payable 642,881 0.74 767,840 0.22 (124,959)
Accrued Mark-up 7,985 0.09 5,178 0.0015 2,807
Short term finances 32,259 0.04 448,861 0.13 (416,602)
Running Finances under mark-up arrangements 118,802 0.43 54,380 0.02 64,422
Current portion of liabilities against assets subject
to finance lease 11,387 0.02 3,656 0.00 7,731
Total 813,314 0.23 1,279,915 0.37 (466,601)
Total Liabilities 1,248,858 0.35 1,556,366 0.45 (307,508)
Total Equities and Liabilities 3,571,264 1.00 3,434,954 1.00 136,310

Ghandhara Nissan Limited
Profit Loss Account (Income Statement)
For the Year Ended June 30, 2015
Particulars
2015
Common
Size 2014
Common
Size
Difference (+
or -)
Revenue (Sales) 5,445,392 1 2,619,910 1 2,825,482
Less: Cost of Sales 4,314,378 1 2,148,821 1 2,165,557
Gross Profit 1,131,014 0 471,089 0 659,925
Less: Distribution Cost 56,435 0 19,318 0 37,117
Administration Expenses 168,995 0 124,565 0 44,430
Other Expenses 58,348 0 19,988 0 38,360
Add: Other Income 26,335 0 12,695 0 13,640
Profit from Operations 873,571 0 319,913 0 553,658
Less: Finance Cost 86,294 0 50,218 0 36,076
Profit Before Taxation 787,277 0 269,695 0 517,582
Less: Taxation 278,410 0 95,765 0 182,645
Profit after Taxation 508,867 0 173,930 0 334,937

Z-Value (Altman’s S Bankruptcy Formula):
Z-Value formula combines five ratios by weighting them
according to their importance to a corporation’s
financial strength. The Formula is:
Z= 1.2X1+1.4x2+3.3x3+0.6x4+1.0x5
Z-Value = 3.4326
Note:
• Score below 1.81 indicates sufficient credit problems
• Score above 3.0 indicates a healthy firm
• Score between 1.81 and 3.0 indicates question mark of
uncertainty

Index of Sustainable Growth:
This is useful to learn if a company embarking on a
growth strategy will need to take on debt to fund this
growth, the index indicates how much of the growth
rate of sales can be sustained by internally generated
funds.
If the planned growth rate calls for a growth rate higher
than the g*, extended capital will be needed.
The formula is:
g*= [P (1-D) (1+L)][T-P (1-D) (1+L)]
[T-P (1-D) (1+L)]

Index of Sustainable Growth:
g* = 0.5597 or 55.97%
Note: If the planned growth rate is higher than the
g*, extended capital is required.

Leverage Buy Out:
Operating Cash Flow:
Net Income= 787,277,000
Add: Depreciation= 75,575,000
Depletion= --------
Amortization= --------
Interest Expense= --------
Income Tax Expense= 162,374,000
Operating Cash Flow= 1,025,226,000

Leverage Buy Out:
Free Cash Flow:
Net Income= 787,277,000
Add: Depreciation= 75,575,000
Depletion= ----------
Amortization= ----------
Total 862,852,000
Less: Capital Expenditures= 17,517,000
Dividends= 90,005,000
Free Cash Flow= 755,330,000

STRATEGIC POSTURE
Nissan Motors Corporation (Global)

Nissan Motors Corporation (Global)
VISION:
Enriching People’s Lives
MISSION:
•Nissan provides unique and innovative automotive
products and services that deliver superior measurable
values to all stakeholders*in alliance with Renault.
•Nissan will continue to offer innovative products and
services today and in the future.

Mission:
• What drives us and gives birth to new value is
the Nissan spirit, embodied in the phrase.
• The power comes from inside.
• Nissan builds high-quality cars that are safe
and have the bold design and innovative
technology to satisfy our customers’ needs.
• As a responsible corporate citizen, Nissan is
committed to contributing to the advancement of
society and the preservation of our natural
environment.
• Our corporate vision is enriching people’s lives.

