INSTITUTE OF BUSINESS MANAGEMENT

MAN405
APRIL 2022
Under instructions of Sir Javaid Ahmed
By, Inshaal Arif (20191-26326)

Alina Aamir (20191-25938)

Afshan Lateef (20191-26083)

Hania Imran (20201-28855)
Ali Salman (20191-26301)

STRATEGIC PERSPECTIVE OF SUZUKI

Abstract:
This research emphasizes on the analysis of automotive industry & its attractiveness as well
as suggesting strategies for Suzuki. Automotive industry is considered a mature one having a
short room of sustaining a differentiating success factor. Large capital investments,
competitive distribution channels, significant costs, large number of buyers, low switching
costs, high demand, degree of differentiation, all these have contributed to the dynamics of
the automotive industry. Microenvironment factors such as different Government policies,
technological advancements, safety requirements, copyright issues, environmentally friendly
rules have affected the industry structure in a significant way. Talking about Suzuki,
selecting a unique competitive plan is a crucial aspect of competitive strategy. After
evaluating the industry analysis and the company’s internal analysis, several outcomes were
made which have been used to conclude that which generic strategy should be adopted by
Suzuki. Moreover, Suzuki with their low-priced cars can maintain their market position.
However, Suzuki does face defeat in its luxurious cars segment as the sales are really low.
Making an effective strategy of increased R&D and innovation with cost leadership as the
primary objective and an increased product portfolio to improve customer portfolio.
Currently, Suzuki has a strong competitive position and the largest Market share in
Pakistan’s automobile industry. But the recent developments in this sector has posed a big
threat to this company. Strategies such as product development, Research & Development
and Innovation can be used to retain and increase the market share.
Keywords: Suzuki, Automotive, Just-In-time, Strategic Analysis, Differentiation, Innovation
1
This research – based case study was a significant part of the undergraduate BBA Course ‘Strategic
Management’, at the Institute of Business Management, spring semester 2022, choreographed by Sr. Fellow
Javaid Ahmed FCIM, FCMI (UK).

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Overview of Pakistan's Automobile industry:-
The automobile manufacturing industry contributes a substantial portion (2.8%) of Pakistan's
gross domestic product and 30 billion PKR in terms of taxes and duties [1]. Therefore attracts a
great deal of attention from politicians, investors, and economists for its driving forces across the
economy. The first vehicle produced in Pakistan was in 1953 at Karachi's National Motors plant.
Since the first vehicle, auto manufacturing has grown to become a significant contributor to
Pakistan's economy with Toyota, Honda, and Suzuki rounding out the big three.
Pakistan’s automobile industry is not only the fastest growing in Asia but is also bringing
millions of lucrative professional jobs to the table. This growth is greatly attributed to and fueled
by a drop in Pakistan’s average age of earning as a result of rapid technological growth and
digitalization. With the increase in freelancing and digital marketing opportunities in Pakistan,
more and more young people are able to afford cars. In this regard, Master Changan Motors’
MD, Syed Shabbiruddin, has said, "On average, the first paycheck was received by the previous
generation at the age of 27 but now, the threshold has declined to 21 years, thanks to the
opportunities arising from digitalization". Therefore now the automobile industry is also
focusing on the youth as a part of their target audience.
The problem that remains intact and unaddressed is the fact that Pakistan depends heavily on
imported auto parts from abroad and uses those raw materials to assemble cars in Pakistan – this
is a big problem from the economic point of view. Therefore the automobile industry in Pakistan
needs to start producing more and more localized parts and eventually lessen the burden on the
exchequer.
Also while the growth potential of the automobile industry of Pakistan is theoretically vast, there
are some practical impediments to its development. They include underdeveloped infrastructure,
high cost of fuel, poverty, safety concerns, and the rules of Islam that prohibit all interest-bearing
loans. So even though the automobile industry of Pakistan seems to have a promising future it is
expected that in short term there is going to be a downward trend due to the chaos caused by
COVID-19, political stability, and rising fuel prices.
Industry structure and dynamics:-
The Pakistani automobile industry is a good example of an oligopoly as it consists mainly of 3
major firms, Toyota, Honda, and Suzuki. The influence of this oligopolistic structure can be seen
clearly in the prices and the development (and introduction) of new vehicle models into the
Pakistani market [2]. Because of this structure other auto manufacturers only share 9% of the
Pakistan’s automobile market [3]. The reason for this oligopolistic structure can be traced back
to the administrative policies of 1990s which encouraged the financial experts to direct resources
into Pakistan's automobile industry and brought together huge firms like Toyota, Suzuki and
Honda. This later led to the establishment of Pakistan Automotive Manufacturers Association
(PAMA) to make sure there is cooperation, to safeguard interests of its members, and to pay a
central role in automobile policies of Pakistan.

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The price brackets that are selected by local auto manufacturers allow each player to enjoy a
segment of the market without having to worry about competition. If you analyze the market, the
lowest price range (PKR 6 lac to PKR 14 lac) is entirely enjoyed by Pak Suzuki, and Toyota
Indus or Honda Altas have never offered anything under this price range. The price range (up to
PKR 24 lac) is almost entirely dominated by Toyota, while from PKR 24.5 lac to PKR 30 lac is
taken by Altas Honda.

A problem that has been caused by this industry structure is the presence of a protectionist
regime. This excessive duties regime discourages competition from imported automobiles so the
consumers are forced to buy from local manufacturers. Even though this is good for promoting
the local industry in the short term it is not good for the long term growth of the industry because
these local manufacturers do not have any incentive to improve their offering and this results in a
welfare loss for the consumers as the have to pay a high price for substandard products and these
vehicles rank really low in relative ranking with the international standard - therefore this
discourages exports and puts the local industry in long term risk and uncertainty if these policies
are changed. Therefore policy actions need to focus on enhancing consumer welfare as well,
rather than solely focusing on safeguarding producer surplus. That being said there are
companies that see Pakistan as a potential profitable market and have shown interest in planning
their launch in Pakistan [4], companies like Volkswagen (one of best auto producers of
Germany) has expressed interest in setting up a plant in Pakistan along with other companies like
Renault [5] and there have been many social media campaigns targeting the big 3 auto
manufacturers for their high priced vehicles [6] [7] [8]. This indicates that foreign investments
are increasing and in the future the structure of the industry may be changed, be more
competitive and not be oligopoly anymore [9].

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Porter’s Five Forces Impact on Automobile Industry:-
Threat of new entrants: (low)

Pakistan’s automobile industry is dominated by 3 companies

Suzuki, Toyota and Honda. These 3 companies have an upper
hand in the industry in terms of competitive and effective
labor, innovative technology, greater market share and loyal
customers which gives them a cost and performance
advantage. They have achieved this by being a part of this
industry since decades. However, with the Auto Policy that
government announced, which offers tax incentives to new
automakers to establish manufacturing plants in the country.
These policies have allowed the new entrants such as KIA,
Nissan, Hyundai, MG, etc. to settle in the market and complete against these dominant
companies but to lead them is not possible. With these new entrants the selling prices of cars is
expected to decrease in Pakistan.

These 3 companies are known in the market for their own specialties. Suzuki is known for its
affordable range of small cars that are used by the middle class which is the majority of Pakistan.
Whereas Toyota and Honda target towards the luxury cars. Toyota is known for its best resale
price and Honda is known for its luxurious driving experience. Suzuki, Honda and Toyota have
strong brand identities and their own product portfolios as well. The 3 giants do have an
advantage of lowering costs due to their dominance in the industry over the decades.

To establish a Car Manufacturing Unit in Pakistan is around Rs. 10 Billion. Not many companies
would risk investing such a huge amount. Along with the huge investment, new automakers also
require a license of manufacturing and selling in the country which itself is a long process which
takes a lot of time. However, with government’s new policies, competition has risen with KIA,
MG, Hyundai but succeeding the already existing dominant companies is very unlikely. Suzuki,
Toyota and Honda have their manufacturing units in Pakistan since decades and have the
motivated workforce, expertise in how to effectively get the work done in a cost effective
manner compared to the new entrants such as KIA, MG, Hyundai, etc.

Suzuki is one of the largest car producers of Pakistan and enjoys the low cost advantage as it is
the most purchased company with cars such as Cultus, Alto and swift.

1 3 5 10

Low High
Moderate

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O1: Large firms have a cost or performance advantage as they are experienced and in the market
since decades.
O2: There are proprietary product differences in the industry, Suzuki, Honda and Toyota have
different product portfolio and these 3 dominant companies are also the strong brand identities.
O3: A lot of capital is required to enter the automobile industry.
O4: The newcomer in the industry will face difficulty in accessing distribution channels as the
dominant companies have already occupied the best ones.
O5: The existing dominant firms have the advantage of lowering costs.
O6: The newcomers will face difficulty in acquiring skilled labour as all the motivated workforce
is employed in already existing companies.
O7: Newcomers need the license for manufacturing and selling which usually takes a long time
to access.
O8: The newcomers will face strong retaliation while entering the market from the dominant
firms.
T1: customers do not incur any significant costs in switching brands, if one has to switch from
Honda to KIA the switching cost isn’t a lot and can be done easily.
Bargaining Power of Buyers: (moderately low)

Pakistani market has a huge demand for cars and is increasing on daily basis. Even after the
increase in suppliers, the demand still exceeds which means that the numbers of buyers exceed
the number of suppliers. The popularity of the three dominant companies, Suzuki, Toyota and
Honda, helps the buyers to not require a lot of information as their car parts and mechanics are
easy available across the country and buyers put their trust in them and need not to be involved
in the process so much. Keeping in mind the customers are highly sensitive to price so if the
prices increase the customers will instantly change the company and switch to the company with
lower prices.

