Strategy Analysis

Two Wheeler Industry In India

Submitted to : Prof Ranjan Das

GROUP - 3 (VLMP 2012-13) Vivek Deshmukh ( Reg No 09) Chetan Patil (Reg No 16) Ravi Chandrawanshi (Reg No 21) Sharad Katwa (Reg No 27) Sitikantha Das (Reg No 28) Sridhar Prasad V (Reg No 29)

Evolution Of Two Wheeler Industry

1948: Two-wheeler industry came into existence in India 1948: Bajaj Auto began trading in imported Vespa Scooters from Italy 1950s: Automobile Products of India (API) started production of scooters

19481980

19802000

1980's: JVs launched with Japanese manufacturers for building motorcycles 1980s: Kinetic introduced gearless scooter in collaboration with Honda 1990s: Two wheeler Industry deregulated, competition intensified 1995-98: Industry faced worst recession, YoY Sales growth declined to 3% Till 2000: Bajaj Auto undisputed market leader, 32% market share

20002012

1996 05: Motorcycles segment share doubled to 79% , Scooters declined to 16%, and Mopeds 5%, 2000-05: HHML, due to motorcycle segment, doubled market share from 20% to 40%, emerge as market leader. 2000-05: TVS market share declined from 22% to 18%
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Two Wheeler Current Industry (2012) Scenario

Total Sales (# Units)

16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 2008-09 2009-10 2010-11 2011-12 Total sales Motorcycles Scooters 15000 10000 5000 0 20000 40000 35000 30000 25000

Annual Sales in Rs crore

Porters Five Competitive Force Analysis :

Bargaining Power of Suppliers LOW

Threats of new Entrant LOW

Jockeying among current players

HIGH

Bargaining Power of Buyers

HIGH

Threats Of Substitutes
LOW

Bargaining Power of Suppliers - Low Common components / multiple suppliers / Powerful buyers dictate the terms

Threats of new Entrant - Low High Capital Investment / Skilled Labour / High R & D Capability / Branding Strength / IP , Patents / Accessibility to distributors & suppliers Economies Of scale / Product Differentiation Threats Of Substitutes - Low Cheap alternativesBus, Auto, Low End Cars / however none offers convenience Bargaining Power of Buyers - High Availability of full Information / Plenty of Varieties available / Low switching Cost Jockeying among current players Oligopoly market - High Products being matched in few months by competitors
Moderately

Attractive

SELECTION OF BEST & WORST PERFORMING COMPANIES

Best Bajaj Auto Worst Kinetic Motors

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Financial Analysis
Asset Turnover Ratio Analysis
6 5 4 3 2 1 0 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Asset Turnover Ratio Bajaj Asset Turnover Ratio Industry Asset Turnover Ratio Kinetic 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 -500

Velocity Analysis

Velocity Bajaj Velocity Industry Velocity Kinetic

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

ROCE Analysis
80 70 60 50 40 30 20 10 0 ROCE Bajaj ROCE Industry ROCE Kinetic

RONW Analysis
400 200

0
-200 -400 -600 -800 -1000 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 RONW Bajaj

RONW Industry
RONW Kinetic

Mar '07

Mar '08

Mar '09

Mar '10

Mar '11
-1200

HISTORY OF BAJAJ AUTO

Emerged in the Automobile industry in 1960 with 2 wheeler VESPA under license from Piaggio Of Italy Bajaj Chetak,1976 - Bajaj Super,1981 - Bajaj M-50

1960-1980

1980-2000

Two wheeler Industry was deregulated and faced the competition in the 1990s, Bajaj Auto began to face a threat from foreign players Kawasaki Bajaj KB100, Kawasaki Bajaj KB125,1990 Bajaj Sunny ,1991 Kawasaki Bajaj 4S Champion,1993 - Bajaj Stride,1994 - Bajaj Classic 1995 - Bajaj Super Excel,1997 - Kawasaki Bajaj Boxer, 1998 - Kawasaki Bajaj Caliber 2001 - Eliminator, Bajaj Pulsar, Discover DTS-I,2005 - Bajaj Wave, Bajaj Avenger, 2006 Bajaj Platina 2007 - Bajaj Pulsar-200 (Oil Cooled), XCD 125 DTS-Si,2008 - Bajaj Discover 135 DTS - i - sport (Upgrade of existing 135cc model),2009 ,XCD -135 cc 2012 - Bajaj RE 60, mini car for intra-city urban transportation 2012 - KTM Duke 200, launch of 200cc bike from the KTM stable
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2000-2012