Nissan (Corporate):
• Established in Yokohama, Kanagawa in 1933, Nissan Motor Co., Ltd.
currently manufactures vehicles in 20 countries around the world,
including Japan and sells them over 170 countries.
• Global Nissan has a portfolio of three brands, Nissan, Infiniti and
Datsun.
• Nissan vehicles are marketed in all major markets worldwide.
• Infiniti was launched as a premium brand in North America in
1989. The new global headquarters for Infiniti in Hong Kong was
opened in 2012 with sales operations in over 50 countries.
• Global unit sales of Nissan Motor Co., Ltd. in fiscal 2013 totaled
518.8 million vehicles.
• In 2012, Nissan Motor Co., Ltd. announced the return of the
Datsun brand. Datsun is for risers, optimistic, up-and-coming
customers in high-growth markets.

Nissan in Pakistan

Nissan in Pakistan
Nissan is represented by Ghandhara Nissan Limited
in Pakistan and operates under the leadership of CEO
Mr. Ahmad Kuli Khan Khattak. Ghandhara Nissan
Limited is committed to serve the market efficiently,
through satisfying internal and external customers
and be accountable to stakeholders and the
community as responsible corporate citizens. They
are determined to reciprocate their trust reposed in
Nissan by delivering on promises to customers,
providing quality product, economically priced
vehicles complete with after sales service.

• Passenger Cars:
o Sunny (discontinued)

• Passenger Cars:
o TIDA (discontinued)

• Passenger Cars:
o TEANA
(discontinued)

• Jeep 4X4:
o X-Trail

• Jeep 4X4:
o Patrol

• Light Commercial Vehicle:
o Patrol

o Pick Up

•Urvan
o Urvan

• Bus:
o Civilian

• Ghandhara Nissan Limited (GNL) is a part of Group of
Companies of Bibojee Services (Pvt.) Limited. The Company
was incorporated in 1981 as Private Limited Company
having the sale Licensee for the distribution of Nissan
vehicles in CBU condition in Pakistan; it was converted in to
a Public Company listed in Karachi Stock Exchange.
• GNL has Technical Assistance Agreement with Nissan Motor
Co. Japan and joint Venture Agreement with Nissan Diesel
Co. Japan for the progressive Assembly of Passenger Cars,
Light Commercial Vehicles and Heavy Duty Vehicles.
• GNL’s Car and Truck are located at port Qasim adjacent to
each other.

• It is the only Automobile Company in the country
assembling complete range of product i.e. passenger
cars, light commercial vehicles and heavy-duty
trucks and buses.
• The company is committed to achieve high quality
products, customer’s satisfaction, market
leadership, contribution in the economic growth of
Pakistan and comply with all regulatory and other
requirements for making the environment user
friendly.

Nissan’s Vision:
To maximize market share by producing and
marketing highest quality vehicles in Pakistan.
Nissan’s Mission:
• As a customer oriented Company, Provide highest
level of customer satisfaction.
• To accelerate performance in all operating areas,
ensuring growth of the Company and increasing
return to the stakeholders.

Nissan’s Mission:
• To create a conducive working environment leading
to enhanced productivity, job satisfaction and
personal development of the employees.
• To contribute to social welfare by adopting
environment friendly practices and processes for the
well being of society.

Current Objectives:
• Maximize its market share in automotive sales in
Pakistan Market.
• Create new joint ventures to achieve its ultimate
goal.
• Focusing on its product line of LCVs, Trucks and
Buses and maximize its profit.

Current Strategies:
• Presently Ghandhara Nissan Limited has been focusing
on horizontal growth strategy through creating a joint
venture with dongfeng and has formed its subsidiary as
Ghandhara Nissan Dongfeng Limited.
• They also opted retrenchment strategy for its product
line and discontinued the passenger cars production.

Current Policies:
• GNL is emphasizing to carry out its business in an
ethical manner that it will become beneficial for all
of its stakeholders.
• Unnecessary competition must be avoided.
• Focusing on business expansion.

SWOT ANALYSIS BEGINS
Corporate Governance:
Board of Directors Responsibilities:
• Board of Directors is responsible to evaluate
quarterly, half yearly and annual performance of
the GNL.
• Review and approve policies proposed by the top
management for the GNL & for its subsidiaries and
wherever necessary recommend suggestions.

