Recession 2008 - Pakistan

Project: How to be sustained in Recession Table of Contents Purpose:............................................................................................................................. 3 Introduction........................................................................................................................ 4 What is recession? ..................................................................................................... 4 Causes of Recession:...................................................................................................... 5 Currency Crisis: ........................................................................................................... 5 Inflation ......................................................................................................................... 5 Speculation (Rumor)................................................................................................... 5 War ................................................................................................................................ 5 Affects of Recession ........................................................................................................ 6 Unemployment ............................................................................................................ 6 Stock market crash......................................................................................................... 6 Foreclosure .................................................................................................................. 6 Deflation ........................................................................................................................ 7 Bankruptcy..................................................................................................................... 7 History of Recession ...................................................................................................... 8 Recession 2008: ............................................................................................................. 8 International Crisis ........................................................................................................... 9 Crisis in the US .............................................................................................................. 9 Crisis in the Europe ..................................................................................................... 10 Crisis in the United Kingdom ...................................................................................... 11 Crisis in Rest of the World .......................................................................................... 12 Recession in Pakistan ........................................................................................................ 13 Pakistan Economy ....................................................................................................... 16 Impact of Recession on Pakistan Economy................................................................. 18 Deprive of Foreign Exchange ...................................................................................... 18 Insecurity ..................................................................................................................... 18 Uncertainty in Economy Sector ................................................................................... 19 Rumors in Banking Sector ....................................................................................... 20 Deflation ...................................................................................................................... 20 Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 1 Preston University – N. N. Campus Project: How to be sustained in Recession Rolex ................................................................................................................................. 21 Rolex Innovations ..................................................................................................... 22 Hand-wound (injury) ................................................................................................. 24 Design traits ............................................................................................................... 24 Cellini Cellinium Features ........................................................................................ 25 How can we stand in Recession? ...................................................................................... 26 Marketing Techniques .............................................................................................. 26 Spend Smart .............................................................................................................. 26 Create Advantage ..................................................................................................... 26 Optimist Approach .................................................................................................... 26 Reduce High-Cost Elements:....................................................................................... 27 New Cellini Cellinium-C08 Features ...................................................................... 27 Target Market.................................................................................................................... 