Suzuki’s major customers are Careem, Indrive or Uber and their businesses are profitable as they
purchase cars like Alto and cultus in bulk.
Each segment has a different requirement and hence has various products. For example Suzuki
targets the lower end customers with cars like Mehran and Alto and targets the middle-upper
class with Ciaz.

With the increasing number of suppliers it is predicted that the bargaining power of buyers will
be increased however looking at the current situation it doesn’t look like this will happen. There
has been an increase in the competition by the entry of new companies. The switching cost
however is not a lot if one wants to switch from Honda Civic to Toyota Grande, this can be
easily done.

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There are 2 types of buyers in the Automobile industry of Pakistan. One is the end users who
purchase one car at a time for themselves who are large in large but makes only small purchases
whereas the others one is the Business to Business who purchase cars in bulk such as rental
companies or metro cab services. Due to the well-established reputation in the market the buyers
do not inquire much about the product and trust the companies with their purchases.

1 4 5 10

Low High
Moderate
O1: The demand is higher than the supply therefore there are more numbers of buyers than the
suppliers.
O2: There are large numbers of buyers with relatively small purchases.
O3: There are existing competitors which prevent customers from taking our function-in-house.
O4: The product offered by the existing competitors is unique and has established brand identity.
O5: The customer’s business is profitable as they use our products for commercial purpose too.
O6: The dominant companies provide incentives to their customers after purchasing the product.
T1: The customer does not face any significant cost in switching to the competitor.
T2: The buyer does not require any important information while making a purchase as they have
trust in the brand.
T3: The customers are highly sensitive to the prices and can switch to the alternate brands if high
prices are charged.
Threat of substitutes: (Moderately high)
Substitute are those products or services that offers the same purpose as of the main
product/service. The availability of closely related substitutes affect the profitability of the
industry and makes it less attractive. Customers tend to switch to the substitutes because of price,
quality, convenience etc. The automobile industry of Pakistan has boomed in the recent years
due to the change in automobile policies and subsidies provided to the auto manufacturers. Due
to which, new companies have stepped in to get the most out of this economy. The substitutes
offered by the new competitors are competitive and provide value for money. They offer more
functions and luxuries which justify the prices. Previously, customers were bound to purchase
from the big 3 i.e. Toyota, Honda and Suzuki due to lack of options. But now, the new entrants
like MG, KIA, HYUNDAI, CHANGAN etc. have taken a good share of the automobile market.
Moreover, the other threat to an automobile industry is the likelihood of potential customers to
go for other modes of transportation. This transition maybe due to the availability of good and

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economical public transport system like Green Line transits, Orange trains and Metro buses
around the country. People are inclined towards public transportation due to several reasons like
pathetic infrastructure of roads and traffic in big cities, economical public transportation, high
prices of private vehicles and petrol followed by the negative shift in the income and purchasing
power of the working class. Although, the substitutes can rarely offer the same convenience as
private vehicles but the issues are far greater than the convenience which can emerge as a big
threat for the automobile industries in near future.
1 5 7 10

Low High
Moderate
O1: The customer is not likely to substitute to other modes of transportation due to the
convenience attached with the private vehicles.
T1: The substitutes have no performance limitations and can outperform the competitors.
T2: The customer doesn’t have to bear any major switching cost.
T3: The customers have real substitutes available and can switch towards them easily.
Bargaining power of suppliers: (low)
In the local automobile industry, the bargaining power of suppliers is considerably low. The
supplier power is determined by the ability of suppliers to negotiate prices and conditions related
to supply. They can adversely impact the profit structure of an industry by providing poor quality
supply at high prices when they have high bargaining power. Therefore, the buying power of
suppliers is a crucial factor when it comes to industry profitability.
In the auto mobile industry, there is an abundance of suppliers which means they have slightly
low margin for negotiation as the buyers can shift to another supplier to secure products of
better price and quality which are abundantly available in the market and can easily be purchased
hence making the cost of shifting relatively low. The suppliers are reliant on loyalty of existing
customers for their sales and therefore stay market competitive as there are many vendors selling
the same thing.
Additionally, the suppliers lack the necessary skillset and resources including expensive
machinery to set up their own manufacturing units hence the threat of forward integration is
extremely low and the automobile industry is aware of the edge they have over the suppliers. The
factors of input remain the same throughout the industry making the switching cost low and the
suppliers in this scenario cannot increase their prices as their profitability is dependent on repeat
orders and company’s loyalty. Their prices have to be market competitive or lower in order to
get orders.

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 1 3 5 10

Low Moderate High

O1: The inputs can be sourced easily and cheaply.

O2: The existence of large number of suppliers makes shifting easy and cheap.
O3: The suppliers lack the necessary skills and resources and therefore would not be able to enter
the same industry as they are weak.
04: The market has an abundance of resources readily available which allows for substitution of
inputs when needed.
05: The suppliers rely on business by existing giants which is crucial for their profit.
06: The number of suppliers selling high quality inputs is high.
T1: Purchase cost significantly impacts overall costs and suppliers can collectively take
advantage by increasing prices.
Rivalry amongst existing competitors: (Moderately High)
The automobile industry is highly competitive which makes the rivalry amongst existing
competitors is high. This factor is determined by the ability of firm’s co existing in an industry to
try and create barriers for each other’s profits and put pressure on one another. The big names
compete to obtain greater market share and profits. The level of intensity of rivalry between
firms plays an important role in the industry profitability structure.
With regards to the local automobile industry there is an oligopoly as there are three big rivals
with cutthroat competition. These are namely SUZUKI which is the market leader with 29%
shares, TOYOTA with 26% market shares and HONDA with 25% market shares with very small
difference between their percentages. Other smaller company’s like Nisan, Kia, and Daihatsu
have 10%, 6% and 4 % respectively. Shows that rivalry among existing competitors which is
high due to rapid industry growth which creates more opportunities. The recurring nature in the
industry but it does not guarantee the fulfillment of capacity as it depends on the market
conditions and resources.
The giants in the industry operate on relatively high fixed costs as they purchase machinery and
manufacturing plants. The industry rivals have very slightly significant product differences
which they use as their unique selling points. In terms of price differentiation and target market,
Suzuki mainly targets the upper lower class with Mehran, Alto, Wagon R, high roof etc.
although these cars are also used as secondary cars in middle and upper middle classes.
Meanwhile Toyota targets upper middle, upper and higher upper class depending on the type of

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vehicle including their Corolla Sedan models, smaller cars like Aqua, Prada and Land Cruiser
which only the wealthy can afford. Toyota has higher resold values and stands out in terms of
quality. On the other hand, Honda targets upper middle and upper class with its city and civic
models and is focused on loyal customers who don’t even consider other options. The
diversification strategy in this market is targeting a specific target audience and the vehicle
category being offered i.e., Sedans, SUV’s, smaller cars etc. The industry requires consistent
modifications, tech and resources and customers don’t have very high switching costs as they
have more options available now. Word of mouth reviews and knowledge about cars is rampant
amongst locals and they do not require much information to make a purchase decision.
1 5 7 10

Low High
Moderate
01: Rapid growth in the industry with upward movement likely in the future as well due to the
changing lifestyles and growth in overall economy.
O2: Products are available in variety depending upon the firms brand identity and USP,
O3: Competitors in the automobile industry use a wide product portfolio for diversification and
market capture.
T1: Fixed costs are a significantly high portion of overall costs incurred.
T2: hard to get out of if there is a lack of skilled workforce and equipment.
T3: Low switching costs for customer, shifting loyalties.
T4: The complexity of products is average and customers have enough prior knowledge which
means it is hard to convince them.
T5: The size and market share of larger names in this industry varies.

Overall Industry Rating:

No: Favorable Moderate Unfavorable

1. Threat of new entrants. 6 2 1
2. Bargaining power of buyers 6 0 3
3. Threat of substitutes 0 1 4
4. Bargaining power of suppliers 5 1 1
5. Rivalry among existing competitors 3 1 5

20 5 14
Total

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PESTLE Analysis of Automobile Industry: -
A stable and pleasant business environment with predictable market growth tendencies is
provided by high political stability. When there is political turmoil, however, investors are put
off and stakeholders' faith in economic and organizational performance is harmed. Suzuki is now
active in a number of countries, each of which has its own set of political issues. Growing
tensions and instability in the global political landscape may have an impact on the expansion of
the gold sector, limiting Suzuki's growth potential. Suzuki should closely examine pressure
organizations, social/environmental activists, and labor union rallies, since they play a crucial
part in the policy-making process. Suzuki's capacity to cooperate with the community and
accomplish long-term company goals may be enhanced by close collaboration with such
organizations.
Furthermore, a well-developed governance structure combined with a democratic political
atmosphere enables foreign commercial enterprises like Suzuki feel more at ease. Entering
nations with high tax rates will have a direct impact on Suzuki's profitability. Taxation has a
negative impact on international trade and hinders exports. Suzuki can enter areas with low taxes
and profit margins, allowing it to spend in research and development. The organization may also
conduct research on industry-specific taxation rules in order to have a better understanding of the
host government's aims and interests in promoting sectors. High trade restrictions, on the other
hand, might complicate the business climate by reducing exports and undermining ties with
international trade partners. Furthermore, if the government of the nation under consideration is
not serious about safeguarding business organizations’ intellectual property rights, it would
discourage entrepreneurs from investing in businesses because of the significant danger of ideas
being stolen.