Board of Directors Continuum:
• Board directors actively participate in policy
formulation, approval and implementation. It is
possible due to the most of the top management of
the Ghandhara Nissan Limited are the part of the
top management team of the company. They are not
only part of the policy making team but also the
part of policy implementation.

Inside Directors:
• Mr. Raza Kuli Khan Khatak
• Lt. Gen. (Retd.) AliKuli Khan Khattak
• Mr. Ahmed Kuli Khan Khatak
• Mr. Mushtaq Ahmed Khan (FCA)
• Ch. Sher Muhammad
• Mr. Jamil A. Shah

Top Management:
The top management of GNL is consist on the following:
• Mr. Raza Kuli Khan Khatak Chairman
• Lt. Gen. (Retd.) AliKuli Khan Khattak President
• Mr. Ahmed Kuli Khan Khatak Chief Executive Officer
• Mr. Aqiel Amjad Ghani Company Secretary
• Mr. Muhammad Saleem Baig Chief Financial Officer

Responsibilities of the Top Management:
The top management of the company has responsible for the
following:
• Top management is responsible to develop and implement
strategies that will help the GNL to maximize its profits and
achieve its vision.
• They responsible to carry out the company’s operations in a
manner that it will be meeting or exceed company’s define
ethical standards of running business.
• They are responsible to make sure that the Ghandhara
Nissan Limited strategies are developed in accordance with
the company’s mission in order to achieve its vision.

Responsibilities of the Top Management:
• They responsible to produce the vehicles that will be
environment friendly and will provide value to the
customers through exceeding their expectations.
• They are responsible to increase stakeholder’s
wealth through increasing company’s profit.
• They are responsible to maintain a safe and healthy
workplace through ensuring that the company’s
define ethical standards no discrimination on the
basis of sex, color, religion disability or nay other
impermissible factors.

Executive Leadership:
Executive leadership of the company is based on the following:
• Mr. Raza Kuli Khan Khatak Chairman
• Lt. Gen. (Retd.) AliKuli Khan Khattak President
• Mr. Ahmed Kuli Khan Khatak Chief Executive Officer
They are responsible to provide the strategic direction to the
company and motivate all the relevant participants to achieve
their predefined goals. CEO is responsible to lead the entire
organization and motivate them for them attainment of the goals
collectively and individually.

Social Responsibility:
• The GNL is committed to operate its business in an
ethical and responsible manner that it will become
mutually beneficial for the organization and as well as
for its stakeholders including stock holders, customers
and the for the society where we are operating our
business.
• They are also committed to provide environmental
friendly vehicles and completely adhere with the laws
pertaining for the same. To achieve zero emission is our
strategy for the long term.

Competency of Top Management:
• The top management is competent enough to manage the affairs
of the Ghandhara Nissan Limited in accordance to its vision and
mission.
• Most of the top management representatives are foreign qualified
and running the affairs of the more than one business at one time.
The Chief Executive Officer of the company is the grandson of the
Chairman and Son of the President and belongs to the third
generation of the Bibojee Group.
• The experience of all the top management is multifaceted and
they are part of the different other company’s boards. These
companies are belongs to the different sector of the industries
which are tyre manufacturing, textile and insurance.

Global Scenario of Auto Industry:
• Global auto industry is faced with two following
challenges which need to be addressed in order to
remain competitive;
• The carbon and climate protection
• Make availability of vehicles at low cost with new
climate friendly energies.

Market Structure:
• The market structure of the automobile industry in
Pakistan is concentrated. In economic term, we could
say it’s an oligopoly, which is characterized by imperfect
competition in which the industry is dominated by a
small number of suppliers. This is because the auto
industry is highly capital-intensive requiring high
investments and the products are expensive. Hence the
barriers to entry are high resulting in the presence of
limited number of suppliers.

Market Structure:
• Moreover, the market can also be categorized as
price-oriented. As care are luxury items, especially
in developing countries (Pakistan being one of
them), the demand for them is elastic. Any prices
change affects the sales of the company to a great
extent.

Economic Position of the Market:
• Pakistan’s GDP rate is around 3.0 and it will strong
probability that it will increase in the years to come.
• Pakistan's total share is up to 0.40% of the world
market, and the Global Trade of the Automobiles is
over $ 1 trillion dollar.

