final eco presetation

8/7/2019 final eco presetation

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Group 3-Ashwin Nair(10P213)-Nikhil Gupta(10P215)-Poulomi Mukherjee(10P219)-Shashank Shekhar(10P232)-Vipul Manglik(10P241)


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Started in 1945 as a trading company Obtained license in 1959 to manufacture two

and three wheelers Rolled out 100,000 vehicle in 1970 Managed to produce and sell 100,000 vehicles in

single year in 1977 Demerged into 3 separate entities in 2005 -

Bajaj finserve, Bajaj Auto & Bajaj Holdings andInvestment Ltd Building $2,500 low cost car in collaboration

with Renault and Nissan Motor


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Few firms selling a homogeneous or

differentiated product

High degree of interdependence or rivalryamong firms

Price competition can lead to ruinous price

wars Firms prefer to compete on basis of product

differentiation, advertising and service


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Entry into industry possible, but it is not easy

Economies of scale

Huge capital investments and specialized inputs

Patent ownership for exclusive right to produce acommodity or use a particular production process

Loyal customer base Few firms may own or control the entire supply of

a raw material

Government franchise given only to a few firms


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P* Current Market Price

At prices above P* a small price risebrings a big decrease in the quantity

sold highly elastic

At prices below P* even a large price

cut brings only a small increase in thequantity sold less elastic


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47.00%

34.00%

8.00%

5.00%3.00% 3.00%

Motorcycle Market Share

Hero Honda

Bajaj Auto

TVS Motors

Honda Motorcycle

Ya a aOt ers

Four Fir Concentration Ratio = 0.96

Herfinda l Index ~ 3500


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Constant Price war between Hero Honda & Bajaj October 2007: Hero Honda offered discount of Rs

2020 on CD Deluxe; Bajaj responded with a discountof Rs 4000 on Platina to counter competition

Reducing Operating Margins over the years dueto competitive pricing strategies by all theplayers

Lower product prices also acts as an barrier to

entry Increased advertising spends by one leads to

increase in ad spends by all players Bajaj launches Naye Bharat ki Nayi Tasveer ad

campaign

Honda responds with Desh ki Dhadkan


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Threat from Substitutes

Low price 4 wheelers

4 wheelers convenience and status symbol

Second hand car market

Threat from new entrants

Barriers to entry reduced as 100% FDI allowed

Huge investments required for setting updistribution channels and service stations

Brand building costs are high

100% import duty on foreign bikes reducesnewer entrants

Supplier Power

Supplier power is low

Suppliers fragmented and exclusive

Backward integration by 2 wheeler companies

Buying Power

Buying power is high

Price sensitivity reduced due to ease infinancing

Buyers demand 2 wheelers as it suits theirpersonality and comfort

Current competition:

- Intensified

- Greater brand building and advertising

-Tremendous growth potential in rural markets


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Personal Income Demand increases as income increases, later substituted by demand for four

wheelers Demography

Bigger the young and working population, greater the demand Penetration Level Lower the penetration level in the market better the scope for market

demand Interest rates

Decrease in bank rates leads to increase in demand Oil Prices

Increasing oil prices deter many lower many middle class buyers State of public transport system

Poorer the public transport, the greater the demand Low Priced Cars

Launch of low priced cars like Tata Nano and reduction in price of second handcars


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R Square 86.83%

Adjusted R Square 83.07%

F - Statistic 23.0758

Critical F-Statistic at 95% Confidence: 4.74

Dependent Variable:Annual Sales for Bajaj Motor cycles

Independent Variable:Per Capita Income of India

WPI (Weighted Price Index) of Petrol


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Equation:

Sales = 9254.71*Petrol WPI +

14.85*Per Capita Income -593708.08

0.00

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

3,000,000.00

3,500,000.00

Actual

Forecast


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Year Petrol WPI Per Capita Income Bajaj Annual Sales

2000-01 154.24 16688 963115

2001-02 158.09 17782 1198227

2002-03 163.25 18885 1251855

2003-04 178.73 20871 1288910

2004-05 203.54 23198 1602565

2005-06 231.09 26003 2029090

2006-07 254.79 29524 2396999

2007-08 242.26 33283 2160927

2008-09 260.85 37490 1919582

2009-10 242.66 40489 2511696

2010-11 281.15 41519 2624574

2011-12 294.27 44264 2786807

2012-13 307.40 47009 2949039

2013-14 320.53 49753 3111271


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Trend Equation: St = S0 + bt

Bajaj Quarterly Motorcycle sales trend

equation with quarterly data for the last 10years: St = 111558 + 14391t

R2= 80.99%


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0

100000

200000

300000

00000

500000

600000

700000

800000

900000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 1 3 5 7

Actual

Forecast


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Quarter Actual Sales Forecast Actual/Forecast

2000 Q2 146097 125949 1.16

2001 Q2 168546 183513 0.92

2002 Q2 210932 241077 0.87

2003 Q2 259071 298641 0.87

2004 Q2 341435 356205 0.96

2005 Q2 445557 413769 1.08

2006 Q2 623062 471333 1.32

2007 Q2 531516 528897 1.00

2008 Q2 561475 586461 0.96

2009 Q2 599737 644025 0.93

Average 1.01


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0

100000

00000

300000

400000

500000

600000

700000

800000

900000

1 3 5 7 9 11 13 15 17 19 1 3 5 7 9 31 33 35 37 39 41 43 45 47

Actual

Forecast

Forecast withseasonal

variations


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St = S0 + b1*D1t+ b2*D2t+b3*D3t+b0t

Dit: Seasonal Dummy Variable for the i

th Quarter

TrendE

quation Obtained:St = 84421 + 22957*D1t + 29629*D2t + 50534*D3t+ 14547t

R2= 81.94%

F statistic = 39.70


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0

100000

200000

300000

400000

500000

600000

700000

800000

00000

1 3 5 7 11 13 15 17 1 21 23 25 27 2 31 33 35 37 3 41 43 45 47

Forecast

Actual


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QuarterTrend Forecast without

Seasonal Variations

Forecast using to Ratio-to-

Trend Method

Forecast Using Dummy

Variables

2010 Q2 701589 706621 706808

2010 Q3 715980 757776 742170

2010 Q4 730371 684598 706094

2011 Q1 744762 706820 743509

2011 Q2 759153 764598 764638

2011 Q3 773544 818700 800000

2011 Q4 787935 738555 763924

2012 Q1 802326 761452 801339


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final eco presetation

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