Post on 10-Apr-2018
8/8/2019 MPI Group9
1/13
Strategic Options for Growth
8/8/2019 MPI Group9
2/13
ObjectivesProtect the current dominant share in the currentmarketIncrease exports to 15% of total sales by 1998
AlternativesRemain focused on domestic market and exportopportunistic basis
Export to developing countries with minimumadaptationPromote to developed countries focusing on lowerend of moped market
8/8/2019 MPI Group9
3/13
Stagnant(declined by 5% in 1991-92)Stiff Japanese competition1993-Indian two wheeler industry suffering from Chronic Overcapacity
Stagnant(declined by 5% in 1991-92)Stiff Japanese competition1993-Indian two wheeler industry suffering from Chronic Overcapacity
DomesticMarket
Growth Opportunities in Latin America, South East Asia, Sri Lanka andBangladeshLarge customer base-economies of scaleReduced dependence on one marketPotentially greater profit opportunities
Growth Opportunities in Latin America, South East Asia, Sri Lanka andBangladeshLarge customer base-economies of scaleReduced dependence on one marketPotentially greater profit opportunities
GlobalMarkets
Why go abroad?
R ecommendation : With all these advantages of going abroad we suggest movinginto newer territories
8/8/2019 MPI Group9
4/13
High on MarketAttractiveness
CompetitiveAdvantage
Low MarketRisk
Basis of selecting a Market
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Which Market to enter
D eveloped CountriesD eveloped Countries
Mature two wheeler market
Opportunity mostly in moped-50cc segmentNon existent 3 wheeler market
Mature two wheeler market
Opportunity mostly in moped-50cc segmentNon existent 3 wheeler market
Marketttractiveness
Technology not our strengthEstablished Japanese playersExacting product performance requirements-weak spot
Price-our only competitive advantage a low priority
Technology not our strengthEstablished Japanese playersExacting product performance requirements-weak spot
Price-our only competitive advantage a low priority
Competitive
dvantageTough regulations on emissions, performance and electricalQuick Model Changes and Latest Features-continuous evolvementrequired
Tough regulations on emissions, performance and electricalQuick Model Changes and Latest Features-continuous evolvementrequired
Market Risk
8/8/2019 MPI Group9
6/13
Maj r s g t- cc a cc s g t No i ort ti s as c omp ar t o on Japane se veh icle s
Major se gmen t-moped cc a nd cc segmen t No impo rt du tie s as c omp ar ed to on Japane se veh icle s
Marke t
Attractiv ene ss
Con side rabl e price advan tag e of Bajaj Sunn yFe we r f e at ure s in Sunn y as c omp ar ed to Piaggi o s Sf e ra
125 cc scoo te r f or a n iche no stalgia m arke t
Con side rabl e price advan tag e of Bajaj Sunn yFe we r f e at ure s in Sunn y as c omp ar ed to Piaggi o s Sf e ra
125 cc scoo te r f or a n iche no stalgia m arke t
Compe titiv e Advan tag e
Change in re gu lat ory en vironmen tChanging p re f e ren ce s-from moped s t o fash ion abl e au tom atic sc oo te rs
Change in re gu lat ory en vironmen tChanging p re f e ren ce s-from moped s t o fash ion abl e au tom atic sc oo te rs
Marke t Risk
EuropeEurope
8/8/2019 MPI Group9
7/13
Stron g and ste ady gr ow th expe ctedOpportunity both for scooters and three wheelersLow consumer purchasing power and access to foreign exchange in
Africa; intense competition in china; opportunity in middle east andnorth Africa
Stron g and ste ady gr ow th expe ctedOpportunity both for scooters and three wheelersLow consumer purchasing power and access to foreign exchange in
Africa; intense competition in china; opportunity in middle east andnorth Africa
Mark e t
Attractiv ene ss
Price sensitive matches our strengthStraig h t Exten sion - Le ss stri ngen t pe rf o rma nce re gulati on s; m ode l change sa ne gativ eUsed p rimarily f o r wo rk a nd tra nspo rtati on
Price sensitive matches our strengthStraig h t Exten sion - Le ss stri ngen t pe rf o rma nce re gulati on s; m ode l change sa ne gativ eUsed p rimarily f o r wo rk a nd tra nspo rtati on
Compe titiv e Advan tag e
Tariff barri e rs a nd impo rt ba ns in sout h e ast AsiaTariff barri e rs a nd impo rt ba ns in sout h e ast AsiaMark e t Risk
D eveloping CountriesD eveloping Countries
8/8/2019 MPI Group9
8/13
Strong and steady growth expectedN titi i t r l r Strong and steady growth expectedN titi i t r l r
Market
Attractiveness
Pri i li it v t v r JJapanese products considered too sophisticated
Pri i li it v t v r JJapanese products considered too sophisticated
CompetitiveAdvantage
Fear of a technical licensing agreement meetinga fate similar to Taiwan and IndonesiaFear of a technical licensing agreement meetinga fate similar to Taiwan and IndonesiaMarket Risk
Latin AmericaLatin America
8/8/2019 MPI Group9
9/13
Recommendation
Focus intensively on developing markets
Attractive growing marketCompetitive advantage of price and low complexityStable with models, model changes a negative
Low focus on developed markets
Stagnating marketTechnology driven-Japanese holding greater competitive advantageTough regulations and continuously evolving preferences
8/8/2019 MPI Group9
10/13
How to Enter/Consolidate the market?
J oint Ventures or D irect InvestmentsReasons : Large size of the market , greater control of investment, low risk as themarket is growingPsychic proximity
Sri Lanka andBangladesh
Sri Lanka andBangladesh
High sales in Argentina and MexicoGo for technical licensing . Assemble CKD unitsRecommended licensee location Argentina and/or Mexico
Latin AmericaLatin America
Indirect/direct export of CKD units
Existing sales not substantial
Middle East andNorth Africa
Middle East andNorth Africa
Continue indirect/direct exportingDon t spend on product adaptation in these markets as this entails higher costs
Europe, U.S.and Japan
Europe, U.S.and Japan
8/8/2019 MPI Group9
11/13
Product
StraightExtensionNeeds similarto IndianconsumerLow price and
lowmaintenance
StraightExtensionNeeds similarto IndianconsumerLow price and
lowmaintenance
Price
Market BasedpricingLowest costmanufacturer-pricing to getcompetitiveadvantage
Market BasedpricingLowest costmanufacturer-pricing to getcompetitiveadvantage
Place
Focus onexclusive andnon-exclusivedistributionLocaldistributors-better
understandingof marketTechnicaltraining todistributionstaff
Focus onexclusive andnon-exclusivedistributionLocaldistributors-better
understandingof marketTechnicaltraining todistributionstaff
Promotion
CommunicationadaptationSame creativetheme globallyAdapt thespecificexecutions todifferent localmarkets
CommunicationadaptationSame creativetheme globallyAdapt thespecificexecutions todifferent localmarkets
Marketing program for Developing countries
8/8/2019 MPI Group9
12/13
The company has three options:
Marketing Organisation
Set up an export department
Set up an International Division
Become a truly global organization
We recommend setting up an International D ivisionInternational D ivision under which the followingcome:
Sri Lanka/ BangladeshLatin AmericaMiddle East and North AmericaEurope, U.S. and Japan
8/8/2019 MPI Group9
13/13
T hank YouT hank You