Progress of Pakistan’s automotive industries:
Sales summary of automotive products manufactured and
sold in Pakistan:
Automotive
Products
Sales in units
2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08
Passenger Cars 151134 118102 118830 157325 127944 12957 82844 164,650
Truck 4111 2663 1948 2394 2942 3620 3136 5,350
BUS 569 577 510 609 515 657 685 1,195
Jeeps (4X4) 1163 1151 1438 342 807 1201 1066 1,448
Pick-Ups 27656 17635 15042 21472 17746 16496 15397 21,321
Total Sale 184,633 140,128 137,768 182,142 149,954 34,931 103,128 193,964

Progress of Pakistan’s automotive industries:

Task Environment:
• Threat of new entrant
• Bargaining Power of the Buyers
• Bargaining power of the supplier
• Rivalry among the competing firms
• Relative Power of unions, governments, special interest
groups

Summary of External Environment (EFAS):
Factors Weight Rating Weight Score
Opportunities:
 Large Market segment with potential purchasing
ability
 Sustainable growth of economy
 Consistency of political government
 Strict import policy of the government
 Stability of the region
 Cost effective and fuel efficient vehicle is
required by the customer
.20
.05
.05
.05
.05
.10
4
3
3
4
1
4
.80
.15
.15
.20
.05
.40
Threats:
 Unavailability of Highly Skilled manpower
 Expensive Raw Material
 New entrant in same industry.
 Strong competitors existing in the market with
global image which can counterfeit the
strategies
.10
.15
.10
.15
4
4
2
4
.40
.60
.20
.60
Total 1.00 3.55

Competitive Profile Matrix: (For Passenger Cars / LCV)
The following competitive profile method provides is for passenger car:
Critical Success Factors Weight
Nissan
Rating
Score
Toyota
Rating Score
Honda Rating
Score
Suzuki
Rating
Score
Comments
Relevant Market Share .20 1 .20 4 .80 3 .60 4 .80
Inventory System .10 3 .30 4 .40 3 .30 3 .30
Financial Position .10 4 .40 3 .30 4 .40 3 .30
Product Quality .10 2 .20 4 .40 4 .40 2 .20
Consumer Loyalty .10 2 .20 4 .40 4 .40 3 .30
Sales Distribution .05 3 .15 3 .15 2 .10 4 .20
Organization Structure .10 4 .40 4 .40 3 .15 3 .30
Production Capacity .10 4 .40 3 .30 2 .20 4 .40
E-Commerce .05 2 .10 3 .15 2 .10 2 .10
Price Competitive .10 2 .20 2 .20 2 .20 3 .30
Total 1.00 2.55 3.5 2.85 3.2

Competitive Profile Matrix: (For Buses , Trucks & HCV)
Critical Success Factors Weight
Nissan
Rating Score
Hino
Rating Score
Master
Rating Score
Hyundai
Rating Score Comment
s
Relevant Market Share .20 4 .80 4 .80 2 .40 3 .60
Inventory System .10 3 .30 4 .40 3 .30 3 .30
Financial Position .10 4 .40 3 .30 3 .30 3 .30
Product Quality .10 3 .30 4 .40 3 .30 3 .30
Consumer Loyalty .10 3 .30 4 .40 3 .30 3 .30
Sales Distribution .05 3 .15 3 .15 3 .15 3 .15
Organization Structure .10 4 .40 4 .40 3 .30 3 .30
Production Capacity .10 4 .40 3 .30 2 .20 2 .20
E-Commerce .05 2 .10 2 .10 2 .10 2 .10
Price Competitive .10 3 .30 3 .30 2 .20 2 .20
Total 1.00 3.45 3.55 2.55 2.75

Internal Environment (IFAS):
Corporate Structure:

Corporate Culture:
• The GNL possess a cooperative culture where the every individual
who has an association with the company has right to express their
views and put suggestions for the improvement irrespective of his /
her designation. This culture has helped them when they developed
new venture with the dongfeng.
• In contrast to the bureaucratic style of working their executive has
adopted the culture of autocratic where everyone can be a part of
decision making and freely put their views regarding product
improvement and for the enhancement of organizational efficiency.

