Vision of the CEO as the team
leader, policies, management practices and government policies are the key factors
By SHABBIR H. KAZMI
Sep 13 - 19, 1999
The companies operating in Pakistan can be divided into two
distinct categories. One working exceptionally well and the other incurring huge losses
regularly. The companies which have grown in size have been posting contrary results when
compared with the other companies belonging to the same sector. While the working
conditions and business environment are identical, the vision of management and policies
to achieve these objectives appears to be the driving force.
Performance of a company is a direct reflection of effectiveness
of management policies. This is dependent on a number of factors which include, the
education and expertise of key personnel, support of the team members and successful
interaction with policy makers. However, it is clear that it is the CEO who makes the
difference. He, not only works to get his policies approved by the board of directors but
also ensures implementation of agreed policies. The success largely depends on the
attitude of all the employees. Because they, not only own the policies but also make
efforts to achieve the desired objectives.
Financial results of a company reflect the way the management
reacts to the changing circumstances. The ability to forecast the future, adapt new
policies and influence government policies also play a vital role. The incentives provided
by the government may help in improving the profitability of companies in short-term but
the efforts to survive and make profit without these crutches provide the real strength.
Investment climate in Pakistan has remained conducive since the
Independence. During the last 52 years new industries have been established, exports have
grown and diversified. Not only local but foreign investors have enhanced their stake in
the country. Though, it is often said that GoP policies have been changing, it is on
record that none of the foreign investors has ever left the country. Even at the time of
nationalization, foreign investment was not taken over by the government.
The other factor to be noted is that the foreign companies have
grown in size by bringing new investment and ploughing back the profit earned from
Pakistan. In a similar manner, local sponsors have also enhanced production capabilities,
substituted imports, diversified their product range and exports. They have been paying
good dividend to shareholders and making significant contribution to national exchequer.
Some of these examples representing foreign investment are, Engro
Chemical Pakistan (previously Exxon Chemical Pakistan), ICI Pakistan, Abbott Laboratories,
Glaxo, Pakistan Oil Fields and Pakistan Petroleum. Among the leading local sponsors are:
Habibs, Dawoods, Adamjees, Saigols and Crescent Group, who are known as the old veterans,
while the new entrants are Lakhanis, Manshas, Hashwanis and Chenab Group.
At the same time, it is also interesting to note that textile
sector, despite enjoying the highest protection and low cost raw material for nearly half
of the century has not been able to exploit the real potential. However, some of the
companies belonging to textile sector have been doing exceptionally well while others
continue to post dismal profit or huge losses. The review of textile sector alone shows
that if Sapphire and Chenab Fabrics can grow in size, enter the export markets and
establish their identity in the global markets, why others cannot do the same?
It is also true that some of the sectors were able to solicit
better policies with the government but textile units enjoying all the conceivable
protection and incentives failed to reap the results. Fertilizer (urea) and PSF sectors
were given incentives and companies managed to substitute imports and bridging
demand/supply gap through successive expansions. However, the level of protection and
subsidies are on a decline. Companies belonging to these sectors are now in a position to
live without these crutches. This is only due to their vision, policies and efforts to
optimize cost of production.
Recognition of good performing companies is necessary. These
companies are not only the role models for others but also a catalyst in bringing fresh
investment, both local and foreign. Every year Karachi Stock Exchange gives awards to 25
top performing companies and Management Association of Pakistan gives Corporate Excellence
Award. These Awards attract other companies to improve their performance.
In the following pages PAGE tries to find out the factors behind the success of
some of the top business leaders. These persons, in their own right, are the role models
for others. And others may also draw inspiration from them. Though, every business entity
may not be able to create similar stories, but, there should be efforts to change the