Strategic Analysis of Behr India

A study of internal and external environment.

Abhishta, Nikhil Agarwal and Samarth Bharadwaj

Table of Contents

1. About the Company............................................................................................31.1 Behr GmbH & Co.KG, Germany..............................................................................................................31.2 Anand Group..................................................................................................................................................31.3 Products...........................................................................................................................................................4

1.3.1 Air Conditioning Systems..................................................................................................................... 41.3.2 Engine Cooling Systems........................................................................................................................ 4

1.4 Boston Consultancy Group Matrix for its products......................................................................61.5 SWOT Analysis..............................................................................................................................................7

1.5.1 Strengths..................................................................................................................................................... 71.5.2 Weakness.................................................................................................................................................... 81.5.3 Opportunities............................................................................................................................................ 81.5.4 Threats......................................................................................................................................................... 8

1.6 PESTLE Analysis...........................................................................................................................................91.6.1 Importance of PESTLE Analysis........................................................................................................91.6.2 Political........................................................................................................................................................ 91.6.3 Economic.................................................................................................................................................. 101.6.4 Social.......................................................................................................................................................... 101.6.5 Technological......................................................................................................................................... 111.6.6 Environmental....................................................................................................................................... 111.6.7 Legal........................................................................................................................................................... 111.6.8 Our comments on the PESTLE Analysis......................................................................................12

1.7 TOWS Framework....................................................................................................................................131.8 Value Chain Analysis of Engine Cooling Modules.......................................................................141.9 Conclusion....................................................................................................................................................14

1. About the Company

Behr India Limited is a Joint Venture between Behr GmbH & Co.KG, Germany &

Anand, India. The company was incorporated in July 1997 as a systems partner

for the Indian automobile industry and is the leading manufacturer and supplier

of thermal management systems to the passenger car and commercial vehicles

segments.

1.1 Behr GmbH & Co.KG, Germany

Behr GmbH & Co. KG, Stuttgart, is a systems partner of the international

automobile industry. A specialist for automotive air conditioning and engine

cooling systems, the Behr Group is one of the world’s leading manufacturers and

suppliers of original equipment for light vehicles and trucks. Group sales in the

2011 business year came to EUR 3.7 billion. Currently, Behr employs some

17,400 staff at 36 production locations and 17 R&D centers worldwide. Since its

foundation in 1905, Behr has developed from a small family-owned operation

into a globally active automotive industry supplier that is active worldwide -

with continually increasing success. Today, the Behr name is synonymous with a

seal for future- oriented innovations and top-quality products.

1.2 Anand Group

Provider of the widest range of solutions to the Indian Automotive Industry,

Anand is among India's leading manufacturers of Automotive Systems and

Components making it the country’s leading OEM supplier. Anand has a major

presence in the Indian Aftermarket as well, with some of its major brands being

Market Leaders. The group supplies to every major vehicle and engine

manufacturer in the country.

Anand is known for its established and successful partnerships with leading

global automotive front runners, each one being a global leader in its area of

operation. The group has 15 Joint Ventures and 6 Technical Collaborations with

these world leading companies.

1.3 Products Air Conditioning Systems

Engine Cooling System

1.3.1 Air Conditioning Systems

1.3.1.1 HVAC Modules

Behr offers design and validation for complete refrigerant circuits and solutions

for optimal air distribution in the vehicle cabin. Behr designs entire HVAC

systems or delivers finely- tuned HVAC modules based on customer

specifications. Behr’s HVAC system is generally robust & compact in size and

provides excellent cooling performance with low noise & low power

consumption. Behr is known for making the HVACs for most of the bus

manufacturers in the country.

HVAC modules include:

Climate Box

Heater & Evaporator

Control Panel

Piping

Rear Blower

1.3.2 Engine Cooling Systems

Engine Cooling Modules

Visco® Fan Drive Systems

EGR Coolers

1.3.2.1 Engine Cooling Modules

Engine Cooling Systems from Behr are very compact with high performance &

durability. There intercoolers are constructed with high performance tabulators

provided inside tube giving high durability & plastic inlet/outlet tanks which

withstands high pressure resulting in compact size with less weight. We have

KOMO type condenser designed such that it can be directly snap mounted to

radiator without bracket & plastic frame and can withstand high refrigerant

internal pressure. One of the most popular product of Behr India which is

presently the most selling.

Engine cooling module includes:

Radiator

Intercooler

Condenser

FMS

1.3.2.2 Visco® Fan Drive Systems

Behr manufactures:

Mechanical Visco Clutch

Electronic Visco Clutch

Behr has locally designed & manufactured mechanical visco clutches available to

serve applications like SUV, LCV & M/HCV segment. We supplies to most of the

OEM’s present in India. Behr has a wider range of fans available locally as well as

can import the same based on need of application. To meet noise emissions &

fuel economy norms, we have introduced Electronic visco clutch which is directly

controlled by engine ECU using PWM signals. Benefits of E-Visco are reduced

parasitic losses for improved fuel economy, Reduced noise etc. Behr is probably

the only firm producing this redundant product which will soon be in no

demand.