Organizational performance is directly influenced by a country's economic progress. Suzuki may

benefit from growing economies in a variety of ways. It's also crucial to comprehend the stage of
the industry lifecycle. Due to market saturation, entering mature industries might be more
difficult than entering businesses in the growth stage.
Suzuki's business success is also impacted by the amount of money invested on essential
infrastructure development by the host nation government. A well-developed infrastructure
improves the business climate and the gold industry's growth potential in the specific country.
The capacity of Suzuki to pursue its long-term growth strategy will be determined by the GDP
growth rate. Consumers' capacity to spend more on offered products is also indicated by a high
GDP. High unemployment indicates that there is a surplus of labor available at cheaper pay.
Suzuki's production costs can be reduced by operating in such a market. The interest rate and its
impact on borrowing ability and investment attitude should also be carefully considered by the
company. The high interest rate will encourage people to invest and provide Suzuki more
opportunity to thrive. Finally, fluctuations in the currency rate might affect profitability and
international commerce. Suzuki may be concerned about the excessive volatility of the local
currency.
The financial market efficiency influences Suzuki's worldwide growth strategy, since operating
in highly efficient financial markets leads to greater liquidity and a stronger capacity to penetrate
new markets. Suzuki's capacity to obtain money at reasonable prices will be determined by the
health and efficiency of financial markets.
Wage rates and skilled worker supply are determined by labour demand and supply. Suzuki has
to research and forecast labour market circumstances in order to figure out how to recruit

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exceptional employees and harness their abilities to boost business success. Suzuki may benefit
from better employee productivity when labour markets are flexible. Operating in restrictive
labour markets, on the other hand, may result in labour pay and other concerns being addressed
by powerful labour unions. Suzuki should also examine the availability of competent human
resources, since a labour deficit may impede corporate efficiency and make talent acquisition and
retention more difficult.

For international business organizations like Suzuki, changes in demographic patterns such as
population ageing, migration trends, and socio-economic factors are critical. Suzuki can choose
the suitable market segment/segments with great development potential by studying
demographic data. Migration has an impact on company and marketing tactics. Suzuki must
grasp the public's overall attitude regarding migration, since this will have an impact on
companies' capacity to recruit foreign management to the host country.
International marketing managers consider culture to be a significant factor.
People in Pakistan take satisfaction in buying automobiles because they believe it gives them a
nice reputation. Although people do not have many complaints about cars, they still prefer to buy
newer models. Customers have expressed an increased desire for customized cars, so Suzuki
needs to work on this. As this appears to be a fairly new thing to attempt for them, demand is
steadily changing towards E-cars and E-bikes, thus strategies should be developed accordingly.
Each civilization has its own set of norms and values that have a significant impact on consumer
behavior. Suzuki should form local teams and form local alliances to better understand social
views and conventions so that marketing efforts may be tailored to the specific cultural setting.
Suzuki places a premium on observing social class stratification. Suzuki will need to use
specialist marketing tactics to sell luxury items at premium rates to a market where the high-end
consumer is rather tiny. Similarly, if social class stratification is modest, market segmentation
based on social class may be unproductive.
Customers have been encouraged to purchase online as a result of the emergence of social media
and e-commerce. Suzuki must examine demographic differences in order to comprehend online
buying behavior, as younger clients are more likely to shop online than older ones. When
establishing marketing and communication strategies, keep in mind the growing role of mobile
phones and social networking sites.
The buying power of money has an impact on consumer spending habits. It's critical to
understand customers' preferences and spending patterns by studying and anticipating their
purchasing power based on pertinent economic data. Consuming the supplied product is
considered a status signal in certain communities, whereas others consume the same things for
utilitarian reasons. Suzuki should devote time to learning about the motives for purchasing and
the societal dynamics that shape consumer behavior. Suzuki should also try to assess the degree
of customer ethnocentrism and the nation of origin influence when evaluating foreign items by
local consumers. Finally, if customers choose experiencing items over standard product offers,
Suzuki could research their leisure interests and focus more on improving the customer
experience.

The advancement of information and communication technology has resulted in the adoption of
novel marketing methods to improve consumer collaboration. In today's business world, using
social media has become commonplace. Suzuki may boost business performance by utilizing the
opportunities provided by social media marketing. Technological advancements may be

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exploited to kick off innovative social media campaigns aimed at building online brand
communities.
Suzuki must consider competition investments on a local and macro level in order to
comprehend how new technologies affect the firm's value chain and current cost structure. In a
world where creativity is being disrupted, research and development efforts are critical. Suzuki
should invest in disruptive technologies to maximize earnings and re-invest the proceeds in
future disruptive technologies in such an environment.
Consumers are increasingly seeking electronically controlled automobiles, and they are more
inclined to choose gas-electric hybrid or hydrogen-powered vehicles. Consumer demand for
technology features such as air bags, hydraulic brakes, and fuel-efficient vehicles is growing,
thus they should be prioritized more today. Technological improvements have the potential to
increase revenue and improve customer happiness.

Business organizations have been driven to embrace creative recycling and waste management
techniques as a result of rising environmental degradation and technological innovation.
Recycling has practically become a corporate standard in several nations. Suzuki also recognizes
the need of implementing effective waste management techniques in organizational units that are
located in or near metropolitan regions. Many nations have enacted severe waste management
regulations in order to safeguard their metropolitan regions.
Weather and climatic conditions can have an impact on company efficiency. Extreme weather
conditions, for example, might raise operating costs and force Suzuki to make the value chain
more flexible. Consumer buying habits may be affected as a result of these developments,
prompting the company to alter its product and marketing tactics. Suzuki's excessive resource
depletion may elicit unfavorable reactions from the media, environmental groups, customers, and
the general public. Suzuki must research the country's unique environmental legislation to
determine which resources (such as water, energy, and so on) are regarded rare or endangered
and who’s over usage might pose problems for the organization.

Suzuki must follow all employee/labor health and safety requirements, as certain nations have
strict labour safety rules. Suzuki has an ethical and moral commitment to provide a safe working
environment for his employees. Similarly, while implementing human resource procedures, anti-
discrimination regulations (such as equal employment opportunity) must be carefully examined,
as discriminating lawsuits against employers undermine the organization's reputation and hinder
its ability to recruit and retain talent. Because of consumer worries about privacy and security,
data protection has become a major problem. Suzuki must research data protection rules in order
to safeguard client information. There are also rules in place to set a maximum price, enforce a
specific level of quality, and protect customers from deceptive marketing promises. Suzuki must
take these considerations into account in order to comply with consumer protection legislation.
Furthermore, intellectual property laws are in place to safeguard businesses' patents and unique
ideas. Inability to secure intellectual property rights may result in a loss of competitive
advantage, putting Suzuki at a disadvantage
in comparison to other market participants.

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External Factor Evaluation Matrix:
Opportunities Weight Rating Weighted Score
1 A lot of capital is required to enter in the automobile industry i.e.
0.04 2
approx 10-20 billion rupees. 0.08
2 The existing brands has a diversified portfolio, strong brand identitites
0.07 3
and social acceptance. 0.21
3 The demand for Suzuki is higher than the supply as the delivery time
for a new vehicle is about 4-5 months. 0.03 2
0.06
4 The customer is not likely to switch to public transportation due to the
convenience attached with private vehicles. 0.04 3
0.12
5 A large number of suppliers are available in the market and therefore
0.06 2
the inputs can be procured from multiple suppliers with reduced cost. 0.12
6 The government has provided tax incentives to Pak Suzuki in return for
0.05 3
setting up a new plant in Pakistan. 0.15
7 The automobile companies have a diversified portfolio different from
the competitors. For example, Suzuki is the only giant compant that 0.06 4
locally produces A-segment and B-segment cars unlike others. 0.24
8 The suppliers make the most amount of profit from the 3 giants. 0.06 2 0.12
9 New comers in this industry have less connections, experience and
therefore they'll incur more cost and will face difficulty in finding 0.04 3
skillful force.
0.12
10 The auto-mobile industry is increasing rapidly with 4.6 % growth rate
and the customers are increasing on a daily basis. 0.05 2
0.1

