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INTRODUCTION
INDUSTRY PROFILE
ABOUT BICYCLE
A bicycle or bike is a pedal – driven land vehicle with two
wheels attached to a frame, one behind the other. First introduced in
19th century Europe, bicycle evolved quickly into their familiar,
current design. Numbering over 1000, 000,000 in the world today,
bicycles provide the principal means of transportation in many
regions and a popular form of recreational transport in others. To
distinguish a bicycle from a motor cycle, it is also called a
pushbike.
The bicycle is one of the most notable of human invention.
The basic shape and configuration of the frame, wheels, pedal,
saddle and handle bars has hardly changed since the first chain
driven model was developed around 1885, although, many
important detail improvements have been made since, especially in
recent years using modern materials and computer-aided design.
A marketable aspect of the bicycle is its widespread
adaptation in many different fields of human activity, e.g. as a
child’s toy in adult recreation and fitness, as a means of everyday
transport, in cycle-touring as a barks of cycle sport (branches: tack,
of road or MTB, downhill, cycle-cross, time tailing, road racing,
cycle speedway, cycle polo, BMX), and as a basis for static
gymnasium or home fitness versions.
A human being traveling on a bicycle at low to mediums
speeds of a around 10-15 mph (16-24kph), using only the energy
required to walk, in the most energy – efficient means of transport
generally available. Is day, which increases with the square of
speed, requires increasingly higher power outputs relative to speed.
A bicycle in which the rides lies in a prone position and which may
be covered in as aerodynamic faring to achieve very low air drag in
referred to as a recumbent bicycle or human powered vehicle.
The bicycle has affected history considerably in both the
cultural and industrial realness. In its early years, bicycle
construction drew on pre-existing technologies; in turn, to others,
newer areas. Beyond recreation and amputation, bicycles have been
adapted for use in many occupations, including the military,
policing, courier services, and sports. A recurrent theme in
bicycling has been the tension between bicyclists and derivers of
motor vehicles, each group arguing for its fair share of the world’s
roadways.
THE HISTORY OF BICYCLE INDUSTRY
THE STORY
No single time a person can be identified with the invention
of the bicycle. Its earliest know forebears were called velocipedes
and included many types of human- powered vehicles. One of
these, the scooter-like dandy horse of the French comet de sivrac,
dating to 1970, was long cited as the earliest bicycle. Most bicycle
historians now believe that these hobbyhorses with no steering
mechanisms probably never existed, but were made up by Louis
bawdry de saunier, a 19th – century French bicycle historians.
The most likely originator of the bicycle in German Baron
Karl von Drais, who rode his tenants. He patented his draisine, a
number of which still exist, including of the paleis let too museum
in Apeldoorn, the Netherlands. These were pushbikes, powered by
the action of the rider’s feet pushing against the ground.
Scottish blacksmith Kirkpatrick Mac Million shakes creative
credit with von drais for adding a treadle drive mechanism, in 1840,
that enabled the rider to lift his feet off the ground while driving the
rear wheel. However, some reports describe Macmillan’s vehicle as
more of a “quadricycle”.
In the 1850s and 1860s, Frenchman Ernest Michhaux and his
pupil pierre lallement took bicycle design in a different direction,
placing pedals on an enlarged front wheel. There creation, which
came to be called the “Boneshaker”, featured a heavy steel fame on
which they mounted wooden wheels with iron tires. Lallement
emigrated to America, where he recorded a patent on his bicycle in
1866 in new haven, Connecticut.
James Starley further refined the Boneshaker in the 1870s.
He mounted the seat more squarely over the pedals, so that the rider
could push more firmly, and further enlarged the front wheel to
increases the potential for speed with tires of solid rubber, his
machine became known as the ordinary. British cyclists likened the
disparity in size of the two wheels to their win age, nicknaming it
the penny-farthing. The primitive bicycles of this generation were
difficulty to ride, and the high seat and poor weight distribution
made for dangerous falls.
The subsequent dwarf ordinary addressed some of these
faults, by adding gearing, reducing the front wheel diameter, and
setting the seat further back with no loss of speed. Having to both
pedal and steer via the front wheel remained a problem.