1.3.2.3 EGR Coolers

Behr recently commissioned a high-tech Laser welding set up for manufacture of

Euro IV and onwards compliant EGR coolers. This is technology; at present; used

for emission compliance for Euro IV norms, particularly for the NOx emission.

Behr uses the patented Winglet Tubes design with the latest laser welding

process in this product. It has varied EGR configurations to suit various

applications in both passenger car and commercial vehicle segments. They are a

new product and need investment but are a product of the future.

1.4 Boston Consultancy Group Matrix for its products

A business with a range of products has a portfolio of products. However, owning

a product portfolio poses a problem for a business.  It must decide how to

allocate investment (e.g. in product development, promotion) across the

portfolio. A portfolio of products can be analyzed using the Boston Group

Consulting Matrix.  This categorizes the products into one of four different areas,

based on:

Market share – does the product being sold have a low or high market

share?

Market growth – are the numbers of potential customers in the market

growing or not

Boston Consultancy Group Matrix for Behr India (Category Wise)

1.5 SWOT Analysis

A SWOT analysis (alternatively SWOT matrix) is a structured planning method

used to evaluate the strengths, weaknesses, opportunities and threats for a

business analysis.SWOT analysis can be carried out for a product, place, industry

or person. It involves specifying the objective of the business venture or project

and identifying the internal and external factors that are favorable and

unfavorable to achieve that objective.

1.5.1 Strengths

The following are the strengths of the firm:

The only German company producing automobile heat exchangers in the

country.

A great connection with all the German car manufacturing companies.

Biggest producer of Charger air coolers in the company.

Fully automated CNC machine tools and a much reduced cycle time due to

the introduction of wheel crimping machines on the shop floor which

reduce setup time.

Behr holds the patent for its special brazing process for aluminum heat

exchangers.

Greater employee satisfaction as they can change jobs between Anand

Group companies.

Special employee engagement programs result in high efficiencies.

1.5.2 Weakness

The following are the weaknesses of the firm:

Still a huge amount of rejections due to after brazing leak.

Less amount of space available on the shop floor for further expansion.

Use of redundant processes such as hydraulic dye crimping machines.

Low worker productivity as compared to other companies as per their

own study.

1.5.3 Opportunities

The opportunities that can be explored by Behr to open new avenues:

Increased sells of diesel vehicles.

More number of air conditioned busses in demand.

Increase in sells of German car companies.

Hiring by Anand group from elite colleges.

1.5.4 Threats

Subros, which is popular among Japanese car manufacturers.

Increase in prices of aluminum.

Its own sister companies which are with Anand Group may become a

threat in the future.

1.6 PESTLE Analysis

PESTLE Analysis is a simple, useful and widely-used tool that helps you

understand the "big picture" of your Political, Economic, Socio-Cultural and

Technological, Legal and Environmental aspects. As such, business leaders use it

worldwide to build their vision of the future. PESTLE analysis is concerned with

the environmental influences on a business. Identifying PESTLE influences is a

useful way of summarizing the external environment in which a business

operates. However, it must be followed up by consideration of how a business

should respond to these influences.

1.6.1 Importance of PESTLE Analysis

It is important for these reasons:

First, by making effective use of PESTLE Analysis, you ensure that what

you are doing is aligned positively with the powerful forces of change that

are affecting our world. By taking advantage of change, you are much

more likely to be successful than if your activities oppose it;

Second, good use of PESTLE Analysis helps you avoid taking action that is

doomed to failure from the outset, for reasons beyond your control;

Third, PESTLE is useful when you start operating in a new country or

region. Use of PESTLE helps you break free of unconscious assumptions,

and helps you quickly adapt to the realities of the new environment

1.6.2 Political

In 2002, the Indian government formulated an auto policy that aimed at

promoting integrated, phased, enduring and self-sustained growth of the

Indian automotive industry

Allows automatic approval for foreign equity investment up to 100% in

the automotive sector and does not lay down any minimum investment

criteria.

Laying emphasizs on R&D activities carried out by companies in India by

giving a weighted tax deduction of up to 150% for in house research and

R&D activities.

Indian government auto policy aimed at promoting an integrated, phased

and conductive growth of the Indian automobile industry.

Allowing automatic approval for foreign equity investment up to 100%

with no minimum investment criteria.

1.6.3 Economic

Several Indian firms have partnered with global players. While some have

formed joint ventures with equity participation, other also has entered

into technology tie-ups.

