Internship Report

ACKNOWLDEGMENT
Firstly, I am very grateful of the most merciful, most beneficial and mighty Allah because without His help I was totally feeble to complete my internship program.

Internship Report On

Pakistan Steel
I am also thankful to the management of Pakistan steel who provided me this chance of internship in such a big industry through which I got insight practical knowledge of working in any organization. Besides I would also thanks to Pakistan steel officers whom I met and got useful data for preparation of my internship report.

Now I will thanks to my instructor of MKTI619 from the core of my heart who makes this internship essential for me so that I may gain and learn something from practical
experience and in the end test myself from a learner point of view. In the end I can never forget my family and friends whose support gave me the confidence and make me able to meet the challenge.

Page i

Internship Report

EXECUTIVE SUMMARY
As per the academic requisite for completing Masters of Business Administration (MBA), in University students are required to complete 6 to 8 weeks internship with any reputable organization with the purpose of an in-depth practical knowledge of the specialization they opt for discipline of Business Administration. As I did my internship in Pakistan Steel, the largest industrial complex in Pakistan, this report will provide comprehensive insight functioning information about this. Pakistan Steel, the leading steel industry established in 1973 with the aim of supplying the best quality steel products in order to survive and achieve a self-reliant and vibrant economy. Since field of my specialization is marketing, major portion of my report consists on marketing operations, marketing strategies, sales methodology and customer service. In the end I also tried to conclude my report and give some recommendations which are important to pay attention in my point of view. Chapter 9 and 10 of my report cover the critical and SWOT analysis of Pakistan steel respectively. In critical analysis I tried to relate the theoretical concepts with the practical experience which I got in Pakistan steel. While in SWOT analysis I discovered internal strengths and weaknesses of Pakistan steel as well as external opportunities and threats it has to face. Pakistan steel is very big industry and has very large and useful data. I tried my level best to visit the important departments related to my field and get complete information about them. I am sure that this report will be beneficial for the readers who want to know about Pakistan steel especially from marketing perspective.

Page ii

Internship Report

TABLE OF CONTENTS (a)

Chapter 1 OVERVIEW OF THE ORGANIZATION Brief history Nature of the organization Products List of main clients List of main competitors Chapter 2 ORGANIZATIONAL STRUCTURE Organizational hierarchy chart Number of employees Introduction of departments Comments on organizational structure Chapter 3 PLAN OF INTERNSHIP PROGRAM Brief introduction of branch/head office Dates of Internship Departments in which I got training Duration of training Chapter 4 TRAINING PROGRAM Assignment #1 Assignment#2 Chapter 5 STRUCTURE OF MARKETING DEPARTMENT Department hierarchy Number of employees Marketing operations Chapter 6 FUNCTIONS OF MARKETING DEPARTMENT Page1 Page 1 Page2 Page2 Page3 Page4 Page5 Page5 Page5 Page5 Page6 Page8 Page8 Page8 Page8 Page9 Page10 Page10 Page12 Page15 Page15 Page15 Page15 Page18

Page iii

Internship Report

Segmentation strategy Target market strategy Product planning, development and management Positioning strategy Pricing strategy Distribution strategy Promotional strategy Chapter 7 SALES DEPARTMENT Department hierarchy Sales operations Sales methodologies Priority in sales Sales return procedure On-line computer sales system An overlook on the sales of previous year Chapter 8 (a) (b) (c) (d) CUSTOMER SERVICE Critical analysis SWOT analysis Conclusion Recommendations References Annexes

Page18 Page18 Page19 Page19 Page20 Page21 Page22 Page23 Page23 Page23 Page24 Page27 Page27 Page27 Page28 Page30 Page33 Page35 Page38 Page39 Page40 Page41-46

Page iv

Internship Report

TABLE OF CONTENTS (b)

Tables
1 2 3 4 5 6 Page3 Page4 Page5 Page16 Page25 Page29

Figures
1 2 3 4 5 Page15 Page22 Page23 Page28 Page29

Page v

Internship Report

Chapter: 1

OVERVIEW OF THE ORGANIZATION

Brief History: After independence in 1947, soon it was realized that for Pakistan it would be impossible to survive as an independent country without the possession of a self reliant iron and steel making plant. The initial idea for a domestic iron and steel mill was put forward in the five first year plan of Pakistan (1955-1960). In 1968, at the very first time the Government of Pakistan decided that the Karachi Steel Project should be sponsored in the public sector, for which a separate Corporation, under the Companies Act, be formed. As a result on the 2nd of July, 1968 Pakistan Steel Mills Corporation was setup as a private limited company in the public sector in accordance to the Companies Act of 1913, with the objective to establish and run steel mills at Karachi and other places in Pakistan. No doubt initially no country supported Pakistan for such a big project. At that time USSR was the first who agreed to prop up the project and in January, 1969, Pakistan Steel concluded an agreement with V/O Tiajproexport of the then USSR for the preparation of a feasibility report into the establishment of a steel mill at Karachi. Subsequently in January, 1971 Pakistan and the USSR signed an agreement under which the latter agreed to provide techno-financial assistance for the construction of a coastal based integrated steel mill at Karachi. The foundation stone for this gigantic project was laid on the 30th of December, 1973 by the then Prime Minister Mr. Zulfiqar Ali Bhutto. Pakistan Steel did not only have to construct the main production units but a host of infrastructure facilities involving unprecedented volumes of work and expertise. The construction work on the main plant started in 1976. Among the main complexes/units of the project, the first coke oven battery was commissioned in April 1981, the first blast furnace in August 1981, the billet mill in October 1982, the two converters, one bloom caster and two slab casters of steel making department between December 1982 and November 1983, the hot strip mill in
Virtual University Page 1