Threats Weight Rating Weighted Score

1 The customers don't have to face any significant cost in switching
0.04 3
brands. 0.12
2 The customers are sensitive to price and can switch to competitors if
higher prices are charged. 0.05 2
0.10
3 The substitutes has no performance limitations and can outperform the
0.05 3
competitors and provide more value to the customers. 0.15
4 The customers easily switch to other brands and are not loyal. 0.05 3 0.15
5 Since the company mostly imports the Inputs, higher interest rates and
0.06 2
freight charges lead to higher prices for vehicles. 0.12
6 The customers have real substitutes available and can switch to them if
0.04 3
they provide more value to them. 0.12
7 The complexity of the products is low and customers are already
equipped with knowledge, therefore it is difficult to convince them for 0.05 2
a purchase.
0.10
8 The cost of purchases signifcantly impacts on overall costs and
0.06 2
therefore the prices fluctuate more frequently. 0.12
9 High government taxes and duties have lead to a significant increase in
0.07 2
prices from 2017-2022. 0.14
10 The fixed cost of the business are relatively high portion of total cost. 0.03 2 0.06
Total EFE Score 1.00 0 2.50

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Since, Suzuki is the only brand among the 3 giants that produces A-segment or B-segment cars,
such as Cultus and Alto that falls in the price range of 10-15 lacs pkr. Neither Toyota nor Honda
produces any car in this price bracket and therefore Suzuki is all alone in this market segment.
On the other hand, Suzuki has not been doing well for the mediocre or high income class. They
have a very limited portfolio in the high income class segments. So, Suzuki heavily depends on
the sale of Cultus and Alto (Suzuki Swift has also stepped in). It must increase their product
portfolio in A-segment or B-segment and also focus on penetrating in the sedan and SUVs
market.
The current scenario of the automobile industry tells us that the market has been flooded with
new automobile companies providing futuristic vehicles. The customers are no longer bound to
purchase from the 3 giants but now they have a wide range of options to look upon to. They
evaluate their options and then form a decision. The best way for Suzuki to cope with this threat
would be to provide the customers the value for their money. Since the new companies would
require some time to establish their brand identities that Suzuki has already established. So, the
company should take benefit from that and provide the customers the value for their money.
Competitive Analysis:
When it comes to the automobile industry in Pakistan, there are many players existing in the
market, and new ones are continuously entering; nonetheless, there are three main players who
have a significant presence and grip in the market. Suzuki, Toyota, and Honda are the three
major players. They have dominated this sector for decades, making life difficult for anyone who
have attempted to enter it and refusing to let them flourish. Toyota has a 25% market share,
Honda has a 15% market share, and Suzuki is the market leader with 52% market share in 2021.
The 'Big Three' have dominated the market in their own way for decades, each with at least one
competitive advantage over the others. For example, Indus Motors' Toyota Corolla has long been
the dependable, low-maintenance mid-range resale market leader, while Honda's Civic is the
high-end choice for customers seeking a higher level of build quality and appearance. Suzuki, on
the other hand, caters to lower-end small-car customers and business transportation vehicles with
its Mehran (replaced by the Alto this year) and Bolan models.
With the introduction of new entrants into the market under the new Auto policy, it appeared that
a market correction was on the way. KIA and Hyundai chose Pakistan as their new home, taking
advantage of the 5-year tax break offered to Greenfield Projects. Lucky Motors re-entered the
market, and the strong Nishat group launched Hyundai with much hoopla; a group that doesn't
enter a new market until there's money to be made.
To compete with these newly established firms, the three major players must now work more
effectively to give more and better features at a lower price, which will either keep their sales
constant or cause them to drop. Furthermore, the Research and Development Department should
now focus more on developing E-Cars, as this is the trend currently with gasoline costs
skyrocketing and people becoming dissatisfied.

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Industry’s critical success factors:
Suzuki was chosen the top automobile brand in the Institute of Customer Service's Index,
attaining its highest ever position. Suzuki consumers rated their dealers as the clearest and most
open individuals to work with, the most trusted brand with a score of 8.6 out of ten, and the most
likely to remain loyal to the brand with a score of 8.5 out of ten in the study. Honda and Suzuki
perform equally, however they both outperform Toyota in terms of customer service.
The percentage gained by any firm in the current market when its rivals are taken into account is
known as market share. Suzuki is the market leader in Pakistan, with a market share of 52% in
2021, with Toyota on 25.9% and Honda on 12.3 percent.

Pak Suzuki has been a market leader in the small vehicle class in Pakistan since its inception, but
it has been less successful in the upper categories, while trying its hardest to gain the market of
above 1000 cc with little or no success. We gathered through our research on Pak Suzuki Motor
Company Limited that they are performing well in the Pakistani market and are the top market
shareholder. They manufacture automobiles at inexpensive pricing for persons with low to
moderate incomes. However, in the premium and semi-luxury automobile segments, they are
unable to compete with Toyota and Honda. They lacked a product development plan, so they get
into Honda and Toyota markets.
R&D refers to the research that firms perform to ensure that the product they are about to market
meets the demands of consumers. In this category, Suzuki and its competitors Toyota and Honda
tied for first place. They do not perform extensive research before to introducing a product in the
Pakistani market, since they do so with products that have already proven to be successful in
other countries. As a result, each product that is to be launched in the Pakistani market has
previously undergone R&D.

The features supplied to customers that meet their needs are referred to as product quality.
Suzuki's product quality is inferior to those of its competitors Honda and Toyota. Suzuki may
have the largest market share, but this is due to the lack of any other competition supplying low-
cost items that aren't worth the money since their quality isn't up to par. Toyota and Honda may
charge more for their products, but they do it in exchange for better quality that lasts longer.

The retention of a customer is referred to as customer loyalty. Customer retention is one of the
most difficult jobs for any firm, whether Suzuki, Toyota, or Honda. Suzuki has a tough time
keeping customers because of their target market, which is the middle and lower middle classes.
They are frequently dissatisfied with the product's quality, which has an indirect influence on
consumer loyalty.
Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts) facilities
in Pakistan. The company currently has 77 dealerships spread across 27 cities.

Pak Suzuki is well known for its A-segment or B-segment cars such as Alto, Cultus & Swift. The
reason why no other competitor other than KIA (recently) has stepped into this market is because
the target audience is mediocre to lower income class who are price conscious and that’s why
Pak Suzuki enjoys a sort of monopoly in this segment and offers at relatively heavy price

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because of lesser options available for consumers in the market. For C or D class segments, Pak
Suzuki shows little or no performance as compared to that of Toyota and Honda, and offers
greater price than them which does not justify and leads to lesser sales.

Pak Suzuki has recently posted the net profit of Rs.2.6 billion this year up from losses of
Rs.1.3billion the previous year. It shows that the company has achieved stability in the market
and the graph shows an upward trajectory. The main reason behind this transition was the
increased inflation and the decreased buying power of the individuals which leaded them
towards Pak Suzuki who offers THE BEST mini & Sub-compact vehicles which comes at
relatively lower prices.

If we analyze the buyer’s mentality in Pakistan, reliability and resales value influences the
decision making. And the Car companies that boast superior reliability, are often most
successful, especially in a market such as Pakistan. Pak Suzuki ranks very low in the reliability
chart whereas the competitors Toyota and Kia are amongst the most reliable automobile
companies in USA.

Pak Suzuki has the largest production capacity of 150,000 cars per annum and 44,000
motorcycles per annum. Whereas the competitors Toyota and Honda has a production capacity
of 80,000/annum and 50,000/annum respectively. This is the reason why Pak Suzuki takes much
lesser time to deliver the products to its customers.

Innovation is the most critical success factor in the automobile industry. Pak Suzuki lacks in this
area as their vehicles still possess the same outdated technologies for 10-12 years. Whereas the
competitors are spending heavily on the R&D which ultimately leads to the innovation and
technological advancement in vehicles.

CPM Matrix:

Suzuki Toyota Honda

Critical Success Factors Weight Rating Score Rating Score Rating Score
Customer Service 0.09 4 0.36 3 0.27 3 0.27
Market Share 0.05 4 0.20 3 0.15 2 0.10
Market Penetration 0.07 3 0.21 4 0.28 2 0.14
Product Quality 0.10 3 0.30 4 0.40 4 0.40
R&D 0.06 3 0.18 3 0.18 3 0.18
Customer Loyalty 0.04 3 0.12 4 0.16 4 0.16
Production Capacity 0.07 4 0.28 1 0.07 2 0.14
Showroom locations 0.07 3 0.21 3 0.21 2 0.14
Price Competitiveness 0.08 3 0.24 3 0.24 3 0.24
Innovation 0.15 1 0.15 2 0.30 3 0.45
Financial profitability 0.08 3 0.24 4 0.32 3 0.24
Reliability 0.14 3 0.42 4 0.56 3 0.42
Totals 1.00 2.91 3.14 2.88

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Despite having the largest share of the Pakistani automobile market, Pak Suzuki is unable to
compete in the sedan and luxury car segments. Pak Suzuki has tried, but failed, to get in to the
luxury automobile market to compete with Honda and Toyota. However, bringing in innovation
may enable them to compete with luxury automobile manufacturers. In order to compete with
HONDA and TOYOTA, we propose that Pak Suzuki follow a Product Development plan. It will
help translate innovative thinking into workable products once it employs product development,
so expanding its premium automobile market share.