Staley’s nephew, J.K. Starley, J.H. Lawson, and Shergold
solved this problem by introducing the chain and producing rear-
wheel drive. These models were known as dwarf safeties, a safety
bicycles, for their lower seat height and better weight distribution.
Starley’s 1885s Rover is usually described as the first recognizably
modern bicycle. Soon as the seat tube was added, creating the
double triangle, diamond frame of the modern bike.
While the Starley design was much safer, the return to
smaller wheels made for a bumpy ride. The next innovations
increased comfort and ushered in the 1890s golden age of bicycles.
In 1885 Scotsman john Boyd Dunlop introduced the pneumatic tire,
which soon became universal. Shortly there often the rear free
wheel was developed, enabling the rider the coast without the
pedals spinning cut of control. This refinement led to the 1987
invention of coaster brakes. Derailleur gears and hand-operated;
cable-pull brakes were also developed during these years, but were
only slowly adopted by casual riders.
By the turn of the country, bicycling dubs flourished on both
sides of the Atlantic, and touring and racing were soon the range.
Successful early bicycle manufactures included Englishman
frank Bowdeb and German builder Ignaz schwinn. Bowden started
the Raleigh company in nothing ham in the 1890s and soon was
producing some 80,000 bicycles a year. Schwinn emigrated to the
united states. Where he founded his similarly successful company
in Chicago in 1895. Schwinn bicycles soon featured widened tires
and spring-cushioned, padded seats, sacrificing some efficiency for
increased comfort facilitated by connections between European
nations and their overseas colonies. European- style bicycles were
soon available worldwide.
By the mid. 20th century bicycles had become the primary
means of transportation for millions of people around the globe. In
many western countries the uses of bicycles traveled off a declined,
as motorized D became affordable and car- centered policies led to
an increasingly hostile road environment for bicycles. In North
America, bicycle sales declined markedly after 1905, to the point
where by the 1940s they had largely been relegated to the role of
childern’s toys. In the other part of the world however, such a
china, India and European countries such as Germany, Denmark,
and the Netherlands, the traditional utility bicycle remained a
mainstay of transportation, its design only gradually changing to
incorporated hand-operated brakes and internal hub gears allowing
up to seven speeds. In the Netherlands, such so- called granny bikes
have remained popular, and are again in production. Especially in
austere Dane they are often colorfully painted and or otherwise
decorated.
In North America, increasing consciousness of physical
fitness and environmental preservation spawned a renaissance of
bicycling in the late 1960s. Bicycle sales in the United States
boomed, largely in the form of the racing bicycles long used in such
events as the hugely popular Tour de France. Sales were also
helped by a number of technical innovation that were new to us
marked, including higher number of gears, while 10 speeds were
the rage in the 1970s, 12-speed designs were introduced in the
1980s and today most bikes features 18 or more speeds.
By the 1980s these newer designs had driven the three-speed
bicycle from the roads. In the late 1980s the mountain bike became
particularly popular, and in the 1990s something of a major fad.
This task-specific design led many American recreational cyclists
to demand a more comfortable and practical product. Manufactures
responded with the hybrid bicycle, which restored many of the
features long enjoyed by riders of the time tested European utility
bikes.
BICYCLE INDUSTRY IN INDIA
INDUSTRY SCENARIO
4 major manufactures- Hero, TICI, Atlas.
Industry capacity-119 Lakhs cycles p. a (as on 2003).
Industry capacity utilization-89 percent (as on 2003).
Industry penetration- 45 prcent (as on 2003).
Concentration of component supplies at
Ludhiana/Delhi.
Approx. 3500 deals across the country.
MAJOR PLAYERS (As on 2003)
Company Volume Market share
(Lac Nos.) %
Hero 53-85 45%
TII 28-83 24%
Atlas 28.30 24%
Others 7.68 6%
India is the second largest maker of bicycles in the world.
Around a million bicycles (valued at Rs. 1500 Crores) are produced
each year. Ludhiana has been the prime source of components fir
the cycle industry in India. Recently, vendor bases have come up in
other parts of the country there by diluting the geographical risk.