Internship Report

December 1983, the second blast furnace in August 1984, cold rolling mill in December 1984, the second coke oven battery in May1985 and the expansion project billet caster in November 1989. The project was completed at a capital cost of Rs. 24,700 million. The completion of the steel mill was formally launched by General Zia-Ul-Haq the then President of Pakistan on the 15th of January 1985. Today Pakistan Steel is the country's largest industrial undertaking having a production capacity of 1.1 million tones of steel. The enormous dimensions of the project can be visualized from the construction inputs which involved the use of 1.29 million cubic meters of concrete, 5.70 million cubic meters of earth work (second to Tarbela Dam), 330,000 tones of machinery, steel structures and electrical equipment. Its unloading and conveyor system at Port Qasim is the third largest in the world and its industrial water reservoir with a capacity of 110 million gallons per day is the largest in Asia. A 2.5km long sea water channel connects the sea water circulation system to the plant site with a consumption of 216 million gallons of sea water per day.

Nature of the organization: Pakistan Steel Mills is the countrys largest industrial complex works under the ministry of production in private sector and is producing steel and other by-products which are then used for manufacturing of other products like steel pipes, tubes and LPG cylinders etc.

Products: Main products o Coke o Pig Iron/hot metal o Cast Billet o Rolled Billet o Hot Rolled sheets/coils
Page 2

Internship Report

o Cold Rolled sheets/coils o Galvanized sheets/coils By products o Coal Tar o Ammonium Sulphate o Blast Furnace Granulated Slag o Blast Furnace o Solar energy o HMLR/ SMLR

List of main clients: There are two types of clients (customers) steel mill dealing with, one is traders and the other is consumers. Traders are those who dont have fixed demand, their demand depends on the demand of other steel goods as they do further selling. While consumers are those clients who make their own utilization, they have demand of fixed material. Recently steel mill has 1076 clients at all, but this figure is not fixed it varies from time to time. Following are some of the recent clients of steel mill: Traders dealers: Company name Mohid Enterprises Field of Business Marketing of Pakistan steel and main products Jillani Enterprises Ahsan Brothers Trader Dealer of HR, CR, GP, Billets and MS Sheets Shahrukh & company Dealer of HR, CR, GP, pig Iron and MS Sheets M/S Hafiz Muhammad Sharif & co. Trader/Dealer
Table 1

Page 3

Internship Report

Consumers dealers: Company name Zeenat steel mills Imran price mills (pvt) limited Field of Business Manufacturers and sales of pipes Manufacturers of steel pipes, tubes and profiles Rizwan industrial crops (pvt) limited Manufacturers of steel pipes, tubes and profiles Pioneer steel mills CABA enterprises (pvt) limited Manufacturers of MS &GI pipes Manufacturers of tractors parts
Table 2

List of main competitors: Pakistan steels do not enjoy any direct competitor in Pakistan of as such image. But it doesnt mean that it has monopoly in steel industry because there are many small industries which are making steels and steel product with scrap, for example Waleed Junaid Industry and M.S. Foundry. On the other hand international competition is on the ground. It has to face competition from India, China, Iran and Russia.

Page 4

Internship Report

Chapter 2

ORGANIZATIONAL STRUCTURE
Steel Mills Hierarchy chart: Hierarchy chart is placed in annex (i), pg# 41 Number of employees: (As per record of 31st may 2010) Officers Staff/workers Employees on contract Total 5858 6059 5297 17214
Table 3

Introduction of departments: As it is a huge project, there are 94 departments including all zonal offices come under its hold. List of all the departments can be exemplified from annex (ii), pg#42. Following is the brief introduction of some of the main departments: Marketing department: Marketing department of steel mill is not only responsible of developing marketing plan but it is also responsible of designing sales policies. It also handles all type of customer related issues. Directly interacting with customers, providing them all updates, and making sales and marketing policies accordingly are the responsibilities of marketing department. Moreover it is geographically subdivided into different zones in five cities of Pakistan. The purpose of its sub division is the nationwide coverage of its customers. Personnel/HR department: The personnel department is responsible for dealing/ maintaining personal files of all officers and workers from general managers to grade-I (workers). However there are separate sections for officers and workers for dealing them. It takes care of all issues from recruitment and selection to retirement of employees including discipline related issues.
Page 5

Internship Report

Amendment/preparation of the service rules is also the responsibility of this department. It also has to face any query from outside agencies like National Assembly, correspondence with Ministry of Industries and replies to Prime Minister/ Presidents Secretariat according to their questions. Production Planning and Control (PP&C): The department works for planning and controlling the overall production of the products in Pakistan steels. When marketing department present its monthly demand to PP&C, it starts to plan the production of each product with respect to its size, quantity and quality and other requirements as well and informs to concerned production unit/department. PP&C is also the control unit of Pakistan Steels who keeps the record of raw material, under process and finished material and control overall production. Purchase Department: The department is responsible of whole process of procurement. It maintains and keeps record of procurement files of all users from all departments of Pakistan steels. From generating a need of purchasing something, either it is a small ball point or a big conveyer belt to making the purchase order, purchase department is record keeper of all the activities performed between these two ends. We can say that it coordinates all the departments as well as their activities including in procurement process. Finance Department: Finance department is responsible to manage the financial resources of Pakistan steel in efficient way to run the industry smoothly without any interrupt. This department tries to raise the funds in lower rates. The main functions of finance department include scrutiny of purchase material, manage cash in-flow and out-flow of the industry and keep the record of the same, make projected budget on monthly, quarterly and annually basis.