Suzuki has a vast client base, yet its customers are not loyal to the brand. Customers of Suzuki
typically switch to Toyota or Honda when they can afford a better vehicle because they are
aware that the quality, they are getting for the price they are paying is not justified. However,
Pak Suzuki may improve their customer loyalty by enhancing their quality. By performing in-
depth research utilizing their CRM system and reinforcing by fixing the areas where consumers
appear to be experiencing problems, the firm can be more client inclusive in the process of
offering them exactly what they desire. Furthermore, rewarding and acknowledging customers
that make consistent engagement with your company is one of the finest methods to keep the
connection going. A loyalty program is an excellent method to remind your loyal consumers that
you value their presence and want them to return.

Before launching a product in the Pakistani market, Pak Suzuki does not conduct extensive
research. Embracing technology is one of the most successful ways. Machine learning and other
technologies can be utilized to improve R&D decision-making. Throughout the R&D process,
for example, documents must be submitted, and the process might be automated to free up
personnel to work on more difficult duties. The companies may petition the government for
assistance in boosting R&D. Increased government infrastructure expenditure would serve to
spur high-tech development in the private sector while also serving as a long-term investment.

Suzuki consumers frequently express dissatisfaction with the product quality. The amount of
money people spend does not correspond to the quality of coverage they receive. Honda delivers
the highest possible quality to its customers, and the company has established a strong brand
image in terms of product quality. Suzuki is also behind Toyota in terms of quality. They may
price more, but they provide exactly what they promise. Suzuki may encourage suppliers to
spend in R&D in order to produce higher-quality goods with longer durability. Suzuki should
concentrate on the fundamentals, such as features, comfort, and fuel economy, and work on
perfecting them. If they want to commit to quality, they must first define what quality is and then
track their mistakes properly. After that, they may invest in training that covers a variety of
topics. For starters, Pak Suzuki may implement a new-employee initiation program that teaches
employees to prioritize quality concerns from the outset. The company may also use quality
circles, which may be an efficient technique to detect and fix problems by grouping personnel
into quality circles. Simply described, quality circles are groups of employees that are
encouraged to evaluate processes and provide recommendations for improvements in order to
increase quality, efficiency, and productivity.

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Inbound logistics
Inbound Logistics refer to the way (process) though which the raw materials are received and
warehoused in a company. Suzuki’s inputs (raw materials and purchase components) include
Plastic Sheets, Tires, Aluminium, Airbags, Steel, Leather, Plastic, Windshields, and many other
things that are essential in manufacturing a car. There are three important characteristics of the
Inbound Logistics system of Suzuki Pakistan;
Although Suzuki motors have traditionally been keeping inventory to avoid being of stock out,
but they have recently shifted their focus on Just in Time (JIT) approach. This approach of
supply chain management aims to reduce the costs by moving the materials only when its
necessary, along with this the costs are reduced because the system requires less inventory to
keep the process running and requires less warehouse sizes. The challenge this approach
provides is that it is W1 not effective in case of any fluctuations in supply and demand, causing
disruptions to manufacturing processes. To deal with the challenges the “Just in Time” supply
logistics provide, Suzuki has S1 opened a new plant in Pakistan worth 450 Million, by making
sure there is less physical distance between different suppliers, now the production of vehicles
will be done at a much faster pace and at the same time ensure low costs (of production) while
the cars will be delivered early which will also satisfy the customers.
S2 Suzuki has an effective Enterprise resource planning (ERP) system to manage the daily
activities such as accounting, procurement, and supply chain operations. They have developed
real-time dashboards for the logistics department (to illustrate product availability and its
movement at a particular location), along with this proper training is provided to different
employees in interpreting and understanding the data processed in the software. The suppliers are
connected in the digital information network (which displays information related to orders and
deliveries), because of this they have been able to reduce both the inventory levels and total time
required to supply different components.
Suzuki has implemented Tiering of suppliers which is a pyramid structure of supply chain with
final product manufacturer at the top, this final product manufacturer called OEM, which means
Original Equipment Manufacturer. Underneath the OEM are suppliers of modules and systems,
and underneath them are component suppliers who buy goods from the part suppliers. This
structure ensures efficiency and effectiveness in the process of production of automobiles.

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The relationship between these tiers is complex and is illustrated in the diagram below:

The number of suppliers increase as we go down in the Tier level (there are less number of
module suppliers compared to the number of part suppliers) therefore the power and influence of
high tier suppliers is more than that of low tier suppliers.
Operations:
Suzuki motors handles its manufacturing operations in the best way possible, they are known for
the reliability of their products which is a proof of their efficient operations. The manager told us
that in the time of Covid-19, rigorous training sessions were conducts in regards to SOPs and
compliance of safety culture was followed across the board. And to better equip employees with
any unexpected situations, daily incident reviews/testing and learning/sharing was done at sites
along with more structured ERP drills. Each car was tested before it is supposed to leave the
factory and be delivered. The production facility consist of perfectly integrated plants with
flexible assembly lines located in Karachi. Suzuki Pakistan also has a strong focus on making its
operations and manufacturing as environmental friendly as possible. S3 They have had great
success with their initiative to install environmentally friendly solar energy units at its various
locations across Pakistan, where feasible. After success in this initiative, they are trying to
implement in all of their plants and even in their showrooms. W2 A problem remains that the
operations are not future oriented (not focused on addressing uncertainties) but more on making
the current system as effective as possible. Pak Suzuki also utilizes "lean manufacturing" concept
drawing inspiration from its parent company Suzuki Motor Corporation. Lean manufacturing is a
approach to production that that places importance to focusing on minimization of any waste in
manufacturing process while maximizing productivity at the same time. In this case waste refers
to anything that customers do not perceive adds value and are not willing to pay for. After

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implementation of this concept in the operations and manufacturing process significant growth
(around 22%) in sales have been observed.
Outbound logistics:
Outbound Logistics refers to all the activities involved in getting the finished product to the
buyer including collecting, storing, distributing, order processing, etc. After the vehicles are
produced, they are either sent to the Showrooms of Suzuki (which are in various locations all
over Pakistan) or are sold directly to the B2B buyers. The B2B buyers include car rental
companies, Airport Metro, etc. Suzuki is proud in the fact that they have S4 the largest
distribution network in Pakistan (compared to other automobile companies), there are currently
total 74 dealers of Pak-Suzuki which are strategically spread all over Pakistan and are providing
customers with premium quality and experience. But unlike the Inbound Logistics of Suzuki,
W3 there is a lack of data driven decision making when it comes to the Outbound Logistics of
Suzuki, even though the choices of which vehicles are placed in which showroom are based on
data, they are not hyper targeted – if they utilize strategies like Conversion rate optimization
(CRO) and collect data of customers of different locations, they will have much better insights
on the preferences of the customers belonging to different areas.
Marketing and sales:
Outbound Pak Suzuki's marketing objective is to continue offering the buyers new vehicles that:
1. Reduce the buyer's cost of ownership of the cars. Suzuki has been aggressively cutting
prices of its models, the rationale behind this is to focus on offering new and upgraded
cars at low prices.
2. Address the buyer's preferences in all aspects and stages of the car ownership (Suzuki
calls this the "360 degree customer experience")

However from what it seems W4 a problem is that these are contradictory goals, every customer
prefers cars that are "high value" and high status, but if the costs associated with them are low
and just anyone can afford them they will start perceiving them as low value and low status cars.
So even though the cars would have all the features the buyers are looking for, they will be
unable to fulfill their desire for social status as the prices are not high enough for the cars to be
"status symbols". Even though Suzuki targets almost all the segments of the market. It
manufactures affordable cars such as Cultus, Alto, and Mehran (which the lower and middle
class of Pakistan can afford) and also targets the upper class as well by producing luxury cars
such as Ciaz, Vitara, and Jimny. Suzuki has a strong hold of the market when it comes to the
affordable cars but when it comes to luxury cars the sales of Suzuki are less and people prefer its
competitors over Suzuki - this can be due to the fact that Suzuki is focusing more on being an
affordable car brand instead of being a high value car brand.
S5 A good leverage Suzuki has is having a good amount of digital fan base on Social media
being the market leader of the segment of affordable cars, Suzuki has recently increased its focus
on using social media for promotions and is utilizing new features in social media like for

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example YouTube shorts. Suzuki has also been collaborating with Faysal Bank and other
institutions (and businesses like Imtiaz for example) to offer deals to the customers.
Services:
There are multiple services that Pak Suzuki provides along with the delivery of the cars, they
include (but not limited to): the inspection of the cars before delivery, after sales service, supply
of spare parts, supply of accessories, and any other services (like insurance or finance) that can
promote the sales of cars within the area for which they are appointed.
In the recent years, Pak Suzuki has increased its use of Information Technology in increasing its
interaction with the customers. S6 They have implemented a sophisticated and modern customer
relationship management (CRM) system that aims to increase customer satisfaction and
engagement. With the CRM system customer feedback is taken on a frequent basis from both
B2B and individuals to collect data on their experience in driving Suzuki cars, and in case of any
complains the team tries to help the customer, also this data is used to improve the experience of
future customers.
They offer warranty of 2 years and 40,000 km (whichever comes first). The first free service is
due at 1,000 Km or 1 month (whichever comes first) and the second free service is due at 5,000
Km or 3 months (whichever comes first). W5 This service is usually not of a high quality as
often times the customer service team is unable to tackle some complains in a proper way
causing dissatisfaction among the customers.

