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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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