Comments on organizational structure: Organizational structure is the formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational

Page 6

Internship Report

goals. Since Pakistan steel is a huge complex, it is necessary to direct its structure in a correct way so that desired results can be achieved. If we start to pass comments on structure of Pakistan steel, we examine that it is divided into functional departments which are grouped on the bases of similarity of work activities e.g., marketing, accounting. The centralization of authority and responsibility of decision making is in the hand of top level management. Decision making is also done by some permanent and ad hoc committees, comprised on middle or top level management. However the structure follows a chain of command that is a continuous line of authority starts from upper organization levels and ends with the lowest levels and clarifies who reports to whom. As per government organization, its structure is much formalized but implementation of rules and regulations depends on the political structure of the country. As regard as span of control concern, it varies from department to department. In some departments there is a narrow span of control while the others have a wide span of control. As I personally observed span of control depends on the quantity of work which each department do.

Page 7

Internship Report

Chapter 3:

PLAN OF INTERNSHIP PROGRAM

Introduction of the branch where I did Internship I did my internship in Pakistan steel located 40km south east of Karachi in close vicinity to port Muhammad Bin Qasim. It is a Metallurgical plant for which planning was started in 1968 and project was fully completed in 1984. Spread over an area of 18,600 acres (29 square miles) with 10,390 acres for the main plant, 8070 acres for the township and 200 acres for the water reservoir Pakistan Steel is Pakistan's largest industrial complex, comprising overall 88 departments in which 11 are major departments (play major role in production) and 35 supporting departments who provide assistance in overall production, e.g. water and power supply. Pakistan steel has an integrated structure between its main plant and administration. The industry is being headed by C.E.O Malik Asrar Hussain since March 2010. It specialize in the production of flat steel products including, billets, slabs, hot rolled coils, cold rolled coils, galvanized sheets/coils/formed sections and corrugated sheets. It is providing high quality and cost effective steel which is consumed in giant buildings, bridges, railway and other large projects in whole country.

Dates of my Internship Starting date: 21st June 2010 Ending date: 30th July 2010

Departments in which I got training I got training in six departments. Name of departments are as follows: 1. Marketing 2. Personnel/HR 3. Purchase 4. Public Relations
Page 8

Internship Report

5. Cost Accounts 6. Finance

Duration of Training The duration of my internship/training program was six weeks.

Page 9

Internship Report

Chapter 4

TRAINING PROGRAM
I would like to mention one thing here in this chapter that Pakistan Steel is very big industry, the working done here is confidential and all employees must be very responsible. Keeping in view this situation, they dont allow internees to work with them. But after profound request, they permit me to do some work with them under their instructions.

ASSIGNMENT#1
I did some PC working in research and dealer section of marketing department: Activities/Operations of Marketing department: This department executes all types of marketing activities from market analysis to selling the products. Some of their activities are done on timely basis e.g. preparation of sales statement, marketing report; while they do some tasks on request of management may be internal or external. It has also four sub sections whose detail is in chapter 5 of the report. Following are the activities performed by marketing department as a whole: To study various journals and newspapers to find the useful data for developing marketing strategies. Determine demand of Iron and steel in domestic as well as international markets and fluctuations of prices thereof. Prepare market reports on quarterly and annual basis. Monitor the needs of the market and anticipate the future demand. Make projected budgets on 70, 80 and 90% capacity. Maintain up-to-date records of commercial dispatches of Pakistan steel products. Prepare daily and monthly sales statements. Keep track history of Pakistan steel products. Keep computerized record of finished material

Page 10

Internship Report

Maintain up-to-date record of traders and consumer dealers of Pakistan steel (Zone wise). Reply the queries received from customers, Government agencies, Internal and External Auditors and Ministry of Industries and Production.

Task assigned to me: I worked in marketing department on MS Excel and MS word. During one week I was given much of little tasks of data entry and calculations. I did sorting and formulating of data and drew tables on MS excel. Besides this I also learnt how they update their dealers statement by adding new ones and deleting terminating dealers (zone wise) on timely basis. Out of these tasks I would like to talk about one assignment in which I assisted Mr. Sohail Dy. Manager (dealership) for three to four days. Assignment Objective: To answer the external query that Pakistan steel sold their products on prices which were less than the prices of imported products in Jan 2006. Data sources: Internet Daily List of Imports (KAPR, KOIL) value in use published by daily list section, Pakistan Revenue Automation (Pvt) Ltd, custom house Karachi Mode of data entry: MS excel Products produced and sold by Pakistan Steel: Items Pig Iron Billet Hot Rolled Products Cold Rolled Products Plated or Coasted Flat Products
Page 11

code 7201 7207 7208 7209 7210

Internship Report

My task was to enter the prices of imported items of above mentioned codes with their respective quantities in MS excel. These prices were taken from the daily list of imports. The total no. of product item was about 1000 to 1200. Then I sorted the whole data with respect to price and calculated average quantity of each product with same price.

ASSIGNMENT#2

I also worked in purchase department under the supervision of Mr. Naeem-ul-Hassan, Dy Manager (CP-1). Activities/Operations of Purchase department: As I discussed earlier that purchase department is responsible of whole procurement process in Pakistan steel which is done according to the PPRA (Public Procurement Regulatory Authority) rules. Annually about ninety percent of the whole purchase in Pakistan steels is completed with publishing the purchase tenders in press. While the ten percent is spot purchase which is made directly. Since the department is responsible of all the procurements from whole Pakistan steels, it is divided into eight sub sections in which five sub sections (CP-1, 2, 5) involve in purchasing of specified material. While the other three are supporting sections: TOC (tender opening cell) responsible of opening the purchase tenders on mentioned date and time, SPC (spot purchase cell), involves in emergency purchase and CMS (contract management system) handle legal issues regarding to purchase.