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Firm infrastructure:
S7 The infrastructure of Suzuki in Pakistan is based on a state of the art facility at Port Qasim
and is spread over 160 acres, it houses 3 properly integrated plants and together these 3 plants
have a capacity of over 400000 units. Not to mention that the workplaces of Suzuki in Pakistan
have gymnasiums, health care facilities, and luxury cafeterias along with daycare centers and
recreational activities for the children of the employees. Apart from that Suzuki has provided
free transport for all of its employees and they have their own pickup vans and buses, employees
having managerial jobs also enjoy the incentive of free cars for their personal use. W6 The
problem this has is the high costs associated with it, because of this the company is spending a
lot of money on the working environment of the employees on top of the salary they are paying
them. When it comes to the management infrastructure S8 Suzuki has also implemented
management information system (MIS) and other mechanisms for managing different
departments, this ensures that there is effective communication between these departments so
that their collaboration is effective as well.
Human resource management:
When it comes to the human resource management Suzuki has always believed that their human
capital is one of the most important assets they have - they have focused on hiring well educated
employees and training them to further polish their skills. They have a policy of handling their
HR issues with transparency and fairness with no discrimination. Furthermore they work towards
increasing the skills and leadership qualities their employees have through empowerment, and
challenging tasks/activities/assignments. Although the relationship between Suzuki management
and its employees has mostly been a healthy one, in 1999 there were some incidents that led to te
establishment of Pak-Suzuki Motor Company Star Workers Union [10] – W7 this union actively
bargains for better working conditions and wages for the employees of Suzuki. There is a system
of evaluation of the employees based on a quantitative measurement of their performance, they
try to align their individual performance with the goals of the organization and try to motivate
the employees by performance-based rewards and recognition. Along with this there are other
incentives for the employees to like their experience at Suzuki, these include health facilities,
luxury cafeteria, fitness centers, recreational activities, etc. Along with this Suzuki invests decent
amount of money in their training of employees and S9 have one of the best frameworks of
training them, they include In House Workshops, Visual Based Training, Outside Training,
Simulation Training, etc.
Technology development:
Even though the technology that Pak Suzuki is using is not bad compared to other manufacturers
in Pakistan, it's nowhere near as advanced as other (international) manufacturers. The prime
focus that Suzuki has when it comes to technology has always been the effective production of
reliable cars, and W8 they have not invested a reasonable amount of money in research and
development. While in the other parts of the world companies are introducing electric cars, auto
driving cars, etc. Suzuki is stuck at depending too much on the sales of the type of cars that are
considered obsolete in other parts of the world, this can disappoint its customers in the future as

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 Suzuki cars don’t have the advanced features that the competition is working on. When it comes
to automobile the companies need to innovate to survive, reduce costs, and to sustain and protect
their competitive advantage, if Suzuki continues with this short term way of thinking the future
of Pak Suzuki is definitely in danger.
That being said, they have taken some solid technological initiatives and had success:
- Implementation of Solar Panels on some of the production plants, this has contributed to
saving of the costs of electricity and made the running of its operations smoother.
- Introduction of the digital Enterprise resource planning (ERP) system to its inbound
logistics system, this has contributed a lot to making its operations effective.
- Customer relationship management (CRM) system, to have better interactions and
therefore better relationship with its customers.
There is a lot of potential for the technological development of the company if it invests more in
R&D, as a slow progress when it comes to innovation can be a disaster for the future of the
company.
Procurement:
There are many different suppliers that Suzuki deals with, they include sellers of Plastic Sheets,
Tires, Aluminium, Airbags, Steel, Leather, Plastic, Windshields, etc. The procurement
department of Suzuki actively aims to reduce the costs associated with the buying of the raw
materials, machines and components through competitive bidding and transparent processes, W9
quality is not the top priority so there are problems related to it but they make sure it’s decent.
They make sure that they negotiate as much as possible while trying to maintain good
relationships with their suppliers so long term contracts can be established and maintained. S10
Being the market leader Suzuki has a good reputation in the market so the suppliers are willing
to give a higher credit time to the company.

INTERNAL FACTOR EVALUATION (IFE) MATRIX:

Weighted
Strengths Weight Rating
Score
1 New plant (worth 450 million) constructed to reduce distance b/w
0.07 4
suppliers, making production process faster and reducing costs 0.28
2 An effective Enterprise resource planning (ERP) system with real-
0.05 3
time dashboards for the logistics department 0.15
3 The solar energy units save costs of electricity and allows them to
0.06 3
rely on their selves. 0.18
4 Largest distribution network in Pakistan with 74 dealers 0.07 4 0.28
5 Category leader with complete domination of the segment of
0.03 3
affordable cars 0.09
6 A modern customer relationship management (CRM) system 0.04 3 0.12
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7 A state of the art facility at Port Qasim and spread over 160 acres
0.06 4
with capacity of over 400000 units 0.24
8 Implemented management information system (MIS) for effective
0.03 3
collaboration between departments 0.08
9 A well designed framework of training employees 0.08 4 0.32
10 Suppliers willing to give higher credit time due to reputation of
0.02 3
Suzuki being the market leader 0.06

Weighted
Weaknesses Weight Rating
Score
1 Their "Just in Time" system is not prepared for any fluctuations in
0.07 4
supply and demand. 0.06
2 Operations are not future oriented but more on making the current
0.05 3
system as effective as possible 0.06
3 There is a lack of data driven decision making 0.06 3 0.14
4 Contradictory marketing goals - to reduce price and increase
0.07 4
perceived value at same time 0.06
5 Customer service having inexperienced employees 0.03 3 0.06
6 High costs associated with the work environment infrastructure 0.04 3 0.03
7 Union actively bargaining for increased wages of employees. 0.06 4 0.06
8 Lacking innovation, not having invested a reasonable amount of
0.03 3
money in research and development. 0.10
9 Quality is not given much priority 0.08 4 0.05
Total IFE Score 1.00 0 2.42

Suzuki has a motivated staff that puts all its dedication in order to bring something feasible for
its customers. They are committed to their work and work efficiently. Suzuki also up to date with
the technology such as solar panels and latest CRM systems.
They save a lot of money by using solar panels as their main source of electricity. They can pass
on this cost saving to their customers by lowering further prices that they are saving from
electricity or give some discounts and incentives to their customers.
Suzuki needs to focus more on spending in Research and Developments as their products do not
show much innovation. Traditional ways can only work for a certain time but then people
evolve, their needs evolve and so for their demands. So in order to maintain their dominance in
the industry and keep their customers satisfied Suzuki needs to start investing in their Research
and Development sector.
Suzuki ‘s operation systems are not as focused on the future but rather only on making the
current system as effective as possible. However, considering future opportunities they should

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extend their capacities and have a futuristic approach as this will help them become more
innovative and survive in the long term.

Suzuki has a large customer base that stays loyal to the brand however they have employed
inexperienced people who are unable to tackle customer service queries. They should come up
with effective customer service strategies and have evaluation criteria for employees of all
categories. They should also hire people with the relevant skill sets for each role as that would
protect their brand image and help them retain and attract customers. Training current employees
will empower them and be beneficial for Suzuki in the long run.

Generic strategy:
After evaluating the industry analysis as well as the internal analysis of the company, it can be
argued that the company has adopted a combination of cost leadership and differentiation
strategy to handle the competitive pressure. Suzuki is a low cost producer in the industry which
is quite obvious by looking at the value chain analysis of the company that it has remarkably cut
down the costs of the production. While the other two competitors Toyota & Honda are more
towards the product differentiation supremacy, Suzuki has been using this strategy too to
position its product offerings in a way to stand out and be different from the available
alternatives. Being the experienced brand with strong foothold, the company uses differentiation
as a tool to reduce the pressure by other brands.

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After analyzing the industrial data and internal value chain data, it can be concluded that the
most viable option for Suzuki would be to stick to being a cost leader as it has more advantages
as compared to other generic strategies. The primary objective of using this strategy is to
preserve the market leadership position through efficient value chain management. Suzuki can
overcome the weaknesses in the value chain to decrease the additional costs which would result
in the increased customer portfolio. The increased customer portfolio will get them more
business and the company can sustain while being profitable.
This strategy would allow Suzuki to expand the market share by targeting the middle class,
which makes the largest proportion of overall consumer market mix in most of the countries and
in Pakistan as well. Middle class consumers generally place high importance to the pricing factor
and cost leadership is the best strategy to cater the needs of this consumer segment.
While being a cost leader, Suzuki Pakistan would need to diversify their product portfolio by
entering into C-class or D-class segments. Recently, the response of Pakistan’s consumer
towards the SUV market showed great results. It has been raining of SUVs lately but Suzuki
being one of the market leaders could not jump into the bandwagon when it could’ve outclassed
the other companies. Increasing their product portfolio would result in increased customer base
and Suzuki pak can get the maximum out of it via their largest distribution network of 74
dealerships.
The discussion of Suzuki’s cost leadership strategy has outlined many benefits offered by this
generic strategy, such as- gaining quick brand recognition, expanding the customer base,
encouraging consumption and achieving sales targets by emphasizing over product’s
affordability and accessibility. Although, the analysis of Suzuki Suzuki’s competitive advantage
strategies highlight cost leadership as the main strategy.

