Pel's Case Analysis: An Aggressive Strategy For PEL

920 Words 4 Pages
Based on the analysis and the different matrices that we constructed the group proposes an aggressive strategy for PEL. The aggressive strategy will incorporate market penetration, product development and diversification. The company should use market penetration strategy as currently PEL has a low marketing budget and does not promote its products. So the company should go in to market penetration. Secondly the company should adopt product development strategy and should introduce new products like LED and washing machines. This will expand the existing product range of the company. Finally the company should get in to diversification and more probably related diversification. PEL tried to do unrelated diversification and introduced smart …show more content…
It should invest more in the promotional and marketing strategies in order to increase the brand awareness among the consumers about the products. As more and more people will get to know the brand this will increase the sales of the company and in turn increase the profit margins of the company.
The company should try to reduce its employee turnover. PEL’s employee retention is very low. The company should provide more incentives to their employees like bonuses, promotions and other fringe benefits so that the employees are satisfied with their job and that with lead to a an increase in the productivity of the employees.
The company’s financial performance has improved in 2014 financial year as compared to 2013. This year turned out to be an excellent operational period. Revenue increased by 28% i.e. Rs.24.125 Billion against Rs. 18.856 Billion of the Preceding Year. Home Appliances Division of the Company achieved its Planned Volumes and Power Division also contributed well towards Volume Growth. Due to wide ranging R&D, decrease in importation cost and cost control measures the Company achieved a substantial growth in the Gross Profits of Rs. 2.254 Billion, which is 56% over the last
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2.241 Billion in 2014 against Rs. 607 Million of the previous year. This was due to better product margin and increased volumes. Earnings per share were Rs. 6.61 as compared to Rs. 3.01 per share in 2013. During the year the Company raised equity by issuing Right Shares worth Rs. 2.064 billion at 10% just to benefit the shareholders. 2011 fiscal year was a challenging year for the company with declining profits but since 2012 it has been experiencing high profit margins. In 2013 the net profit margins were 3.7% whereas in 2014 the percentage rose to 10.9%. The company has been able to achieve the increase in profits due to high revenues but the expenses for the company are increasing and the finance cost is also increasing. Gross profit on the other hand3 is also increasing that has resulted in high NP ratios. The increase in GP margin is due to a fall in the cost of sales from 58% in 2013 to 52% in 2014. Overall PEL is a profitable

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