Following are some activities which are performed by purchase department in whole procurement process: Alot the case no. to any purchase case
Page 12

Internship Report

Make and get the approval of tender from management Publishing the tenders in press as well as on websites of Pakistan steels and PPRA Open the tenders on mentioned date and time Noticing all important points during the tender open session Formulate purchase proposal with the approval of chairman Finally issue MRV( material receiving voucher) to the supplier

Task assigned to me Objective: Making a draft of purchase proposal after reading the procurement file of item: copy printer code: 020000030. Assignment: Following are some terms which are needed to analyze for making a purchase proposal: Intend: It is a formatted list of items with specification of each item and estimated value/amount to be purchased Intender: The department who make the intend after receiving the demand of material from user department Type of tender: There are two types of tender: FOR (Free on Road or Railway) it is also said to be local tender, the other is C&F (Cost and Freight) or tender for imported items Bids: Offers come from different companies or supplier Mode of procurement: either purchase is made through publishing the tender in press or it is made directly in case of emergency LPP: It is the last purchase price of the item Quoted price/CTP: The actual price of item TEC: Technical Evaluation Committee check out the specifications of the items offered by supplier with that of desired specifications TOC: There are three tender opening committees, low value, middle value and higher value. Tenders up to 3 million are handled by low value committee, up to 10 millions by middle value while tenders above 10 million are treated by higher value committee.
Page 13

Internship Report

RRC: Rate Reasonable Committee works if there is more then 10% deviation in actual price from last purchase price

Page 14

Internship Report

Chapter 5:

STRUCTURE OF MARKETING DEPARTMENT

Department hierarchy:

Fig. 1

Number of employees: Total no. of employees in marketing department is 96 in which 72 are officers and 24 are workers.

Marketing operations: Dealership The first operation of marketing department is dealership which is performed by dealership section. Since steel mill only deals with registered clients so for becoming a client, one must sign a dealership contract with steel mill for further processing. The customers are awarded dealership after through security, judgment of credibility, past performance and income tax record. For this clients can contact with customer service section of marketing department or any zonal office.
Page 15

Internship Report

Types of dealership: There are two types of dealership, trader dealership and consumer dealership. In both types there are some terms and conditions which clients have to fulfill. For consumers it is necessary to give an idea about his factory products, no. of employees, no. of machinery used, area of factory, GST, NTN and bank a/c etc. Similarly traders need to illustrate office staff, GST and NTN. After verification of all the mentioned details a Performa is signed by the client, whole procedure is completed with approval of chairman; pay order submitted in sales account department and then a unique code is issued to the client from here. Categories of dealership: Categories A B C Products By-products Long products(billets) Flat products(HR,CR,GP) fees 150000 250000 400000
Table 4

It is not necessary to register for all categories. It depends on the capacity of business of clients. Eligibility: Conditions for becoming the clients of Pakistan steels: i. ii. iii. iv. All the requirements must be completed. One client or one person can only sign one dealership contract. No customer shall hold "Consumer" and "Trader" dealership(s) at the same time. For partnership there should be valid partnership agreement for demonstration.

Data Coordination: Data coordination cell keeps the record of all customers on one hand and saleable material (products) on the other. It basically coordinates inside data with that of outside i.e. customers demand and production and then in the light of this information it makes
Page 16

Internship Report

month wise marketing plan. It has a big computer based system which helps in coordination of data.

Research: Research section is very demanding section of marketing department. It has to remain active all the time in getting latest information about the demand, supply and prices of raw material as well as finished products. So it has full time coordination with international markets, local markets and zonal offices of steel mill. Declaration of immediate change in prices is the responsibility of research section in-charge. Research section also remains busy in study different business magazines for preparing the reports on ongoing and changing patterns of trends in market and then responsible to discuss these with management. Business Magazines considered by research section: i. ii. iii. iv. Metal Bullet in Metal Experts weekly Minerals and Metals review Minerals and Metals weekly

Customer service and sale: Customer service is the backbone of marketing department. Direct dealing with customers, listening complains, giving advices to management for any issue regarding customers etc. are the functions of this section. Similarly it also handles sales related issues; making sales policy, analyzing low or high sale in some period of time. Moreover four sub sections also come under this section; each for a separate product line and keeps selling record of the same product. Making any immediate sale plan is the responsibility of sales section. So it has to analysis sales record on daily and timely basis and for this purpose it has to coordinate with all zonal offices of Pakistan steels.

Page 17

Internship Report

Chapter 6

FUNCTIONS OF THE MARKETING DEPARTMENT

Before going to define different functions /strategies that Pakistan steel adopted to manufacture, market and sale its material it will be beneficial to know what the marketing strategy is. Marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objectives. Pakistan steel deals with some common strategies in manufacturing and marketing its products. One more thing which is better to enlighten here is that making strategy is not only the responsibility of marketing department. Data here in this section is collected from some other departments also which are public relation, PP&C (production planning and control) and PSPS (Pakistan steel product store). Following are some marketing strategies of Pakistan steel:

Segmentation strategy Organizations may be small or big, government or private, product or service may not be able to serve each customer from any corner in the world. Keeping in view this statement organizations divide whole market into different groups of buyer with different needs, characteristics or behavior who might required separate product or separate pattern of service. There is not a single way to segment the market. It can be segmented according to different variables, e.g. geographic, psychographic, demographic and behavioral variables. Pakistan steel chose geographical segmentation strategy to maximize its business. It established five zonal offices in five strategic cities of Pakistan which are Karachi city, Islamabad, Lahore, Peshawar and Gujranwala and is going for launching another office in Quetta. The purpose of this segmentation is nationwide coverage of its customers.

Target market strategy

Page 18

Internship Report

After defining many segments company can enter one or many segments of a given market. For this purpose it has to evaluate each segment and chose those segments which are more attractive and able to generate the greatest customer value and profit. As Pakistan steels doesnt deal with unregistered customers so it target those customers in the segment which fulfill all the requirements of registration or dealership and finally register with it. We can say that it is somewhere in between concentrated (very narrowly) and undifferentiated (very broadly) marketing because it deals in different geographical areas but only with registered customers.