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SUZUKI’S STRATEGIC POSITION & ACTION EVALUATION:

In space matrix we’ve observed that Suzuki will go for aggressive strategy. We observed the key
factors of Financial Strengths, Industry Strengths, Competitive Advantages and Environmental
Stability by assigning them values as per their importance worst to best, we calculated the score
which lead us to the decision that company will pursue Aggressive strategy.
Suzuki is one of the giants of automobile industry but still for further growth it is important to
design market development strategies. Suzuki’s strengths are low-price cars such as Mehran,
alto, cultus and have not performed well in luxury cars such as Vitara and Ciaz or SUVs. Suzuki
should turn its focus more on developing the market as it can help them in generating more sales
in their luxury cars and can help them in capturing even more market share. Suzuki has
performed greatly in market penetration in terms of their main vehicles with low end prices as

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they break the records of sales as they have no competitor in lower priced segment but Suzuki
has failed to penetrate their other luxury vehicles in the market. Suzuki Vitara and Suzuki Ciaz
are two major failures of Suzuki which require a lot of attention and different marketing tactics
to catch attention and generate sales in the market and to help the company for penetration. The
market penetration will increase its profit in the SUV and Sedan segment.
Suzuki is falling behind in terms of innovation as it has less innovated cars compared to its
competitors. Suzuki should focus more on product development and should consider the new
features that are now in demand by the customers and they should add those features in their
vehicles to provide the best quality possible to their customers. Suzuki can also introduce a new
vehicle which is different from their typical style and more towards what its competitors are
producing to gain an existing market by creating the brand identity and perception among the
customers.

Forward integration Suzuki can be that they can own its company outlet showrooms from which
they can directly sell cars and can escape the hassle to pay commission to showroom owners.

Backward integration is a form of vertical integration in which a company expands its role to
fulfill tasks earlier completed by businesses up the supply chain. Backward integration that
Suzuki can implement is that it can set up its own plant for the materials that it consumes such as
rubber, steel, engine. At present they are importing engines from Suzuki Japan but a plant can be
set up of it with ease.

Horizontal integration is when a company increases its production of goods or services at the
part of the supply chain. As for the Suzuki the horizontal integration can be by taking over Isuzu-
Dmax as it is a new company and it’s struggling with sales and are not very well known in the
market.

Suzuki can practice concentric integration as they can innovate and start making hybrid cars as
people would be very interested in switching in it because high prices of petrol are making it
very difficult for people to deal with it.

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Boston Consulting Group (BCG) Matrix:

Question Star Cash Cow Dog

Mark
Swift Jimny Mehran Liana
Alto APV
Cultus
Ravi
Bolan

Jimny is one of the cheapest and a new 4x4s on sales and as it has a low ratio box it is capable for the off
road too. If we compare with Suzuki Potohar, Jimny’s warranty is good, it has high quality materials in its
interior and external body parts. For a person it might not seem to spend 2 million to buy a 4-seater 4x4
mini jeep however it comes with a 1328c engine and hence it makes a top and only 4x4 jeep in Pakistan.

This is a Star because the NGOs, government and the private organizations which are operating in small
cities and villages for example in interior Sindh and in Central Punjab are purchasing Jimny on contract.
As the villages on most basis don’t have proper roads so Jimny is that type of car which can handle any
road situation thus it attracts those people who live in these areas. In order to make it a cash cow Suzuki
has to invest more in order to assemble it locally.

In the cash cow category, we have Alto, Mehran, Cultus, Ravi and Bolan. In this category it has
the highest sales. These vehicles have reached their development cycle and as a result the

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customers are satisfied with the current status of the product and these vehicles are fuel efficient
and they have a low maintenance cost in the short run.
People who have their monthly salaries of 20,000 to 30,000 PKR per month they mostly prefer
Mehran as it economical and also due to its size. Those people who have small businesses also
prefer Mehran due to its low maintenance cost and also it attract the people who move from bike
to car so Mehran is the first choice of the people who have a low income. Comparing to all the
categories Mehran has the highest sales in Pakistan. Alto is also a good choice for the people as
its spare parts are available and due to its 1000cc engine.
Currently Suzuki should focus on the quality of the vehicles and they should not compromise on
the cost because as the sales kept increasing so they need to come up with improvement so that
people may prefer these cars and in the long run they may have a competitive advantage amongst
its competitors.
Those people that do small business mostly in the supply chain side especially cargo services for
example, home delivery services, market delivery and TCS, they are loyal customers to Ravi.
Shehzore has some of its market share in this category but Ravi is much more famous in this
category and is a market leader in this type.
In order to be more relevant in this market Suzuki should now be focusing on improving the
quality, come up with the innovation so that when the cash cows reach a maturity level they may
start to decline so in order to stay relevant in this market and this category Suzuki should come
up with latest features or come up with a reborn version of the same cars so that they are able to
regain the market share, if they fail to do so than there is a possibility they may lose the market
share in the near future.
Pak Suzuki highest car and luxurious car was Liana. This was built in order to compete with
Suzuki’s competitors which are Honda and Toyota. If we compare Liana with Corolla and Civic
it failed because it could not capture the market and it was also not appealing to the Pakistani
customers due to its design as well. Liana replaces Suzuki Baleno in 2005 and since then Suzuki
has tried different ways and different strategies in order to establish its position however it failed.
As Liana was supposed to target SSC-A category or the high-income groups but due to the high
prices of Corolla and Civic they have a strong brand name/ its image in the market and also have
a strong customer loyalty thus Liana failed to capture the market.
The Dog category which includes Liana and APV should be discontinued as Liana is not
competing with Toyota Corolla and Honda City. APV has low sales and low market growth, its
spare parts are not easily available and the local manufacturers are not interested in making the
spare parts due to the low sales volumes of APV. Moreover, Pak Suzuki is not interested in
developing local manufacturing assembly of APV.
As Liana failed, Suzuki came up with a 1300cc car which was Swift. It had all the latest features
which includes auto transmission, power steering, central locking and Anti-lock braking system
(ABS). In Pakistan all the 1300cc cars its price range is 1,300,000-1,500,000 whereas Swift was

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introduced at 999,000. Comparing the price competition Swift has an advantage to other 1300cc
cars in Pakistan.
As it is a new introduction in the Pakistani market its local assembly been operational hence it
doesn’t have a high market share. In order to make it a cash cow Suzuki should be working on
the distribution channels, supply chain side and the marketing strategies so that people get
attracted to it as Swift is a new introduction so Suzuki should work well in order to make it
successful. Swift is a one of its kind in the 1300cc category and if Suzuki properly advertises
Swift and also make its spare parts available then there is a possibility that it can turn it into a
star and then a cash cow in the near future. However, the Swift cannot match with the other cars
in the 1300cc category due to its quality.

INTERNAL EXTERNAL MATRIX:

IFE TOTAL WEIGHTED SCORE

Strong Average Weak

3.0 to 4.0 3.0 2.0 to 2.99 2.0 1.0 to 1.99 1.0
4.0
High
FE TOTAL WEIGHTED SCORE

3.0 to 4.0
I II III
3.0
Medium EFE SCORE
2.0 to 2.99 IV V VI 2.50
2.0
Low
1.0 to 1.99
VII VIII IX
1.0

IFE SCORE
2.42
The IE matrix which is based upon the IFE and EFE analysis suggests that the company falls in
the fifth quadrant. Therefore, the company works with the “hold and maintain” strategy which
explains the idea of expansion and growth of business more towards the market but not to an
extensive level. If the company works and tries to improve its IFE and EFE, it can easily fall
under the first, second or even fourth quadrant which works on the growth and build strategy.
This can be achieved by entering into new markets since this is where the market development,
product development and market penetration becomes a strong asset for the company.