28 Middle Upper Class ..................................................................................................... 28 Conclusion ........................................................................................................................ 30 Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 2 Preston University – N. N. Campus Project: How to be sustained in Recession Purpose: The purpose of this project is to analyze the strategies to be sustained in the current financial crisis and develop the future strategy to better achieve of the profit. As a Brand Manager or Marketer, how can we stable our product in Recession 2008. It will also help us to better understand the market tactics and enhance our ability to handle different crisis and to formulate our strategies accordingly. We have chosen Rolex wrist watches as a Brand and we will analyze how to stay in recession period. Surely we will implement appropriate strategies to be sustained and make consistency in our brand position. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 3 Preston University – N. N. Campus Project: How to be sustained in Recession Introduction What is recession? Recession refer as a period of general economic decline, part of the usual business cycle. It is a difficult time for the economy of any affected country, when there is less trade and industrial activity than usual and more people are unemployed. Recession can be defined as significant decline in general economic activity extending over a period of time. Recession results in jobs being cut, revenues dropped and governments taking back subsidiaries. We are not exactly in a recession right now, the way inflation is booming and cost-of-living increasing; our economy may get into slumber soon. Recession also refers towards a stage of the business cycle in which economic activity is in slow decline. Recession usually follows a boom, and precedes a depression. It is characterized by rising unemployment and falling levels of output and investment. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 4 Preston University – N. N. Campus Project: How to be sustained in Recession Causes of Recession: Currency Crisis: A currency crisis, which is also called a balance-of-payments crisis, occurs when the value of a currency changes quickly, undermining its ability to serve as a medium of exchange or a store of value. It is a type of financial crisis and is often associated with a real economic crisis. Inflation Inflation is a very dominant role in recession occurrence. The term inflation can be defined as, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. Inflation can also be described as a decline in the real value of money a loss of purchasing power. Speculation (Rumor) Speculation, in a financial context, is making an investment that increases the overall risk in a portfolio. The opposite of speculation is hedging, which is making investments that decrease the overall risk in a portfolio. Stock exchanges are in rumor therefore people are losing their confidence to invest. War War is also a reason for recession, currently it is going in Pakistan, Afghanistan, Iraq, Palestine and some other countries. Effect on the economy depends on the amount of damage and the weapons used, farmlands may become infertile and certain regions may be uninhabitable due to radiation contamination. In other cases, a victory and little damage to industrial capacity at home might pull the Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 5 Preston University – N. N. Campus Project: How to be sustained in Recession country out of a depression as happened to the most of the countries in World War II. Affects of Recession Unemployment Unemployment occurs when a person is available to work and currently seeking work, but the person is without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. Stock market crash It is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles. It is badly affected in recession period Foreclosure The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 6 Preston University – N. N. Campus Project: How to be sustained in Recession Deflation Deflation is the opposite of inflation. Therefore, under the usual contemporary definition of inflation, 'deflation' means a decrease in the general price level. Alternatively, the term was used by the classical economists to refer to a decrease in the money supply and credit; some economists, including many Austrian school economists, still use the word in this sense. The two meanings are closely related, since a decrease in the money supply is likely to cause a decrease in the price level. Bankruptcy Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. It usually happens in Recession period. Lehman bank has been declared as bankrupt in September 2008 with loss of 613 billion dollars. The year 2008 as of September 17 has seen 81 public corporations file for bankruptcy in the United States. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 7 Preston University – N. N. Campus Project: How to be sustained in Recession History of Recession There is no commonly accepted definition of a global recession. Economists of International Monitory Fund (IMF) estimate that global recessions seem to occur over a cycle lasting between 8 and 10 years. World have gone through the past three global recessions of the last three decades, where we found that global per capita output growth was zero or negative. Investment input also declined and we observed the downturn in stock markets in last three decades. According to economists, since 1854, the world has encountered 32 cycles of development and retrenchment, with an average of 17 months of contraction and 38 months of expansion. However, since 1980 there have been only eight periods of negative economic growth over one fiscal quarter or more, and three periods considered recessions:    January-July 1980 and July 1981-November 1982: 2 years total July 1990-March 1991: 8 months November 2001-November 2002: 12 months From 1991 to 2000, the U.S. experienced 37 quarters of economic expansion, the longest period of expansion on record. The 2001 recession did not involve two consecutive quarters of decline, it was preceded by two quarters of alternating decline and weak growth. Recession 2008 In 2008, the possibility of an economic crisis was suggested by several important indicators of economic downturn worldwide. These included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum) and global inflation; a substantial credit crisis leading to the bankruptcy of several large and well established investment banks; increased unemployment; and the possibility of a global recession developed. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 8 Preston University – N. N. Campus Project: How to be sustained in Recession Markets are currently indicating a roughly 20 percent chance of a global recession in 2008. The forecast is based on a range of asset prices that historically have shown close correlation with the global economic cycle. The forecast is based on a range of asset prices that historically have shown close correlation with the global economic cycle. International Crisis Crisis in the US The United States entered 2008 during a housing market correction, a sub prime mortgage crisis and a declining dollar value. In February, 63,000 jobs were lost, a 5-year record. In September, 159,000 jobs were lost, bringing the monthly average to 84,000 per month from January to September of 2008. In the early months of 2008, many observers believed that a U.S. recession had begun. As a direct result of the collapse of Bear Stearns, Global Insight increased the probability of a worse-than-expected recession to 40%. In addition, financial market turbulence signaled that the crisis will not be mild and brief. A number of private economists generally predicted a mild recession that will end in the summer of 2008 when the economic stimulus checks going to 130 million households start being spent. A chief economist at Moody's predicted in March 2008 that policymakers would act in a concerted and aggressive way to stabilize the financial markets, and that then the economy would suffer but not enter a prolonged and severe recession. It takes many months before the National Bureau of Economic Research-committee, the unofficial arbiter of when recessions begin and end, makes its own ruling. As one common definition of a recession is negative economic growth for at least two consecutive fiscal quarters, some analysts suggest this indicates that the U.S. economy was not in a recession at the time. However this estimate has Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 9 Preston University – N. N. Campus Project: How to be sustained in Recession been disputed by some analysts who argue that if inflation is taken into account, the GDP growth was negative for the past two quarters, making it a technical recession. Rise in unemployment The United States Department of Labor issued a report that its unemployment rate rose to 6.1%, the highest in five years. Bankruptcy/ liquidity crisis In early July, depositors at the Los Angeles offices of IndyMac Bank frantically lined up in the street to withdraw their money. On July 11, IndyMac - the largest mortgage lender in the US - was seized by federal regulators. During the weekend of September 13–14, Lehman Brothers declared bankruptcy after failing to find a buyer. The year 2008 as of September 17 has seen 81 public corporations file for bankruptcy in the United States, already higher than the 78 in 2007. Lehman Brothers being the largest bankruptcy in U.S. history also makes 2008 a record year in terms of assets with Lehman's $691 billion in assets all past annual totals. The year also saw the ninth biggest bankruptcy with the failure of IndyMac Bank. Crisis in the Europe The different parts of Europe are also facing recession now days. Denmark was confirmed to be in a recession after quarterly results for 2008 showed a contraction of 0.6 percent in the first quarter following a contraction of 0.2 percent in the fourth quarter of 2007. Sweden's economy showed zero growth in the second quarter of 2008. The entire economy of the European Union declined by 0.1 percent in the second quarter. A European Commission forecast predicted Germany, Spain and the UK would all enter a recession by the end of the year while France and Italy would have flat growth in the third quarter following second quarter contractions. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 10 Preston University – N. N. Campus Project: How to be sustained in Recession Crisis in the United Kingdom The economy of the United Kingdom has also been hit by rising oil prices and the credit crisis. The Ernst & Young Item club predicted growth of only 1.5 percent in 2008, slowing to 1 percent in 2009. They also predicted consumer spending would slow to only 0.2 percent, and forecast a two-year drop in investment. Nationwide, the UK's biggest building society, warned the UK could head into a recession after house prices in July fell 8.1 percent from the previous year. Housing prices declined by 1.7 percent in July, double the decline recorded in June. 70,000 homeowners were in negative equity and it could rise to 1.7 million or about one in six homeowners in the UK based on an expected 17 percent decline into 2009. The Bank of England reported that mortgage approvals fell by a record of nearly 70 percent. British manufacturing activity declined by the most in almost a decade in July, the third consecutive month of declines. The number of companies that went into administration in May–July was 938, an increase of 60 percent compared with the same period in 2007. The number of company liquidations in the second quarter rose to 3,689, a 16 percent increase and the highest quarterly figure in five years. House builders expect the number of houses built in 2008 in England and Wales to be the lowest since 1924. The declines are seen as an indication the United Kingdom has high chance of entering a recession. Factory production in the UK dropped 0.5 percent in June when twelve out of 13 categories of factory production fell. The economic output of the UK was reported to have increased by just 0.2 percent in the second quarter, the joint-slowest pace since 2001. The Office for National Statistics later gave a revised number saying growth in the British economy was at zero, the worst since the second quarter of 1992. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 11 Preston University – N. N. Campus Project: How to be sustained in Recession Crisis in Rest of the World New Zealand Institute of Economic Research's quarterly survey showing New Zealand's economy contracted 0.3 percent in the first quarter and Treasury figures suggested the economy also contracted in the June quarter putting New Zealand in a technical recession. About 23 financial companies in New Zealand have filed for bankruptcy in a year. Housing starts in New Zealand fell 20 percent in June, the lowest levels since 1986. Excluding apartments, approvals dropped 13 percent from May. Approvals in the year ended June fell 12 percent from a year earlier. Second-quarter approvals dropped 19 percent. The figures suggest a decrease in construction and economic growth. House sales fell 42 percent in June from a year earlier. Central bank cut rates by half a percent arguing the economy was in recession. In Australia, Approvals for loans to build or buy homes and apartments decreased 3.7 percent in June of 2008. Housing prices in Australia fell in the second quarter of 2008 for the first time in about three years. Consumer confidence in Australia fell to a 16-year low in July and retail sales fell 1 percent in June. High profile casualties of the credit crunch include Allco Finance, MFS, ABC Learning, Babcock & Brown and Centro while numerous other institutions have lost a significant part of their value. In Japan exports in June declined for the first time in about five years falling by 1.7 percent. Exports to the United States and European Union fell 15.4 percent and 11.2 percent respectively. The decline in exports and increase in imports cut Japan's trade surplus $1.28 billion a decline of 90 percent from the previous year. Japan's economy declined by 0.6 percent in the second quarter of 2008. This was later revised to a decline of 0.7 percent. Japanese exports grew 0.3 percent in August of 2008 compared to a year before down from 8 percent the previous month. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 12 Preston University – N. N. Campus Project: How to be sustained in Recession Recession in Pakistan In 2008, the possibility of an economic crisis was suggested by several important indicators of economic downturn in Pakistan. These included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum) and inflation; a substantial credit crisis leading to the bankruptcy of several large and well established investment banks; increased unemployment; and the possibility of a recession developed in country. In Pakistan the central bank's foreign currency reserves, when counting forward liabilities is said to only amount to as little as $3 billion, sufficient for a single month of imports. Corruption and mismanagement have combined with high oil prices to damage Pakistan's economy. Pakistan's rupee has lost more than 21 per cent of its value in 2008 and inflation is at 25 per cent. The government has failed to defer payments for Saudi oil or raise favorable loans. President Asif Ali Zardari claimed Pakistan needed a bailout worth $100 billion which he was expected to ask for at a meeting in Abu Dhabi in November. Ratings agency Standard and Poor's rates Pakistan's sovereign debt at CCC +, only a few ratings above the default level, warning the country may be unable to cover about $3 billion in upcoming debt payments. Given below are 10 signs that usually indicate that a recession is knocking. 1. The Rate Of Joblessness Assumes Disturbing Proportions. Usually, the rate of jobless people remains steady every month. But if there is a constant, steep rise in that number, then this could be a sign of recession. 2. Large Companies Start Giving Depressing Profit Figures. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 13 Preston University – N. N. Campus Project: How to be sustained in Recession When many companies across all sectors start giving out depressing sales and profit figures, then alarm bells should start ringing. 3. Borrowers Start Defaulting. When borrowers are unable to pay back their loans on homes, vehicles, businesses and credit cards, then this could be another indication of a falling economy. Here in the United States, even lenders such as banks and credit unions have started defaulting on their financial obligations, due to the sheer number of borrowers who are in no position to repay loans they have taken out. 4. Credit Card Purchases Shoot Up. In spite of depressing news, if the number and volume of credit card purchases suddenly shoots up, it means that people no longer have cash to pay for their daily needs - and are now resorting to the last method to pay their bills. When people start paying their mortgage payments through their credit cards, thereby risking high interest payments, then this is a sign of financial desperation. 5. Prices Of Essential Commodities Shoots Up. When prices of food, fuel and other utilities shoot up - and the government seems helpless to do anything - then it could be said that inflation is fanning the flames of a possible recession. 6. Companies Stop Filling Vacancies. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 14 Preston University – N. N. Campus Project: How to be sustained in Recession When companies decide to keep their job openings vacant instead of hiring new staff, then this again is another sign that a recession has afflicted the economy. Many companies might also offer voluntary retirement programs in order to reduce their workforces and cut expenses. 7. Prices Of Property And Stocks Come Down Drastically, But Nobody Buys Them. When repossessed homes and stock prices come down in value, but nobody has the funds to buy them, then it can be truly said that the economy has been hit by a recession. 8. The Country's GDP Goes Down. When a country's GDP, or Gross Domestic Production, registers a continuous downward fall, then this could be another sign that the economy is in recession. 9. Savings Are Used For Day-To-Day Expenses. When people start terminating their fixed-term deposits, such as CDs and IRA’s, and sell off other assets to meet their day-to-day expenses, then this could indicate that a recession has started doing some serious financial damage. 10. You Start Worrying About All Of The Above. When you start feeling the pinch and start worrying about your own future on the above points, then this will indicate that the recession has now reached your door. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 15 Preston University – N. N. Campus Project: How to be sustained in Recession Pakistan Economy While strictly criticizing their predecessors, current coalition government of Pakistan is actually following the foot steps of Prime Minister Shaukat Aziz’s policy. In last few days, there are news items of new loans, from international institutions as well as friendly countries, streaming in Pakistan for one reason or the other. However, no plans are made public on how to pay back what is already being taken by previous government. Let’s analyze why Pakistan is such an attraction for foreign investors. The News reports that foreign investors find Pakistan an attractive destination because they are allowed to invest in any sector and bid for any privatized enterprise. Besides, there is no limit to the profit they can make and they can send back 100 per cent of the capital anytime and pass on their total profits to their countries. This definitely places us in league with free zone countries like UAE, Hong Kong, Mauritius etc. However, instead of turning the influx of investment towards building sustainable infrastructure and uplifting industries, the government has provided a quick Return-on-Investment scheme to foreign investors. While Pakistan receive large foreign direct investment (FDI), at the same time outflow of profits/dividends in foreign exchange is also raising. As during the FY2006-07, such outflows on account of remittance of profits and dividends to foreign investors’ countries of origin amounted to $804.2 million against $504.4 million in FY2005-06. So, this means that the investors are coming in for a quick suck, investing in most profitable sectors and taking their returns out, as soon as possible. Here is what the foreign investors have taken out from various sectors in form of dividends and profit remittances during last Fiscal Year:  Power sector (especially thermal): $126.5 million Page | 16 Preston University – N. N. Campus Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Project: How to be sustained in Recession                  Communication Sector: $88.2 million Financial Business Sector: $52.1 million Oil and Gas Exploration Sector: $60.5 million Petroleum Refining Sector: $48.2 million Chemicals Sector: $29.4 million Tobacco and Cigarettes Sector: $27.3 million Food Sector: $21.69 million Pharmaceuticals and OTC Products Sector: $19 million Transport Sector: $15 million Trade Sector: $14.4 million Transport Equipment Sector (automobiles): $13.8 million Food Packaging Sector: $5.8 million Cement Sector: $5.6 million Storage Facilities Sector: $5.1 million Personnel Services Sector: $2.5 million Tourism Sector: $2.4 million Textiles Sector: $1.4 million With private entities like MCB selling 15-20% shareholding to Malaysian MayBank and government considering 10% privatization of Steel Mill, it is clear that national assets and resources of Pakistan are for sale, maybe not to the highest bidder but most favorable one. Pakistan increased its fiscal deficit by expanding the size of defense expenditures. With the increasing consistency of economic systems through out the world, flexibility of responses of macroeconomic activity toward international economic conditions, magnified. That’s why multiple unpleasant events that concentrated in 1990s and 2000s, i.e. Asian financial crises, economic sanctions due to nuclear explosion, global recession, and the post-9/11 military action in neighboring Afghanistan, with a massive influx of refugees from that country, proved fundamental external shocks hereafter. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 17 Preston University – N. N. Campus Project: How to be sustained in Recession Impact of Recession on Pakistan Economy Deprive of Foreign Exchange Pakistan's foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy. Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion enough to buy about 30 days of imports like oil and food. Nine months ago, Pakistan had $16 billion in the treasury. The government is engulfed by crises left behind by Pervez Musharraf, the military ruler who resigned the presidency in August. High oil prices have combined with endemic corruption and mismanagement to inflict huge damage on the economy. Insecurity Given the country's standing as a frontline state in the US-led "war on terrorism", the economic crisis has profound consequences. Pakistan already faces worsening security as the army clashes with militants in the lawless Tribal Areas on the north-west frontier with Afghanistan. The economic crisis has already placed the future of the new government in doubt after the transition to a civilian rule. President Asif Ali Zardari has faced numerous but unproven allegations of corruption dating from the two Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 18 Preston University – N. N. Campus Project: How to be sustained in Recession governments led by his wife, Benazir Bhutto, who was assassinated in December 2007. Uncertainty in Economy Sector While Mr Musharraf's prime minister, Shaukat Aziz, frequently likened Pakistan to a "Tiger economy", the former government left an economy on the brink of ruin without any durable base. The Pakistan rupee has lost more than 21 per cent of its value so far this year and inflation now runs at 25 per cent. The rise in world prices has driven up Pakistan's food and oil bill by a third since 2007. Efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, while the government has also failed to raise loans on favourable terms from "friendly countries". President Mr Zardari revealed that Pakistan needed a bail out worth $100 billion from the international community. "If I can't pay my own oil bill, how am I going to increase my police?" he asked. "The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful." The ratings agency Standard and Poor's has given Pakistan's sovereign debt a grade of CCC +, which stands only a few notches above the default level. The agency gave warning that Pakistan may be unable to cover about $3 billion in upcoming debt payments. Mr Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month. This gathering will determine whether the West is willing to bail out Pakistan. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 19 Preston University – N. N. Campus Project: How to be sustained in Recession Rumors in Banking Sector The State Bank of Pakistan has said that Pakistan’s banking sector is stable, safe and sound and there should not be any cause for concern about the stability of the banking system. A State Bank of Pakistan spokesman said that all banks, including Bank Alfalah and Standard Chartered Bank, operating in the country are performing well and enjoying good reputation amongst the general public. Bank Alfalah is the sixth largest bank in Pakistan and has a healthy balance sheet footing of Rs331 billion. Operating with a share capital of around Rs8 billion, as against the minimum requirement of Rs4 billion, it has total equity of around Rs17 billion. The Bank is well capitalized and its key performance indicators including the solvency ratio reflect robust performance and sound financial condition. Likewise the Standard Chartered Bank is also a healthy institution Deflation It is huge decrease in currency value against dollar. According to forex rates rupee devaluated on Rs. 83.00 in mid of October 2008. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 20 Preston University – N. N. Campus Project: How to be sustained in Recession Rolex Rolex SA is a Swiss manufacturer of wristwatches and accessories. Rolex watches are popularly considered status symbols. Rolex is the largest single luxury watch brand by far, producing about 2,000 watches per day, with estimated revenues of around US$ 3 billion (2003). Business Week magazine ranks Rolex #71 on its 2007 annual list of the 100 most important global brands, top among all watchmakers. Rolex Information Type Founded Headquarters Key people Industry Products Revenue Employees Website Privately held company 1905 by Hans Wilsdorf and Alfred Davis in London Geneva, Switzerland Patrick Heiniger(CEO) Michael Elms (CFO) Watch manufacturing Wristwatches, accessories USD $3 billion (2003) 6,000 (estimate as of 2005) http://www.rolex.com/ Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 21 Preston University – N. N. Campus Project: How to be sustained in Recession Rolex Innovations Among the company's innovations are the first waterproof watch case; the first wristwatch with a date on the dial; the first watch to show two time zones at once; and the first watchmakers to earn chronometer certification for a wristwatch. To date, Rolex still holds the record for the most certified chronometer wristwatches. Rolex participated in the development of the original quartz watch movements. Although Rolex has made very few quartz models for its Oyster line, the company's engineers were instrumental in design and implementation of the technology during the late 1960s and early 1970s. In 1968, Rolex collaborated with a consortium of 16 Swiss watch manufacturers to develop the Beta 21 quartz movement used in their Rolex Quartz Date 5100. Within about five years of research, design, and development, Rolex created the "clean-slate" 5035/5055 movement that would eventually power the Rolex Oysterquartz. The first selfwinding Rolex watch was offered to the public in 1931, preceded to the market by Harwood which patented the design in 1923 and produced the first self-winding watch in 1928, powered by an internal mechanism that used the movement of the wearer's arm. This not only made watch-winding unnecessary, but eliminated the problem of over-winding a watch and harming its mechanism. Rolex was also the first watch company to create the first water resistant watch to 330 feet. Wilsdorf even had a specially made Rolex watch attached to the side of the Trieste bathyscaphe, which went to the bottom of the Mariana Trench. The watch survived and tested as having kept perfect time during its descent and ascent. movements in the category of Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 22 Preston University – N. N. Campus Project: How to be sustained in Recession This was confirmed by a telegram sent to Rolex the following day saying "Am happy to confirm that even at 11,000 metres your watch is as precise as on the surface. Best regards, Jacques Piccard". Rolex has also made a reputation in watches suitable for the extremes of deepsea diving, aviation and mountain climbing. Early sports models included the Rolex submariner and the Oyster Perpetual Sea Dweller 2000 (in 1971). This watch had a helium release valve, co-invented with Swiss watchmaker Doxa, to release helium gas build-up during decompression. Another sports model is the Rolex GMT Master II, originally developed at the request of Pan Am Airways to assist pilots in transcontinental flights. The Explorer and Explorer II were developed specifically for explorers who would navigate rough terrain—such as the world famous Everest Expeditions. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 23 Preston University – N. N. Campus Project: How to be sustained in Recession Hand-wound (injury) While most of today's watches are equipped with automatic movements, the Cellinium models are hand-wound. You may wonder why anyone would willingly avoid modern technology for a more primitive - excuse the pun - hands-on manoeuver. You may be surprised to know that a lot of watch aficionados feel that a hand-wound caliber provides a more tactile pleasure. There is definitely something to be said for rediscovering the fine art of old-fashioned watchmaking. Design traits All the Cellinium watches have the same basic design - the polished platinum case, the wide, smooth bezel, the small second hand at six o'clock, and the black leather strap. The only difference between the models is the dial. One model features a white mother-of-pearl dial, another ice blue one, and the third a black one. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 24 Preston University – N. N. Campus Project: How to be sustained in Recession Cellini Cellinium Features o o o o o o o o o o o o o o o o Genuine Italian 31 Jewel Automatic Movement Smooth sweeping second hand, like the real thing Genuine scratch resistant, sapphire crystal Certified waterproof Large stainless steel threaded screws on band Solid end links on the band, not hollow Perfectly fitted, hand made polished solid links Genuine Luminox -glow in the dark markers Genuine laser etched dials and fonts Genuine 2.5x magnification on date wheel One piece screw down crown True 440 grade stainless steel Green Hologram on sticker on back Only opened with Rolex tool Serial number at lug at 6 o'clock Fully detailed back clasp markings and band Retail price is $9,500. (Rs. 760,000/-) Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 25 Preston University – N. N. Campus Project: How to be sustained in Recession How can we stand in Recession? Marketing Techniques For the sustainability of our Brand we will implement high-return marketing techniques. While competitors are slashing their advertising budgets, we are redirecting our resources to results-oriented campaigns such as public relations. Publicists will work to get our business in print, on radio and on TV at a fraction of the cost of an ad agency campaign. Spend Smart We will look for innovative ways and reduce our budget in manufacturing and purchasing parts we can buy the needed services to succeed. There are many service providers that give emerging businesses a vehicle with which to boost their profile -- and their profits -- without spending cash. Save money by using company's stock to acquire the nationwide advertising. Create Advantage In marketing terms, it's called a Unique Selling Proposition (USP), something that sets apart from competitor. A decision regarding product or service would be considered an essential during bad economic times, because, consumers will cut out non-essentials – we will target our marketing efforts to USP. Optimist Approach We have to be an optimist. According to an old Chinese adage, "When strong winds are blowing, some hide behind walls and other build windmills." Remember that many smart businesses became successful during market shake-downs caused by recessions. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 26 Preston University – N. N. Campus Project: How to be sustained in Recession Reduce High-Cost Elements: By following our marketing techniques, we intend to place an order to reproduce the products decreasing high cost elements such as Diamond, Gold and other precious stones used in our product. This will reduce the product cost as well and also will be feasible to sale more units. We will not compromise on quality because Rolex is the on of strongest brands of industry. High performance product gives you profitable feed back our product is durable and it has build intangible worth. Customer has positive perception about Rolex, this is because of Goodwill of the company. We will use our intangible assets to stay in market. We have some proposals for new product with following features for Upper class people. New Cellini Cellinium-C08 Features o o o o o o o o o o o o o o o Automatic Movement Smooth sweeping second hand, like the real thing Genuine scratch resistant Certified waterproof Large stainless steel threaded screws on band Solid end links on the band, not hollow Perfectly fitted, hand-made Genuine dials and fonts Genuine 2.5x magnification on date wheel One piece screw down crown True 220 grade stainless steel Green Hologram on sticker on back Only opened with Rolex tool Serial number at lug at 6 o'clock Fully detailed back clasp markings and band Retail price is $2,500. (Rs. 250,000/-) Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 27 Preston University – N. N. Campus Project: How to be sustained in Recession Target Market Our focus is to deliver best quality product in affordable prices. The quality assurance is main element in our success, this directly effects on behavior of consumer. Our quality and durability is our strength. Middle Upper Class Our new innovative products are specially designed for Middle Upper class customers. Pakistan is a growing country and people have awareness about fake and replica products. They will be surely delighted after a successful launch of our new innovations. We offer in different designs and many unique features. The main focus is to gain more customer confidence and penetrate in middle upper class market as well as middle class. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 28 Preston University – N. N. Campus Project: How to be sustained in Recession Other New Rolex for Middle class Price in $$ $ 166.00 Sample Product BN PANERAI RADIMOR BLACK SEAL BN PANERAI LUMINOR DAYLIGHT PKR 13,778/- $ 100.00 8,300/- BN ROLEX DAYTONA 2 TONE $ 100.00 8,300/ BN ROLEX DAYTONA WHITE DIAL BN ROLEX DAYTONA 2005 BLACK DIAL BN ROLEX DAYTONA BLACK DIAL BN ROLEX EXPLORER II WHITE DIAL BN ROLEX EXPLORER II BLACK DIAL BN ROLEX GMT-MASTER II BLACK & RED BEZEL BN ROLEX GMT-MASTER RED & BLUE BEZEL BN ROLEX GMT-MASTER II BLACK BEZEL BN ROLEX SUBMARINER 2 TONE BLACK BEZEL BN ROLEX SUBMARINER 2 TONE BLUE BEZEL BN ROLEX SEA-DWELLER BLACK BEZEL BN ROLEX SUBMARINER BLACK BEZEL BN ROLEX SUBMARINER 50TH GREEN BEZEL $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ $ 100.00 8,300/ Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 29 Preston University – N. N. Campus Project: How to be sustained in Recession Conclusion Recession has entered in its peak time, it means that economy is falling rapidly and affected countries are implementing strategies to stay alive. After the deeply study of Pakistan’s economics it has come to know that Pakistan is facing recession period with rest of the world. According to the finance minister this recession period will be lasted for 24 months in Pakistan. Pakistan economy is falling down day by day; some urgent bold steps and bailout plan is needed for sustainability. President Asif Ali Zardari has announced that Pakistan needs 100 billion dollars to stay. This is a really big deal for Friends of Pakistan to provide the requested. As a Brand Manager of Rolex Cellini Cellinium, we suggest to reproduce it by reducing cost elements such as Diamond, Gold and other precious parts of Rolex. We will not compromise in quality by implementing aforesaid strategy. Marketing department will play its role to create customer perception and will also help to enhance consumer’s satisfaction. Our focus is to target middle upper class of Pakistan. Middle upper class of Pakistan is well aware about Rolex and they will be surely delighted with our new designs that will make their personality and our Brand will not lose its value. Submitted to | Sir Madurai Anastasues Melvyn Anthony Compiled by | Afshan Yasmeen & Fazal Muhammad Page | 30 Preston University – N. N. Campus