Product planning, development and management strategy Product is what customer pays for. It satisfies customer need. Therefore it should be such that consists of features demanded by customer. Pakistan steel also takes care of its customers demand. However it will be better if we talk about production planning instead of product planning and development because it has resemblance in name of department where this planning is actually done i.e. Production Planning and Control or PP&C. PP&C plan and manage the overall production of Pakistan steel. It provides month wise production schedule to each production unit which is prepared according to demand. In Pakistan steel every product has some specific grade and size so planning for each product is done with respect to these features. Quality is one of the most important elements considered in all production levels i.e. from raw material to finished material. Product is tested in intermediate and finished level in engineering lab. All main and by-products are basic in their features; no development is done on product side. However PP&C controls the production in sense that which grade of product is demanded more, the production of that grade grow to be high otherwise it befalls low.

Positioning strategy Positioning strategy is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target customers. Position is very
Page 19

Internship Report

central to having the right strategies at work to achieve overall business goals. In other words the thirst of the concept of positioning is to something effectively with what already exists in prospects mind and then capitalize on it. Being the largest and only steel mill of such a repo, Pakistan steel enjoys a good position in steel industry in Pakistan. Target customers have a valuable and credible place in their minds for its products as they consider Pakistan steels good image and government involvement in its running. If I talk about the slogan of Pakistan steel, Building the Nation, Serving the Nation it will be clearly realized that positioning strategy of Pakistan steel revolves around the nations mega projects. Its products are utilized in construction of bridges, building shopping malls, railway etc. No doubt some small steel goods making industries use its main and by-products. But the main focus of its positioning is to encourage giant projects in the country.

Pricing strategy Price is the only element which generates revenue for the company. So for a successful business it is necessary to set the prices of its product after very considerable efforts. Any up and down falls can cause major loss for the business. Pakistan steel basically follows market-based pricing strategy. For this purpose it has to keep touch with the rates in international and local markets. But it is not the only way to set its prices. It also considers many other elements which are as follow: i. ii. iii. iv. v. vi. vii. Market conditions Market acceptance Protection against imports Competitors Landed cost of Imported Material Production and quality range Cost of production

Page 20

Internship Report

After consideration all these elements price fixation committee which comprised of following members set or change the price. i. ii. iii. iv. Chairman Director Corporate Planning Director Finance Director Marketing

As Pakistan steel is a huge complex and has very large no. of expenditure it has to notice any immediate change in any of the above mentioned element and change the prices accordingly otherwise it has to bear unpredictable loss.

There is fixed price of every product according to its width and length. No discount is offered to its consumers. However 1.5% commission of total contract is given to its trader dealers. Since By products dont incurred any cost of production, their prices are totally market based. This is the pure profit for steel mill. Price tenders: Price tenders are published for waste materials kept in waste yards. Then the procedure of bidding is followed, highest value bid is agreed upon and material is sold.

Distribution strategy Distribution is basically availability of product for the customer. Organizations may use different channel members to make their products close to the customer and these channel members no doubt can add value for the producers in terms of negotiation, promotion and information. But some organizations dont have any intermediary or channel member in between. They sell their products directly to customers. Pakistan steel follows both types of distribution strategy. It sells its products to both consumers and traders who then sell them to ultimate consumers. Therefore its channels are simple as well as complex too and looked as:

Page 21

Internship Report

Pak. steel

Consumer

Pak. steel

Trader

Consumer
Fig.2

However customers either consumers or traders from any corner are required to have their own transportation. Then after security checking customers can lift their material from PSPS (Pakistan steel product store) department, main branch of Pakistan steel.

Promotional strategy Organizations use different strategies to promote or make known their products to general public and target customers. For this they have different objectives in front of them. Some want to increase their sale and some simply willing to be informed others about their products/services. So they select different strategies according to their objective. Pakistan steel doesnt have such product promotional strategy. However it remains engage in building good image of its business/organization through electronic and print media. And for this it has a separate public relation department. It involves arranging different types of institutional and professional visits, periodical (house general AlHadeed) and non- periodical (calendars, Eid/seasons greeting cards, posters) publications and exhibitions. It also arranges news release about Pakistan steel so that general public and target customers have good opinion about the industry.

Page 22

Internship Report

Chapter 7:

SALES DEPARTMENT
Department Hierarchy: Sales department is not a separate department in Pakistan steels. It is a section of marketing department. Then it also holds four sub-sections under it with each subsection are responsible of keeping sales record of separate product.
GM (Marketing) Cust. Service& sales section

Billets Section

Hot rolled section

CR/GP Section

By-Product Section
Fig.3

Sales operations: In order to sell Pakistan steel products profitability & in a reasonable manner under the directive / guidelines of marketing department sales department/section is responsible of following operations: Making sales plans on monthly bases keeping in view the current sales In case of any emergency, responsible of making immediate sales plan and hence prepare for additional production plant if needed Check out sales policies time to time and make desired amendments in them If sale in any period of time dont achieve the target, find out the reasons behind low sales, getting feedback from the market Coordination with all zonal offices of Pakistan steels Study the dispatched of the day and dispatched of the month

Page 23

Internship Report

Study the quantity of DO delivery order product wise and also remaining balance of the same Make the production according to demand

Sales Methodologies: To achieve targeted sales directed towards attaining organizational objectives, a broad based sales policy is adopted which provides the guidelines for the selling methodologies. The Sales policy of Pakistan Steel Products is prepared with immense care and dynamism, keeping in view the customers demand and market condition and is also based on past experience and achievements. It reflects the plus points of the previous Sales policies and maturity of policy makers. Sales Policy is formulated on the basis of:

Streamline procedure. Improve performance of sales. Operate purely on Commercial lines. Optimize productivity & profitability. Cover promptly and effectively customer-related activities.