Cycles can be classified into two segments- standards and
specials. There are four major players- Hero cycles, TI cycles, Atlas
cycles and Avon cycles. With changing environment, the market for
standard for standard bicycles has become highly price sensitive
allowing small players take aggressive price postures. The special
category bicycle are more differentiated by design and find market
in kids, students and youth, for fitness and leisure.
The bicycle industry in India has witnessed a continues
downward tend in demand over the last three years. In 2004-2005,
there was 7 percent drop in volume over the previous year.
Increased urbanization, in proved public transport system, increased
affordably of motorized vehicles and limited road space for bicycles
(there in complete absence of “cycles only” lanes even in most
congested and polluted cities) are said to be some of the causes for
the down turn. However, the bicycle is still the first vehicle for
most children and there is growing use of bicycle as health and
leisure products.
COMPANY PROFILE
MURUGAPPA GROUP
The Murugappa group, headquartered in Chennai, India, is a
$1.5 billion conglomerate with interest in engineering, abrasives,
sanitary ware, fertilizers, finance, bio-products and plantations. It
has 29 companies under its umbrella; eight are listed and actively
handed on the national stock exchange and the Bombay stock
exchange. Together, they have over 28,000 employees.
The business has its origins in 1990, when Dew a bahadur
AM Murugappa chattier established a money-lending and banking
business in Burma (now Myanmar), which then spread to Malaysia,
Sri Lanka, Indonesia and Vietnam. A century down the line, it has
withstood enormous vicissitudes (including strategically moving its
assets bank to India and restarting from scratch in the 30’s before
the Japanese invasion in world war 2) to became one of the
country’s biggest industrial houses. The group turnover crossed the
$1 billion mark in 2003-04, with an impressive growth of 25% Rs.
42,060 million in 2002-03. The group clocked a 40 percent jump in
profit before tax over the previous year. Murugappa Group’s
consolidated turnover for 2004-05 crossed %1.44 billion. The group
achieved a growth of 20 percent over the previous year.
The group is a market leader in India across a spectrum of
products like sanitary ware, fertilizers, abrasive, automotive chains,
car doorframes and steel tubes. Neemzal, a neem - based organic
pesticide, is the country’s best known brands like BSA and
Hercules in bicycles, parry ware in sanitary ware, parry’s spiraling
and parry’s Beta carotene in nutraceuticals, ball master and Ajax in
abrasives, Gromor and paramfos in fertilizers, and many more come
from the Murugappa group.
Its companies have tie-up with Borg-warner of the USA,
wend of Germany. Morgan Crucibles of the U.K and Mitsui
Sumitomo insurance of Japan. It has registered 43 International
patents for its research and development innovation. The group has
grown consistently through its decisive and visionary response to
change times. Its pioneering efforts, steadfast commitment to
ethical business practices and it dogged pursuit of new arras to
extend its business acumen have brought in its wake several
prestigious national and international awards.
Social commitment has always been the cornerstone of the
group’s ethos and it has been at the forefront of eco-conservation,
public health, and education in the communities where its
companies operate, since 1957. It runs four schools, a polytechnic
college and four hospitals. Besides, the group runs a research and
development center for rural development the sir AMM Murugappa
Chettiar research center (MCRC), which has been a designing
simple, cost-effective technology for local artisans since 1977.
The Murugappa group has 29 companies active in the area of
engineering, abrasive, sanitary- ware, fertilizers, finance, bio-
products and plantations. The major companies of the group all:
Carborumdum Universal Limited
Cholamandalam Investment & Finance Company
Limited
Coromandel Fertilizers Limited
EID Parry Indian Limited
Godavari Fertilizers Limited
Parry Agro Industries Limited
Parry Nutraceuticals Limited
Tube investment of India Limited
Name of the Country % of turnover
TII 28%
EIDP 34%
CFL 16%
CUMI 8%
OTHERS 14%
TUBE INVESTMENT OF INDIA LIMITED
A reputed engineering company in India, driving excellent in
work and part of the US $1.5 billion India conglomerate, the
Murugappa Group.
CORPORATE CHRONICLE
Incorporate in 1949- TI cycles of India (TICI) in
collaboration with TI, UK the world’s largest manufactures
of bicycles.