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QUANTITATIVE STRATEGIC PLANNING STRATEGY MATRIX:

R&D & Marketing tactics

innovation for Sedan & SUV
Strengths Weight AS TAS AS TAS
New plant (worth 450 million) constructed to reduce distance
between the suppliers, making production process faster and 0.07 3 0.21 2 0.014
reducing costs
An effective Enterprise resource planning (ERP) system with real-
0.05 2 0.10 1 0.05
time dashboards for the logistics department
The solar energy units save costs of electricity and allows them to
0.06 1 0.06 1 0.06
rely on theirselves.
Largest distribution network in Pakistan with 74 dealers 0.07 2 0.14 2 0.14
Category leader with complete domination of the segment of
0.03 2 0.06 3 0.09
affordable cars
A modern customer relationship management (CRM) system 0.04 2 0.08 2 0.08
A state of the art facility at Port Qasim and spread over 160 acres
0.06 3 0.18 1 0.06
with capacity of over 400000 units
Implemented management information system (MIS) for effective
0.03 2 0.06 1 0.03
collaboration between departments
A well designed framework of training employees 0.08 3 0.24 1 0.08
Suppliers willing to give higher credit time due to reputation of
0.02 1 0.02 1 0.02
Suzuki being the market leader

R&D & Marketing tactics

innovation for Sedan & SUV
Weaknesses Weight AS TAS AS TAS
Their "Just in Time" system is not prepared for any fluctuations in
0.07 4 0.28 1 0.07
supply and demand.
Operations are not future oriented but more focused on making the
0.05 4 0.20 1 0.05
current system as effective as possible
There is a lack of data driven decision making 0.06 4 0.24 1 0.06
Contradictory marketing goals - to reduce price and increase
0.07 3 0.21 3 0.21
perceived value at same time
Customer service having inexperienced employees 0.03 1 0.03 3 0.09
High costs associated with the work environment infrastructure 0.04 2 0.08 1 0.04
Union actively bargaining for increased wages of employees. 0.06 2 0.12 1 0.06
Lacking innovation, not having invested a reasonable amount of
0.03 4 0.12 1 0.03
money in research and development.
Quality is not given much priority 0.08 3 0.24 2 0.16

R&D & Marketing tactics

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 innovation for Sedan & SUV
Opportunities Weight AS TAS AS TAS
A lot of capital is required to enter in the automobile industry i.e.
0.05 3 0.15 1 0.05
approx 10-20 billion rupees.
The existing brands has a diversified portfolio, strong brand
0.03 2 0.06 3 0.09
identitites and social acceptance.
The demand for Suzuki is higher than the supply as the delivery
0.07 3 0.21 2 0.14
time for a new vehicle is about 4-5 months.
The customer is not likely to switch to public transportation due to
0.03 1 0.03 3 0.09
the convenience attached with private vehicles.
A large number of suppliers are available in the market and
therefore the inputs can be procured from multiple suppliers with 0.06 3 0.18 3 0.18
reduced cost.
The government has provided tax incentives to Pak Suzuki in
0.05 3 0.15 1 0.05
return for setting up a new plant in Pakistan.
The automobile companies have a diversified portfolio different
from the competitors. For example, Suzuki is the only giant
0.03 2 0.06 2 0.06
compant that locally produces A-segment and B-segment cars
unlike others.
The suppliers make most amount of profit from the 3 giants. 0.03 1 0.03 1 0.03
New comers in this industry have less connections, experience and
therefore they'll incur more cost and will face difficulty in finding 0.03 3 0.09 1 0.03
skillful force.
The auto-mobile industry is increasing rapidly with 4.6 % growth
0.03 3 0.09 3 0.09
rate and the customers are increasing on a daily basis

R&D & Marketing tactics

innovation for Sedan & SUV
Threats Weight AS TAS AS TAS
The customers don’t have to face any significant cost in switching
0.06 3 0.18 4 0.24
brands.
The customers are sensitive to price and can switch to competitors
0.09 3 0.27 3 0.27
if higher prices are charged.
The substitutes has no performance limitations and can outperform
0.07 3 0.21 3 0.21
the competitors and provide more value
The customers easily switch to other brands and are not loyal. 0.07 3 0.21 4 0.28
Since the company mostly imports the Inputs, higher interest rates
0.05 1 0.05 1 0.05
and freight charges lead to higher prices for vehicles.
The customers have real substitutes available and can switch to
0.05 4 0.20 3 0.15
them if they provide more value to them.
The complexity of the products is low and customers are already
equipped with knowledge, therefore it is difficult to convince them 0.06 2 0.12 4 0.24
for a purchase.
The cost of purchases signifcantly impacts on overall costs and
0.04 3 0.12 3 0.12
therefore the prices fluctuate more frequently.
High government taxes and duties have lead to a significant
0.05 2 0.10 2 0.10
increase in prices from 2017-2022.
The fixed cost of business are relatively high portion of total cost. 0.05 3 0.15 2 0.10
TOTALS 5.33 3.96

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The company should implement the first strategy (R&D and innovation) as it has scored
5.33.
The future of Suzuki clearly depends on how well it is able to adapt and innovate to stay relevant
in a highly competitive market with the latest technologies and rapid disruption, if the company
relies on just enjoying the market dominance it currently has it will lose its long term market
share as in the future the structure of the industry is going to be disrupted and is going to be
highly competitive. The new technologies like Block chain, decentralization, cryptocurrencies,
etc. are making significant impact in the world and some companies (like Tesla) have adapted
such technologies and are actively trying to be ahead of time - because this market relies heavily
on the technology it will be naïve of Suzuki to ignore the importance of innovation as this market
is full of uncertainties. An improved R&D will not only add value to the products, but also
improve the productivity of the employees and make the logistics more effective.
Suzuki Strategic Implementation:

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APPENDIX:
Annexure 1:
THREAT OF NEW ENTRANTS YES MODERATE NO
1. Do large firms have a cost or performance 
advantage in your segment of the industry?
2. Are there any proprietary product differences or 
established brand identities in your industry?
3. Do your customers incur any significant costs in 
switching suppliers?
4. Is a lot of capital needed to enter your industry? 

5. Does the newcomer to your industry face difficulty 

in accessing distribution channels?
6. Does experience help you to continuously lower 
costs?
7. Does the newcomer have any problems in 
obtaining the necessary skilled people, materials or
supplies?
8. Are there any licenses, insurance or qualifications 
that are difficult to obtain?
9. Can the newcomer expect strong retaliation on 
entering the market?
TOTAL 6 2 1

BARGAINING POWER OF BUYERS YES MODERATE NO

1. Are there a large number of buyers relative to the 
number of firms in the business?
2. Do you have a large number of customers, each 
with relatively small purchases?
3. Does the customer face any significant costs in 
switching suppliers?
4. Does the buyer need a lot of important
information?

5. Is there anything that prevents your buyer from 
taking your function in house?
6. Your customers are not highly sensitive to price. 

7. Your product is unique to some degree or has 

accepted branding.

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8. Your buyers businesses are profitable 

9. You provide incentives to decision makers? 

TOTAL 6 0 3

THREAT OF SUBSTITUTES YES MODERATE NO

1. Substitutes have performance limitations that 
do not completely offset their lowest price. Or,
their performance is not justified by their
higher price
2. The customer will incur costs in switching to a 
substitute
3. Your customer has no real substitute 
4. Your customer is not likely to substitute? 

TOTAL 0 1 3

BARGAINING POWER OF SUPPLIERS YES MODERATE NO

1. My input (material, labor, suppliers, services, etc.) are *
standard rather than unique or differentiated.
2. I can switch between the suppliers quickly and *
cheaply.
3. My suppliers would find it difficult to enter my *
business or my customers would find it difficult to
perform my function in-house.
4. I can substitute inputs readily. *
5. I have many potential suppliers. *
6. My business is important to my suppliers. *
7. My cost of purchase has no significant influence on *
my overall costs.
TOTAL 5 1 1

Rivalry amongst existing competitors yes moderate no

1. The industry is growing rapidly. *
2. The industry is not cyclical with intermittent over capacity. *
3. The fixed costs of the business are a relatively low portion of *
total costs.
4. There are significant product differences and brand identities *
between the competitors
5. The competitors are diversified rather than specialized. *

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 6. It would not be hard to get out of this business because there *
are no specialized skills or facilities or long-term contract
commitments, etc.
7. My customers would incur significant costs in switching to a *
competitor.
8. My product is complex and requires a detailed understanding *
on the part of the customer
9. My competitors are all of approximately the same size as I am *
TOTAL 3 1 5

Annexure 2:

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REFERENCES

[1] https://invest.gov.pk/automobiles

[2] https://www.globalvillagespace.com/the-recent-discovery-of-pakistan-automobile-market/

[3] https://www.pakwheels.com/blog/big-three-dominate-pakistans-car-market-yet-another-
year/

[4] https://www.thedayspring.com.pk/new-vehicle-companies-in-pakistan-causing-trouble-for-
the-big-3-automakers/

[5] https://factschronicle.com/car-manufacturers-in-pakistan-monopoly-of-the-big-three-
broken-1337.html

[6] https://en.dailypakistan.com.pk/07-May-2018/facebook-campaign-target-big-three-
pakistani-auto-manufacturers-for-high-priced-vehicles

[7] https://timesofislamabad.com/07-May-2018/why-a-campaign-has-been-launched-against-
big-three-auto-car-makers-of-pakistan

[8] https://e-syndicate.net/2019/07/11/dirty-monopoly-of-big-three-in-pakistans-automobile-
industry/

[9] https://propakistani.pk/2021/03/08/heres-the-status-of-each-new-car-company-in-
pakistan/

[10] https://www.wsws.org/en/articles/1999/11/pak-n02.html

(11)https://invest.gov.pk/automobiles#:~:text=Pakistan's%20Automobile%20industry%20co
ntributes%20 (2.8, with%20a%20growing%20middle%20class.

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