This sales policy is the result of amendments in previous sales policy-99 as approved by the Price Fixation / Review Committee; the following selling

arrangements/methodologies have been formulated for implementation with effect from September 10, 2004. (a) Contract sale Pakistan Steel may enter into contracts with customers as per Standard Terms & Conditions of Sales.
Page 24

Internship Report

First of all before signing a contract customer deposit 10% security amount for the entire quantity of the contract, through a Pay Order / Bank Draft. This security

amount is refunded after the completion of contract or adjusted against his next contract. Minimum quantities for placing an order against a contract and delivery periods are: categories Products Minimum quantity A B C By-products Long products(billets) Flat products(HR,CR,GP) 100 tons 100 tons 300 tons Delivery Period 60 days 60-90 days 120-150 days
Table 5

For trader dealers minimum quantity of CR & GP in category C is 100 tons.

10% quantity variation of the total contractual quantities is allowed on the seller's option.

The prices of products are subject to change customers are liable o pay the prices prevalent at the time of delivery of material. Moreover any tax / duty levied by the Government, not applicable at the time of signing of contract, will also be payable by the Customer before taking delivery.

Notice of Readiness: The material is offered to Buyers in parts or full as and when received from the Production Departments the notice of readiness (NOR) is served through telex/fax/courier or through personal contact to obtain the Delivery Order within Seven (07) working days from the date of issuance of the notice and to lift the material within Seven (07) working days from the issuance of the D.O. failing which the Seller reserves the right to forfeit security amount in full or prorate to the quantities remained un-lifted.
Page 25

Internship Report

Adjustment Note: This note is prepared in case of any required adjustment in material/goods requirement. At the time of lifting the material if there is any shortage or expansion in material the adjustment is made through adjustment note.

Clearance Certificate: The certificate after the completion of contract is issued by customer side. This certificate is a proof of clearance and completion of the contract.

(b) Running contracts The procedure of running/long term contracts is same as above mentioned contracts except the fact that they are of large quantities for minimum period of six months. Such running contracts are sold minimum quantity of 20,000 tons Hot Rolled products and 20,000 tons Billets/Blooms/Slabs for a period of twelve months. While customers have to deposit 50% price of the total contractual amount.

(c) Open sale The off-plan, off-grade and un-committed stocks/material is sold to registered dealers against OR as UCS (un-committed stock) on cash/credit as per policy in vogue from time to time. Government department may also be provided material even outside the dealership network, if material is directly purchased by them on cash payment (being one time deal), and NO Commission is allowed. Sale in packets: Material pertaining to stuck-up/incentive, packet are made and sold containing prime and stuck-up materials as per laid down procedure approved from time to time.
Page 26

Internship Report

However, stuck-up portion of packet may be sold on credit as per policy in vogue. These packets can be sold by zonal offices of Pakistan steels as provided by store department. (d) Tender sale Slow moving/stuck-up/old stocks or waste material may also be offered for sale through tender/ auctions-against reserve price fixed by the Price-Fixation Committee. Priority in sale As per rules and regulations Pakistan steels always gives priority in sale to its consumer dealers. Firstly consumer dealers are sold the desired material, and then trader dealers are served if material is left. Sales returns procedures Customers are required to lift the material within 7 working days after issuing the delivery order. Otherwise Pakistan steel have the right to sell it to some other party and besides this make the customer liable to forfeiture of security amount paid at the time of signing the contract at sole discretion of seller. On-line computer sales system The sale of Pakistan steels products take place through a systemic way in co-ordination with PP&C and sale department. Pakistan steel has a strong mainframe computer system which has integration with other concerned departments. Therefore all sale procedure is computerized here. From placing an order to delivery the desired material whole process is online which can be seen in following diagram:

Page 27

Internship Report

Fig.4

The whole procedure may be summarized: 1. Place of order by authorized dealers( Traders or consumers) 2. Make the marketing plan and get approval of demanded products by PP&C regarding the ability to produce and the estimated time schedule 3. Production planning in PP&C and move the same in concerned production unit 4. Transfer of finished material in PSPS( Pakistan steel product store) 5. Dispatching NOR and dispatching DO An overlook of sales of Pakistan steel in previous year Following is the graph showing the sales pattern in Pakistan steel from July 2009 to May 2010. The figures of sales is in million.

Page 28

Internship Report

Month July Sale

Aug

Sep

Oct

Nov

Dec

2729.350 1654.717 2059.777 1737.671 1707.732 2618.216 Feb Mar Apr May

Month Jan Sale

2865.464 1350.157 2596.035 1449.602 731.832

Table 6

Fig.5

Page 29

Internship Report

Chapter8

CUSTOMER SERVICES
Of many things it has been recently realized that customer is the most important elements in marketing and its sustenance and retention is far more important than any other marketing functions. They are the lifeblood of any organization. Therefore today organizations spend a lot of efforts in developing and maintaining good relations with customers. And it is reality that organizations can achieve their goals only if they do better manage their customers through the introduction of reliable systems and methods and provide good customer service empathetically and more forcefully. Customer service is more probably better service for the customers other than all functions of business from production to selling. And recently almost all organizations are engaged in doing it. We can define customer service of an organization as provision of labor and other resources for the purpose of increasing the value that buyer receive from the purchases and the process leading up to the purchase. If I talk about public sector, customer service is not yet considered as important as in private organizations. However still they are customer oriented, they listen customer complains, process them; find new ways to provide better services and so on. Improvements are also being made regarding to customer service in public sector now. In Pakistan steel customer service section is not very strong but we can not say that they dont care of their customers. It is for customers that they established Zonal Sales offices in five big cities of Pakistan and also one more in Quetta is ready to run. This is because those customers from other cities dont remain without their services. As Pakistan steel realize the need, it starts the zonal office for better coverage and services for customers. Besides this all zonal offices are integrated with main marketing department in main