A tube product of India (TPI) was established in 1955 with
the objectives of providing backward integration to bicycles.
TPI merged with TICI in 1959. Name of the company
changed to tube investments of India Ltd.
TPI established a cold Rolling mill in 1962 for the production
of cold Rolled close annealed steel strip.
TPI established EOU at Avadi in 1996.
Tube plant commissioned in 1997 at Shirwal, Maharashtra.
Facilities to produce doorframes for Maruti 800 cc and
Hyundai Santro in 1998
Cycles plant at Nashik set up in 2001.
Tube Investment of India limited is the flagship company of
Rs. 6250 cr. Murugappa Group. It manufactures precision steel
tubes and ships, car door flames, auto motives and industrial chain
and bicycles.
The company has 13 manufacturing assembly units spread
across the country. Marketing offices that act as interface between
customer requirements and production train ably support these
units. The company’s shares are listed on the national, Mumbai and
Chennai stock exchanges within India and GDRS on the
Luxembourg stock exchange. The company’s product segments
are- Engineering, metal formed products and cycles.
TI is the market leader in precision tubes with 61
percent market share by virtue of its quality &
application engineering capabilities.
TI is the market leader in roll formed car door flames
with 57 percent market share by virtue of its cist
efficiency, association with key auto majors and roll
forming capabilities.
TI is a leading players in auto motive chain with 35
percent market share by virtue of its quality, cist &
delivery and association with two wheeler major.
TI is a leading player in bicycles segment with 30
percent market share by virtue of its brand equity,
product development capability and proximity to the
markets.
The company reported a turnover of RS. 1563.39cr and profit
after tax of Rs. 98.55cr in 2004-2005.
The company also has an interest in the services sector
through its investments in Cholamandalam Investment and finance
company Ltd and Cholamandalam MS general insurance Co. Ltd.,
Tube investment of India was one of the most important post-
independence forays of the Murugappa group into manufactures. It
was a niche the group identified as a trump card for a nascent
nation; marking the poor man’s vehicle, the bicycle. It was
originally founded as TI cycles of India and TI miller-, which
manufactured cycle, lamps and dynamo sets-were merged with the
company in 1959 and 1984 respectively.
TII is the second largest- manufacturer of bicycles in India.
Marketing top Brands like Hercules, BSA and Philips, and had a
market share of 31 percent in 2003-04. In the value-added special
segment, TI in the leader, with a 50 percent market share. More
recently, the company entered the promising health conscious
‘exercise’ bicycle segment in 2002-03. TI cycles of India, one of
the leading bicycle manufacturers in India, started in 1949, has been
at the forefront of innovation and is a pioneer in the market of
cycles. TI cycles are the makes of country’s most famous brands
like Hercules, BSA and Philips cycles. The company’s vision is to
be a worldwide leader in cycling and solution by installing the pride
of ownership in the customers”.
BRANDS
Hercules- the flag ship brand of TI cycles portfolio, this
brand of ours is still as young as ever. Hercules stands for a unique
pride of possession-anchored in the time-tested values of heroisne
and integrity, to which the brand’s customers subscribe in their own
lives.
BSA- anchor flag ship brand of TI cycles, BSA stands for
Birneighani small arms. It signifies the joy of cycling; fun and
comfort go hand in hand with BSA. BSA today is an intrinsic part
of the Indian family with cycles for everyone kids teams and adults.
Certificates: certified with ISO 9002 & Iso 14001
Exports: TI cycles is an exporter to many regions across the
global-Europe, south East Asia and Africa; being some of them
Locations: Chennai (corporate HO), Nashile, Noida,
Durgapur, Banglore, Kolkatta, Patna & Ludhiana.
A subsidiary, tube products of India was set up in 195 in
collaboration with tube products (old bury) Ltd, UK to produce
electric resistance welded (ERW), cold drawn welded (CDW) tubes
and draw over mandrel (DOM) tubes. In 1957, tube investments of
India started production of cold-rolled close annealed steel strips, in
collaboration with TI, UK, primarily to meet in house and group
requirements.