Corporate Resources:
Marketing:
• Presently GHNL has not been carrying out any rigorous
marketing camping for its products but their marketing
department responsible to closely work with the sales team
and help them out to achieve their defined targets and
closely get the feedback from the customers to improve its
customer service after sales and will get response from them
for the future improvement of the product / vehicles.

Marketing:
Present Performance of Ghandhara Nissan Limited:
Product
Sales in Units
2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-8
Nissan Bus 0 6 0 6 0 30 0 54
Nissan Truck 852 378 226 224 487 519 551 1,166
Dongfeng Bus 0 0 0 0 0 2 8 18
Dongfeng Truck 0 0 0 0 0 0 4 -
Total Sales 852 384 226 230 487 551 563 1238

Marketing:
Present Performance of Ghandhara Nissan Limited:

Finance:
• Presently GNL is not in very sound financial
position but fair enough to accelerate for the
attainment of its higher goals. They already
paid dividends to the shareholders at the end of
last fiscal year. Cash flows are positive and
relevant financial ratios reflect sound financial
status of the company and will allow them to
expand it vertically.

Research & Development:
• Currently GNL has not allocated heavy budget for its
R&D activities, they are receiving technical assistance
form Nissan Global. And the new products and the
amendments in the present products are made in
coordination of the Nissan Global.

Operations & Logistics:
• Company has well versed infrastructure for its automotive
products but unable to capitalize in term of production. From
past decade they are working under capacity.

Human Resource Management:
• Currently human Resource has been considered as casual
resource for the organization instead of developing them as
competitive advantage.
Information System:
• Information system plays very vital role for the organization
success and GNL is in process to optimize the efficiency and
accuracy of its information system through synchronizing its
subsidiary.

Summary of Internal Factors:
Factors Weight Rating Weight Score
Strengths:
 Competent top management with diversified
experience of industries.
 Ability to integrate vertically in the market
through utilizing existing infrastructure.
 Sound financial position of the company.
 Successfully expanded through new joint venture.
 Ability to grow in diversified auto products range.
.10
.10
.10
.10
.10
4
4
4
3
4
.40
.40
.40
.30
.40
Weaknesses:
 Past introduced vehicles are unable to capture the
market.
 Unable to achieve economies of scale
 Unable to clearly define long term goals mostly
focusing on short term objectives.
 Lack of ownership among the employees.
 Unable to apply economy of scope to minimize
cost.
 Lack of Research & development
.10
.10
.10
.05
.10
.05
1
1
1
2
2
1
.10
.10
.10
.10
.20
.05
Total 1.00 2.65

Analysis Strategic Factors (SFAS)
Key Internal and External Strategic Factors (SWOT):
TOWS Analysis:

Internal Factors
External Factors
Strengths
1. Competent top management with
diversified experience of industries.
2. Ability to integrate vertically in the market
3. Sound financial position of the company.
4. Successfully expanded through new joint
venture.
5. Ability to grow in diversified auto products
range.
Weaknesses
1. Past introduced vehicles are unable to
capture the market.
2. Unable to achieve economies of scale
3. Unable to clearly define long term goals
mostly focusing on short term objectives.
4. Lack of ownership among the employees.
5. Unable to apply economy of scope to
minimize cost.
6. Lack of Research & development
Opportunities
1. Large Market segment with potential
purchasing ability
2. Sustainable growth of economy
3. Consistency of political government
4. Strict import policy of the government
5. Stability of the region
6. Cost effective and fuel efficient vehicle is
required by the customers.
SO Strategies
 The management of GNL must utilize its
diversified experience to expand Nissan
products through effectively utilizing the
favorable conditions for the auto industry.
(S1, O1, O2, O3, O4,O5)
 Through clever planning GNL can produce
fuel efficient vehicles for the customers.
(S5, O6)
WO strategies
 Through offering new products with
distinctive features can help the GNL to
capture mega market share. (W1, O1)
 Existing economic conditions will help the
GNL to achieve economies of scale. (W2,
O2,)
 The consistency of political governments
and their policies will help the GNL to
develop and achieve their long term goals.
(W3, O3, O4)
 The GNL must invest more on R& D to
produce cost effective and fuel efficient
vehicles for the customers. (W6, O6)