Page 30

Internship Report

branch. Data of customers from all ZSOs is kept in main data base separately for further process. It is not only saving here but also updated on timely bases. Pakistan steel also manage good relations with customers by directly meeting them, and if need arises marketing department handle customers calls directly in main office. They also provide updates regarding to business time to time. If there is any new business or sales policy prepared by management customers are informed the same on early bases. Similarly with any change in price, updating about price change is sent to all ZSOs as well as it is also uploading on Pakistan steels website. The purpose of this activity is to inform the customers about any latest business policy/information and make them feel as the part of the business. Customer retention is the process of keeping customer inventory for an unending period by meeting the needs and exceeding the expectations of those customers. Customer retention is very necessary for any organization because it builds good image in the market about the business and it is also the proof of customer satisfaction and assurance of better volume of sales in future. Pakistan steel obviously has same opinion and keeps in mind the ultimate result of customer retention. Customer complaints handling process: Pakistan steel always ready to process customer complaints. Quality complaints are attended immediately by the representative of customer service team. All about efforts are made of settle quality complaints within fifteen days. Customers may complaint in any zonal office or directly in marketing department of main office. These complaints are required to be in written form. Written complaints are authentic and also it is easy to process them. Complaint regarding to whatever problem is sent to the concerned department. Where it is taken seriously and processes as early as possible. If the complaint is not valid it is sent back to the marketing department and then customer service representatives are mandatory to satisfy the customer.
Page 31

Internship Report

Complaints do not only create negative aspect but if we see they have one positive sign for marketers in them. And it is that these highlight something which has gone wrong with a part of overall marketing operation; usually the high quality, a fundamental requirement of the organization has not been achieved. Whatever the reason, the sensible marketers will want to know exactly what has gone wrong. So that remedial actions may be taken. However complaints should be processed on early basis because they can create bad image of the organization externally. They should not be taken for granted, but must be handled well, and must be seen to be well handled by the complainant, and by the organizations own staff. Pakistan steel takes care of their customers complaints and tries its best to resolve them on early basis by considering all positive and negative aspects of these complaints.

Page 32

Internship Report

CRITICAL ANALYSIS
This text will give clear understanding on critical issues which I observed in practical scenario during my internship in comparison with that I studied in my whole degree program and especially in marketing point of view. No doubt that Pakistan steel is leading the steel industry in Pakistan but still it has some space for betterment. High government influence makes the communication process ineffective. There lies a communication lapse between top down employee relationship. Employees are not motivated for better work performance even sometime they are highly discouraged if they innovate something from their point of understanding. One more thing regarding to workforce that I observed in Pakistan steel is that right person is not on right job here. Many qualified engineers are working on management side. Similarly IT people are working manually in marketing and personnel department. If we perceive around, we will see that tremendous technological advancement in communication has been placed in the world. And organizations are fast enough to confine all these advancements so they can survive in this ever changing environment of the world. But I saw in Pakistan steel that they still are without these communication services. Even many departments have not own the internet facilities. Besides this most of the paper work is done manually, which requires extra efforts and time from employees. Organizations spend much of time and efforts in need analysis of their customers and then making strategies accordingly. Here, in Pakistan steel I saw many lacks in planning, developing and maintaining its marketing strategies. No development and innovation in any term is brought in its products. They dont need of any product promotional strategy. Promotional tools like advertising; sales promotion and personal
Page 33

Internship Report

selling are not in use. Only tender advertising is used for purchasing and selling purpose. Pakistan steel customer service is very weak section. As organizations formulate different strategies to attract new customers, here I got that they just realize on existing ones, no steps are taken to acquire new customers. Pakistan steel has been facing increasingly losses for past few years because of the rapid change in top level management in relation with change in political environment. And in order to come out of these crises the external management is used by the government, who dont have the in-depth understanding of the organization to run it effectively and come out of this crisis situation.

Page 34

Internship Report

SWOT ANALYSIS
Strengths: Large size Pakistan steel is enjoying as large size industry and can generate huge revenue. Also it is providing jobs to thousands of workers. Monopoly Pakistan steel is enjoys monopoly in sense as no other steel industry in Pakistan has such expertise in steel production. Owned resources Pakistan steel has its own power and water supply for production purpose. And it has also other supporting departments like medical and education. Quality products It is producing high quality products from imported raw material which can be its competitive advantage over other competitors in Pakistan. By-products Has an advantage of producing by-products as no cost and efforts incurred in their production but they generate big revenue Weaknesses: Outdated technology Pakistan steel is still using old and outdated technology which is leading it towards back from other international competitors.
Page 35

Internship Report

Political pressure It has to bear political and union pressure and nepotism which leads misperception among the employees. Nepotism also leads ineffectiveness in working of organization. Right person is not on the right job One weakness of Pakistan steel is that right person is not on the right job. Many qualified engineers are working on management side. Similarly IT people are working manually in marketing and personnel department. Financial problems Recently Pakistan steel has to bear financial problems. Its assets are completely vanished. It is going in loss for last few years. Opportunities: Market dominance Pakistan steel has market dominance as a largest and leading steel industry in Pakistan. Government influence It enjoys good image and repo in market because of the government influence and support Customers demand Able to fulfill the demands of customers as it has achieved skills to produce large variety of products Highly bargaining power
Page 36

Internship Report

Due to the large scale of production it purchases raw material in bulk quantities so it has high bargaining power and enjoys discount from its suppliers.

