Chetan Strategy Analysis

7/29/2019 Chetan Strategy Analysis

1/22

Strategy AnalysisTwo Wheeler Industry In India

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)

Submitted to : Prof Ranjan Das


2/22

2

1948-1980

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 ofscooters

1980-2000

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 Salesgrowth declined to 3%

Till 2000: Bajaj Auto undisputed market leader, 32% market share

2000-2012

1996 05: Motorcycles segment share doubled to 79% , Scooters declinedto 16%, and Mopeds 5%,

2000-05: HHML, due to motorcycle segment, doubled market share from20% to 40%, emerge as market leader.

2000-05: TVS market share declined from 22% to 18%

Evolution Of Two Wheeler Industry


3/22

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

2008-09 2009-10 2010-11 2011-12

Total sales

Motorcycles

Scooters

Total Sales (# Units)

0

5000

10000

15000

20000

25000

30000

35000

40000

Annual Sales in Rs crore

Two Wheeler Current Industry (2012) Scenario


4/22

Bargaining Power ofSuppliers

LOW

Threats of new Entrant

LOW

Bargaining Power ofBuyers

HIGH

Threats Of Substitutes

LOW

Jockeying among currentplayers

HIGH

Porters Five Competitive Force Analysis :


5/22

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

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

Threats Of Substitutes - Low

Cheap alternativesBus, Auto, Low End Cars / however none offers convenience

Moderately

Attractive


6/22

6

SELECTION OF BEST & WORSTPERFORMING COMPANIES

Best Bajaj AutoWorst Kinetic Motors


7/22

7

0

10

20

30

40

50

60

70

80

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

ROCE Bajaj

ROCE Industry

ROCE Kinetic

ROCE Analysis

-5000

500

1000

1500

2000

2500

3000

3500

4000

4500

5000


Velocity Bajaj

Velocity Industry

Velocity Kinetic

Velocity Analysis

-1200

-1000

-800

-600

-400

-200

0

200

400

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 RONW BajajRONW Industry

RONW Kinetic

RONW Analysis

0

1

2

3

4

5

6


Asset Turnover Ratio

Bajaj


Industry


Kinetic

Asset Turnover Ratio Analysis

Financial Analysis


8/22

8

1960-1980

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

1980-2000

Two wheeler Industry was deregulated and faced the competition inthe 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 - KawasakiBajaj Caliber

2000-2012

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

HISTORY OF BAJAJ AUTO


9/22

9

Vision :

To attain world class excellence by demonstrating

value added products to customers.

Mission:

Focus on value based manufacturing

Continual improvement

Total elimination of wastePollution free and safe environment

BAJAJ : VISION AND MISSION STATEMENT


10/22

10

STRENGTHExtensive R&D

Highly experienced player

Widespread distribution network

Wide product range in terms of price,

quality and categories

WEAKNESS

Not a global brand despite high

volume production

OPPORTUNITY

Premium sports bikes for urbanareas

Constant growth industry

THREATS

Entry of international brands(e.g

Hyosung , Korea)

Growth in scooter segment

Cut throat competition

SWOT - BAJAJ


11/22

11

Segment

Middle-class

people who wanta bike that isstylish and has agood mileage.

Positioning

Premium Segment

Pulsar , AvengerEliminator , Ninja (KB150 cc & above )

Executive Segment135cc (Discover ,XCD)

Economic segment

100cc ( Platina)

Target Group

Youth between the

age of 20-35. Middle class & Upper

middle class .

WHERE TO COMPETE * Market Selection+

BUSINESS STRATEGY BAJAJ


12/22

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 ).


13/22

13

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.


14/22

14

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.


15/22

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 firstExhausTEC technology, SNS suspension, Ride Control Switch.

Technological Innovation, Economy of Scale

Dec, 2004: Signed deal with Kawasaki Motor Philippines Corp. to export 100cc entry-

level motorcycle, CT-100, to the Southeast Asian nation Capturing new Markets

Analysis Of Market Signals Bajaj Auto


16/22

16


17/22

Kinetic Motors Ltd


18/22

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

OPPORTUNITY

Improvised Design with powerfulengine / fuel efficiency &

accessories

Tap teenagers & style conscious

customer.

THREATS

New entrants with Low price

Better fuel efficiency

Better service network

SWOT- Kinetic


19/22

19

Segment

Gearless Scooters

Positioning

Kinetic Honda, onlyin metro cities.

Through a selecteddealers only.

Target Group

Middle-class Ladiesand old aged people

WHERE TO COMPETE * Market Selection+

BUSINESS STRATEGY Kinetic


20/22

20

HOW TO WIN ORDERS.. [Competitive Advantage]

Kinetic

- Comfort while driving.

- Technology focused for ladies

bikes.


21/22

Key Take away:

- Failure of success

- Benchmark the industry and change accordingly.

- Competition is eternal.


22/22

THANK YOU

Chetan Strategy Analysis

Documents

Transcript of Chetan Strategy Analysis