Internal Factors
External Factors
Strengths
1. Competent top management with
diversified experience of industries.
2. Ability to integrate vertically in the market
3. Sound financial position of the company.
4. Successfully expanded through new joint
venture.
5. Ability to grow in diversified auto products
range.
Weaknesses
1. Past introduced vehicles are unable to
capture the market.
2. Unable to achieve economies of scale
3. Unable to clearly define long term goals
mostly focusing on short term objectives.
4. Lack of ownership among the employees.
5. Unable to apply economy of scope to
minimize cost.
6. Lack of Research & development
Threats
1. Unavailability of Highly Skilled manpower
2. Expensive Raw Material
3. New entrant in same industry.
4. Strong competitors existing in the market
with global image which can counterfeit the
strategies
ST Strategies
 The raw material can be minimized
through achieving vertical integration. (S2,
T2)
 GNL sound financial allows them to invest
on Human Resource Development to avoid
scarcity of Skilled Human in future. (S3,
T1)
 Through creating more joint ventures the
threats of new entrant can be eliminate or
minimized. (S4,T3)
 GNL can cope with the existing
competitors through producing diversified
auto products for the market. (S5, T4)
WT Strategies
 Investment on Human Resource
Development will help the organization to
get over the skill redundancy and will
enable them to produce quality vehicles
according to the customer requirements.
(W1, T1)
 Through achieving economies of scale
they can minimize overall production cost
of vehicles. (W2, T2)
 GNL must focus on Long term plan which
will help them to minimize new entrants’
threat in the industry. (W3, T3)
 GNL can create a synergy among the
employees, production and Research &
Development to minimized competitor’s
influence on the market. (W4, W5, W6,

SPACE (Strategic Position and Action Evaluation) Matrix:
Financial Position Rating
Return on investment 5
Leverage 5
Liquidity 4
Working Capital 5
Cash Flow 5
Inventory Turnover 5
Earnings Per Share 4
Price Earnings Ratio 5
Total 38

Industry Position Rating
Market Share 3
Product Quality 4
Product Life Cycle 3
Customer Loyalty 3
Capacity Utilization 3
Technological Know -how 5
Control Over Suppliers & Distributors 5
Total 29.0

Competitive Position Rating
Growth potential -1
Profit Potential -2
Financial Stability -2
Extent Leveraged -3
Resource Utilization -6
Ease of Entry into market -1
Productivity, Capacity utilization -2
Total -17

Stability Position Rating
Technological Changes -2
Rate of Inflation -2
Demand variability -4
Price Range of Competing products -5
Barriers to entry into market -5
Competitive Pressure -1
Price Elasticity of Demand -2
Risk involved in Business -3
Total -24

Conclusion:
• The GHNL must pursue the following Aggressive Strategies:
• Backward, Forward, Horizontal integration
• Market Penetration
• Market Development
• Product Development
• Diversification
• Retrenchment

Conservative
Market Penetration
Market Development
Product Development
Related diversification
Aggressive
Backward Forward
horizontal integration
Product development
Diversification (Related and
unrelated)
Defensive
Retrenchment
Divestiture
Liquidation
Competitive
Backward, Forward,
horizontal Integration
Market Development
Product Development
According to
space matrix
score the GHNL
must adopt the
aggressive
strategy to
achieve its vision.
SPACE (Strategic Position and Action Evaluation) Matrix

II
Stars
III
Cash Cows
I
Question Marks
IV
Dogs
Nissan’s Buses
presently existing
in this Category
Nissan’s Trucks presently
existing in this category
BCG Matrix:

Internal External (IE) Matrix:
Conclusion:
IE matrix suggests Grow and Build Strategy comprises
on following:
•Backward, Forward, or Horizontal Integration
•Market Penetration
•Market Development
•Product Development

Internal External (IE) Matrix:
I II
IV
VII
V
VIII
III
VI
IX
According to IE
Matrix Score GNL
possess this
Category

Grand Strategy:
Quadrant II
1Market Development
2Market Penetration
3Product Development
4Horizontal Integration
5Divesture
6Liquidation
Quadrant I
1Market Development
2Market Penetration
3Product Development
4Forward Integration
5Backward Integration
6Horizontal Integration
7Related Diversification
Quadrant III
1Retrenchment
3Unrelated Diversification
4Divesture
5Liquidation
Quadrant IV
2Unrelated Diversification
3Joint Ventures
GNL’s own growth
and market progress
bring it
in this quadrant

Strategic Alternatives and
Recommended Strategy:
Strategic Alternatives:
GHNL can choose one of the following strategies to increase
its market share and to penetrate in to the market fully.