Threats: Political instability Pakistan steel has to bear management instability because of the rapid change in political environment. It effects its working and big decisions Imported raw material It has to import raw material because of the unavailability of high quality material in Pakistan. This requires big finance in Pakistan steel budget. Economic crises The current economic crisis has a bad impact on its profitability. This has been considerable decreased in the demands for its products due to decrease in people income.

Page 37

Internship Report

CONCLUSION
Pakistan steel countrys largest industry is making promotional efforts for establishment of downstream industries on private sector based on utilization of its high quality main and by-products. It has a designed capacity of 1.1 million tons per annum with potential up to 3 million and possess highly skilled and trained work force. Pakistan steel has its own power and water supply. It is also working for the social welfare and has been started many supportive programs and recreational activities for its workers. It has been instrumental in creating new job opportunities, opening of new vistas of technical and economical cooperation and giving the start of research and development activities in the field of metallurgy and in other technological fields. No one can refuse of its contribution in government funds since its birth as the largest industry. It has still potential of increasing profitability. But unfortunately because of some wrong policies from government side, it has now become without valuable assets. The need of today is that to plan and put right guidelines so that this mega industry can get back its former position and survive once again in changing environment of the world.

Page 38

Internship Report

RECOMMENDATIONS
Government influence should be as minimized as possible. Government should announce right policies independently without interference of external powers in countrys benefits. As dealership is good in sense to keep the sales procedure free from bias and to

avoid black marketing but still I suggest that in order to increasing the sales, unregistered customers should be treated after very high security checking. Production capacity should be increase up to potential level. If production

increases, demand can be better managed. It is also to be notice that raw material is exposed from Pakistan so that duty on

imports can be reduced if possible. New technology should be adopted for communication. Paper work should be

minimized. Similarly old machinery should be replaced.

Page 39

Internship Report

REFERENCES

BOOKS: - Kotler, Philip & Armstrong, Gary.( eleventh edition), Principles of Marketing. - Handouts on Principles of Management (MGT503), University of Pakistan. - Handouts on Organizational Behavior (MGT502), University of Pakistan. - Handouts on Customer Relationship Management (MKT610), University of Pakistan. - Handouts on Brand Management (MKT624), University of Pakistan.

URL:

- Pakistan Steel[On line] Available: www.paksteel.com.pk/

Page 40

Internship Report

Page 41

Internship Report

Departments of Pakistan steel

NO Name of the department Corporate secretariat Corporate planning Protocol Internal audit Weigh bridge QAD ME&IC QCD Safety Process lab SPP Marketing ZO(Islamabad) Sub-ZO(Peshawar) ZO(Lahore) ZO(Karachi) ZO(Quetta) ZO(gujranwala) PP&C(production planning and control) Indigenization Report to NO Name of the department Shipping Report to

CEO

48

Director(commercial)

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Corporate secretariat Corporate secretariat CEO Internal audit CEO QAD QAD QAD QAD QAD CEO Marketing ZO(Islamabad) Marketing Marketing Marketing Marketing CEO

49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

MMD Inspection CMD MR &HT F &PM F &F MERS Rubberizing PERS-Mech Elect.Opns PERS-Elect. PDN Engg.Lab EDC Power AS &GN TPP-TBS WS& SS

Director(commercial) Director(commercial) APEO(TS) G.M(M\CMD) G.M(M\CMD) G.M(M\CMD) G.M(M\CMD) G.M(M\CMD) G.M(M\CMD) APEO(TS) G.M(E.O) G.M(E.O) G.M(E.O) G.M(E.O) APEO(TS) G.M(Power) G.M(Power) G.M(Power)

20

CEO

67

BWSD

G.M(Power)

Page 42

Internship Report

21 22 23 24 25

PSSCB Accounts Cost account Insurance Finance

HWT Director(Finance) GM (Accounts) Director(Finance) Director(Finance)

68 69 70 71 72

WWC & TP ESB Development CDB Civil maintenances Laundry shop Electronics C&S ISMD SPM & D

G.M(Power) APEO(TS) G.M(ESB) G.M(ESB) G.M(ESB)

26 27 28 29 30

Rolling CRM(cold roll) HSM() Billet Mill SMD(steel making department) Oxygen plant Refractory RRD Hot Metal

PEO(Production) G.M.(Rolling) G.M.(Rolling) G.M.(Rolling) PEO(Production)

73 74 75 76 77

G.M(ESB) APEO(TS) G.M(Electronics) G.M(Electronics) APEO(TS)

31 32 33 34

G.M(SMD) G.M(SMD) G.M(SMD) PEO(Production)

78 79 80 81

ECD Security Medical Industrial relations Transport Transport (maint.) Township Horticulture HWT Guest house BMR&E PERSONNEL

APEO(TS) Director(A&S) Director(A&S) Director(A&S)

35 36

IMD Sintering Plant

G.M (Hot Metal) G.M (Hot Metal)

82 83

Director(A&S) D.E.C(Transport)

37 38 39 40 41 42

RMHD JETTY MDD COBP In-Plant Transport PAT

G.M (Hot Metal) G.M (Hot Metal) G.M (Hot Metal G.M (Hot Metal PEO(Production) G.M (In-Plant Transport)

84 85 86 87 88 89

Director(A&S) Director(A&S) Director(A&S) D.C.E(Guest house) PEO (BMR &E) Director (P &HR)

Page 43

Internship Report

43

PARC

G.M (In-Plant Transport) G.M (In-Plant Transport) Director(commercial)

90

IED

G.M (personnel)

44

Railways

91

LAW

Director (P &HR)

45

Purchase

92

Public relations HRD PSIT

Director (P &HR)

46 47

PSPS BMD

Director(commercial) Director(commercial)

93 94

Director (P &HR) Director (P &HR)

Page 44

Internship Report

Page 45

Internship Report

Page 46