Establishment of India as a manufacturing hub, for mini, compact cars,

OEMs and for auto components.

1.6.4 Social

Since changed lifestyle of people, leads to increased purchase of

automobiles, so automobile sector have a large customer base to serve.

The average family size is 4, which makes it favorable to buy a four

wheeler.

Growth in urbanization, 4th largest economy by PPP index.

Upward migration of household income levels.

Indian customers are highly discerning, educated and well informed. They

are price sensitive and put a lot of emphasis on value for money.

Preference for small and compact cars. They are socially acceptable even

amongst the well off.

Preference for fuel efficient cars with low running costs.

1.6.5 Technological

Companies in India are laying more and more emphasis on R&D activities

carried out.

Weighted tax deduction of up to 150% for in-house research and R & D

activities.

The Government of India is promoting National Automotive Testing and

R&D Infrastructure Project (NATRIP) to support the growth of the auto

industry in India. 

Technological solutions helps in integrating the supply chain, hence

reduce losses and increase profitability.

Customized solutions (designer cars, etc) can be provided with the

proliferation of technology.

With the entry of global companies into the Indian market, advanced

technologies, both in product and production process have developed.

1.6.6 Environmental

Physical infrastructure such as roads and bridges affect the use of

automobiles. If there is good availability of roads or the roads are smooth

then it will affect the use of automobiles.

Physical conditions like environmental situation affect the use of

automobiles. If the environment is pleasant then it will lead to more use

of vehicles.

Technological solutions helps in integrating the supply chain, hence

reduce losses and increase profitability.

1.6.7 Legal

Legal provision relating to environmental population by automobiles.

Legal provisions relating to safety measures.

1.6.8 Our comments on the PESTLE Analysis

Well, the environment of the Behr India as a industry directly depends

upon the environment of the Indian automobile industry.

Also at the rate at which the rates of petrol are growing, demand of diesel

cars is going to increase a lot, thus increasing the demands of charger air

coolers of Behr.

As people are shifting to public transport HVAC will be a product to look

on for the company.

More technological betterments in the company will surely allow Behr to

produce greater heat exchangers in lesser amount of time.

Their relationship with the German companies is strong.

1.7 TOWS Framework

TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS

and SWOT are acronyms for different arrangements of the words Strengths,

Weaknesses, Opportunities and Threats.

External Opportunities(O)1. Increased Sales of diesel vehicles.2.More demand of air-conditioned cars.3. Increase in sells of german made cars.

External Threats (T)1. Subros is more popular among Japanese firms.2. Increase in prices of aluminum.

Internal Strengths(S)1.Connection with german firms.2.Biggest producer of CACs.3.Automated Machining4.Patent for brazing of aluminum.

SOContact the German

Car Manufacturers to increase market share.

STPatent can be

licensed so as to cover aluminum costs

and CAC can be marketed among

Japanese companies.

Internal Weaknesses (W)1.High rejection rate.2.Less space available in shop floor.3.Use of some redundant machines.4.Low per worker productivity.

WOGerman car

manufacturers can help Behr to improve

there processes.

WT Increased process

efficiency can become competitive advantage.

TOWS framework for Behr India

1.8 Value Chain Analysis of Engine Cooling Modules

Radiators, CACs and Condensers cool down the air that passes through it. Hence

value of the product is in how effectively the product cool down the heated up

medium. It basically depends upon the amount of air that comes in contact with

the cooling portion of the product in one unit time and the material of the

product. Hence increase in surface area would result in more volume of air

getting cooled down per unit time. So, all of these products have a basic structure

of fin tube matrix allowing a very large surface area to come in contact with the

air. All of these products are made up of aluminum as it is a good conductor of

heat and is also cost effective as compared to copper. As a matter of fact copper

radiators also exist in the market.

Secondly the air that is an input to the device is needed back by the system for

cooling; hence it is very important that during the cooling procedure minimal

amount of air is lost. For this brazing of the core is done. As for a fact we cannot

achieve ‘zero leak’ hence it is taken care that the leak remains on the lower side.

Finally as all these products are manufactured for the automotive industry hence

there performance should not be affected by shocks and jerks during the travel;

thereby strength of the joints and proper crimping of the manifold to the header

adds value.

Summarizing it all we can conclude that the ‘value’ of radiators, CACs and

condensers depend upon the following properties:

Surface area and the material used

Leak proof nature

Joining at the contact point of tubes and fins in the matrix.

Overall strength of the product against the shocks and jerks

1.9 Conclusion

The corporate level strategy of Behr may soon change as Mahale now acquired it.

The strategy at the other levels may remain same. It would be a matter of

curiosity for me to see how fast they take Visco Fans off the market. Their

strategy is hugely impacted by the strategy of their customers i.e. the automobile

giants.