BAJAJ : VISION AND MISSION STATEMENT

Vision : To attain world class excellence by demonstrating value added products to customers. Mission: Focus on value based manufacturing Continual improvement Total elimination of waste Pollution free and safe environment

STRENGTH
Extensive R&D Highly experienced player

WEAKNESS
Not a global brand despite high volume production

Widespread distribution network

Wide product range in terms of price, quality and categories

SWOT - BAJAJ
OPPORTUNITY
Premium sports bikes for urban areas Constant growth industry

THREATS
Entry of international brands(e.g Hyosung , Korea) Growth in scooter segment Cut throat competition
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BUSINESS STRATEGY BAJAJ WHERE TO COMPETE * Market Selection+

Segment
Middle-class people who want a bike that is stylish and has a good mileage.

Positioning
Premium Segment Pulsar , Avenger Eliminator , Ninja (KB 150 cc & above ) Executive Segment 135cc (Discover ,XCD) Economic segment 100cc ( Platina)

Target Group
Youth between the age of 20-35. Middle class & Upper middle class .

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Customer Value: VALUE [V= P+S+D+E ] Product or core offerings [P] = (Aesthetic look + competitive price); Delivery [D] = (Widespread service network + quick service + easy spare parts availability On spot vehicle finance & Bajajs own vehicle insurance ).

Bajaj : Cost & Technology Leadership

Technology leadership:
Both DTS-i (Digital Twin Spark Ignition) and DTS- Fi (Digital Twin Spark Fuel Ignition) Exhaus TEC (Exhaust Torque Expansion Chamber).

Cost leadership:
Lean manufacturing practices. Kaizens for quality and cycle time reductions.

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VALUE DELIVERY MODEL

Efficient Vendor management: 70 % non core activities outsourced to vendors. Vendors in close vicinity of assembly plant. Third party logistic providers for long distance vendors. (Milk run concept) TPM policy for vendors. Strong inventory control through ICT implementation.

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Analysis Of Market Signals Bajaj Auto

May, 12: Recommended 450% dividend of Rs 45/ share (previous year 400%). declared amongst the world most profitable automobile manufacturer. Influence Customer behavior Dec,09: End of the road for Bajaj scooters. Exit declining market

Sep,05: Strategy to countering cut-throat competition by restructuring its retail business model and opened of 50 Pro-biking Specialised Stores across major metros. Vertical integration

June05: launched Avenger, high-performance, high margin bike in premium segment Niche Market
Dec, 2005: launched 112 cc Discover, to leverage highly successful Discover brand and to capture market share in the 'Executive' segment with alloy wheels, world first ExhausTEC technology, SNS suspension, Ride Control Switch. Technological Innovation, Economy of Scale Dec, 2004: Signed deal with Kawasaki Motor Philippines Corp. to export 100cc entrylevel motorcycle, CT-100, to the Southeast Asian nation Capturing new Markets

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Kinetic Motors Ltd

STRENGTH Pioneer in gearless scooters First Electronic Ignition system USP Convenience for women , old aged & differently - abled persons

WEAKNESS Low Turnover on R & D Low mileage High cost of Spare parts Poor after sale service Market Myopia

SWOT- Kinetic
OPPORTUNITY Improvised Design with powerful engine / fuel efficiency & accessories Tap teenagers & style conscious customer. THREATS New entrants with Low price Better fuel efficiency Better service network

BUSINESS STRATEGY Kinetic WHERE TO COMPETE * Market Selection+

Segment
Gearless Scooters

Positioning
Kinetic Honda, only in metro cities. Through a selected dealers only.

Target Group
Middle-class Ladies and old aged people

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HOW TO WIN ORDERS.. [Competitive Advantage]

Kinetic

- Comfort while driving. - Technology focused for ladies bikes.

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Key Take away: - Failure of success

- Benchmark the industry and change accordingly.

- Competition is eternal.

THANK YOU