1) Reintroduce its Passenger Cars:
GHNL must have to come
back with a differentiated
auto product in the passenger
car market to become a leader
in automotive product
manufacturing in Pakistan.

2) Acquisition of Existing Brand to Increase its Market Share
in HCV & LCV:
GNL can also increase its
market share in HCV and
LCV through acquiring the
existing brand in the Market.
It will help them increase its
market with minimum time
frame.

3) Export of LCV & HCV:
Beside serving and operating
in the current market GNL
can choose to increase its
products sale through
exporting their existing
products to other markets.

Quantitative Strategic Planning Matrix:
Reintroducing
Passenger Cars
Acquisition of
existing Brand to
increase market
share in LCV and
HCV
Export of LCV ,
HCV
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities:
 Large Market segment with potential purchasing ability
 Sustainable growth of economy
 Consistency of political government
 Strict import policy of the government
 Stability of the region
 Cost effective and fuel efficient vehicle is required by the
customer
Threats:
 Unavailability of Highly Skilled manpower
 Expensive Raw Material
 New entrant in same industry.
 Strong competitors existing in the market with global
image which can counterfeit the strategies
.20
.05
.05
.05
.05
.10
.10
.15
.10
.15
4
3
3
4
3
4
3
3
2
4
.80
.15
.15
.20
.15
.40
.30
.45
.20
.60
2
4
3
3
3
2
2
3
4
3
.40
.20
.15
.15
.15
.20
.20
.45
.40
.45
1
3
3
4
3
4
3
4
2
-
.20
.15
.15
.20
.15
.40
.30
.60
.20
-
Sub Total 1.00 3.4 2.6 2.35

Reintroducing
Passenger Cars
Acquisition of
existing Brand to
increase market
share in LCV and
HCV
Export of LCV ,
HCV
Key Factors Weight AS TAS AS TAS AS TAS
Strengths:
 Competent top management with diversified experience
of industries.
 Ability to integrate vertically in the market through
utilizing existing infrastructure.
 Sound financial position of the company.
 Successfully expanded through new joint venture.
 Ability to grow in diversified auto products range.
Weaknesses:
 Past introduced vehicles are unable to capture the
market.
 Unable to achieve economies of scale
 Unable to clearly define long term goals mostly focusing
on short term objectives.
 Lack of ownership among the employees.
 Unable to apply economy of scope to minimize cost.
 Lack of Research & development
.10
.10
.10
.10
.10
.10
.10
.10
.05
.10
.05
3
4
4
-
-
4
3
3
2
1
4
.30
.40
.40
-
-
.40
.30
.30
.10
.10
.20
3
2
4
4
2
4
3
3
3
4
2
.30
.20
.40
.40
.20
4
3
4
2
4
.40
.30
.40
.20
.40
.40
.30
.30
.15
.40
.10
2
3
2
3
3
2
.20
.30
.20
.15
.30
.10
Sub Total 1.00 2.5 3.15 2.95

•The score of the QSPM model reveals that the GNHL must
develop strategy to reintroduce the passenger cars to
increase its market share.
•But it is not necessary that the GNL must choose one
strategy at one time. They can choose to drive one or more
strategy to achieve its vision.
•It all depends upon the management commitment and the
availability of financial resources and the consistency of the
political and economical stability of the economy of the
market.

•It is better for the GNL to focus on different strategies for
its different products for passenger car they can opt
reintroduce their products with a distinction or
differentiation from the existing competitors’ products.
•They have to produce the passenger cars with unique
features and characteristics which cannot be easily
available in others. If it is not possible to offer the passenger
cars below the competitors’ price then it must not be more
than their products. They must focus to produce the
passenger cars in all the categories from 600 cc to more
than 1300 cc.

•For their LCV and HCV products they can choose one of
the strategy or the both strategy to increase their revenues
as their LCV and HCV are the cash cows for the GNL so
they can earn more revenue through exporting them and
they can increase their market influence through acquiring
the existing brand.

Long Term Plan:
Capture 25% auto market share in Pakistan in all
four wheel categories.
Medium Term Plan:
Rejuvenate Nissan as the first choice in auto solution.
Short Term Plan:
Revamp operational process to achieve economies of
scale

Implementation
Programs:
To drive their strategies in right direction they must develop
following programs:
Research & Development:
GNL must increase its Research & development budgets to
produce new kind of automotive products to meet the market
requirements.
They must create a “concept future car” for the customers. It
can be done through continuously seeking responses from the

Implementation
Programs:
Total Quality Management:
Without quality products it is impossible to create a positive
image of the GNL products in car markets. To achieve this
GNL management must develop a quality conscious culture
within the organization. They must implement the concept
that:
“Quality is everyone’s responsibility”

Implementation
Programs:
Total Quality Management:
Within the organization the concept must be enforce in a way
that everyone will become quality conscious. It is not only up to
the quality department to make sure the quality policy will be
implemented; all the departments and their respective
employees must be fully adhere with quality concept and make
sure that it must be implemented.

Implementation
Programs:
Marketing:
The marketing Strategy must be focus to develop the brand
image of the GNL products that Nissan will become the first
and the foremost choice of every customer in auto products.
Whenever they think to buy the auto products, they compel to
think about the Nissan, first.

Implementation
Programs:
Marketing:
The Marketing strategies will be device separately for
passenger cars and for LCV & HCV auto products (Trucks &
Buses). Market can be segmented in three broader categories:
•Individuals and Families
•Industrial and Business Entities
•Government Markets

Implementation
Programs:
Finance:
Strong financial controls will be implemented to improve the
efficiency and reduce the cost of products. It can be done
through allocating budgets to each department with a great
care, and evaluate their performance in accordance with the
allocated budgets.
To achieve the desired results the dividends must be hold for 3
to 5 years to reinvest in the future activities and ask the
shareholders to enjoy the increasing market price of the GHNL

Implementation
Programs:
Information System:
Information is one of the key resources for any organization.
The uninterrupted and accurate flow of information will allow
them to the management to make effective decisions at all
level. To develop and effective information system within the
organization GNL must adopt ERP system to integrate its all
departments and resources.

Implementation
Programs:
Human Resource is one of the vital resources for the
organizations to achieve their vision or to translate their vision
in to reality. GNL must nurture the following concept for its
human resources:
“We produce perfect vehicles because our employees are
perfect”

Implementation
Programs:
To implement this concept the all Human Resource related
policies and procedures must be revaluated and if necessary
must revise.
The concept of HR business partner can also be adopted to
effectively utilize this resource. For this the management must
introduce the employee stock option for the employees.

Implementation
Programs:
Budgets:
The Research and Development budgets must be increase up to
100%.
Market budgets must be increase up to 50%, with a view to
increase the company operated showrooms all over the market,
and effectively manage the after sale service of the products.

Implementation
Programs:
Procedures:
For the effective implementation of GNL strategies, the SOP
for the each process and work will be developed for every
department.
The standards and parameters for each process must be define
and it will make sure that no work will be carry out in
contradict of GNL’s define standards and procedures.

Evaluation and Control:
• To achieve the desired goals and to rejuvenate the Nissan
passenger cars products in to the market following
landmarks must be achieve by the GNL and compromise on
desired results:
• 10% growth must be achieved by GNL in term of sales of
auto products.
• The manufacturing cost must be reduced by 10% and it must
be make sure that no unnecessary penny will be spent or
wasted.
Implementation

Evaluation and Control:
• Number of complaints regarding the products must be
reduced 10% and struggling to bring it up to 0.
• Operational output must be increased by 10% until and
unless the economies of scale and economies of scope will be
achieved.
• Continuous improvement policy must be adopted to fully
penetrate into the passenger car market.
Implementation

Questions
&
Answers

Semester project strategic management (70415)

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