Through started as a backward integration project for the
manufacture of bicycles, today, TPI is a major preferred supplies of
precision welded tubes to major automotive companies in India and
abroad. It is the undisputed leader in the Indian market for precision
welded ERW & CDW steel tubes, with the widest variety and range
in terms of size as well as material gracles offered. TPI started
operation at Avadi, Chennai, but has expanded with two more
plants satirically located in western and northern India.
Another subsidiary, TI metal forming, is a pioneer in coid
roll forming. It manufacturers and supplies value- added metal
formed components like car door flames, sash/division channels,
door guide rails and bar assembly. It has plant in Chennai and
Bawal (near Gurgaon). Both plants in Chennai and QS 9000
certified. The Chennai plant is ISO 14001 certified.
A third plant has been set up near Baroda (in Gujarat state,
Western India) to manufacture and supply doorframes, impact
beam, bar and rail assembly for general motors, India. Its client list
includes Maruti udyog general motors, India.
TIDC India formerly known as TI Diamond chain Ltd, was
established in 1960 in collaboration with the Diamond chain co,
USA. Starting as a marker of bicycle industrial chains TIDC
produce from tiller chains, leaf chains and conveyor chain to
industrial power drive chains, engineering class chains, in
automotive TIDC produces motorcycle drive chains and engine
mechanism chain and fine blank parts. Annually production runs to
45 million ESS feet, and commands 40 percent of the domestic
market share. The company is known for developing high
performance chains, for specific applications and machinery. Some
of TIDC’s popular brands are Diamond and Xtron, TIDC exports to
over 50 countries worldwide.
TII has entered into a joint venture with Borg Warner Morse
TEC, USA for production of timing and silent chains. It has entered
into a technology agreement with Tsubakimoto chains company,
Japan, for engineering class chains. Some of TI Diamond chain’s
popular brands are Diamond and Xtron.
UNITS
- TI CYCLES OF India
- TUBE PRODUCTS OF India
- TI METAL METAL FORMING OF India
ASSOCIATE COMPANY
- TI DIAMOND CHAIN LTD
TII – BUSINESS PORTFOLIO
Business % Turnover
Cycle 41%
Engineering 56%
Metal Forming 3%
PRODUCT PROFILE AND ORGANISATION STRUCTURE
TI cycles is one of the largest integrated cycle manufacture in
Asia, Manufactures high quality bicycles for both domestic and
international market. TICI manufactures and markets the
HERCULES, PHILIPS and BSA brands.
HERCULES
Hercules MTB
Hercules Thriller
Hercules Bravo
Hercules Torando
Hercules Axn
Hercules Glider
Hercules Top Gear Ezy Ultra
Hercules Ultima
Hercules Captain Shakthi
Hercules Grand Champion
Hercules Explorer
Hercules Captain Kidz
Hercules Ultima Dx
Hercules Ultima Ex
Hercules Wind pacer
Hercules Hurricane
Hercules Spitfire
BSA
BSA Champ plus
BSA Lady bird spot
BSA Lady Bird
BSA Dino sour
BSA Dash DX
BSA Comet
BSA Champ-H-Plus
BSA Aqua Zing
BSA Aqua Marine
BSA Rocket
BSA Diana
BSA I-Bike
BSA Mach
BSA New Mach
BSA Spice-Ic
BSA Fold man
BSA City Axt
BSA photon
BSA SLR 2000
BSA Delite
BSA Supreme
Health Segment
BSA Trimgyni
BSA Trimgyni Jogger & BSA Trimgyni Stepper
DEPARTMENT OF THE COMPANY
Departmental organization is concerned with grouping the
various activities into separate administrative units. It implies
grouping activities and employees into departments.
Departmentation may thus be defined as a “process of
grouping activities into units with a view to ensure effective
management”.
THE VARIOUS DEPARTMENTS:
1. HUMAN RESOURCES
2. SALES AND MARKETING
3. RESEARCH AND DEVELOPMENT
4. PRODUCTION/OPERATIONS
5. CUSTOMER SERVICE
6. FINANCE AND ACCOUNTS
7. ADMINISTRATION AND I.T
1. HUMAN RESOURCES
Recruitment and retention
- Job descriptions
- Person specification
Dismissal
Redundancy
Motivation
Professional development and training
Health and safety and conditions at work
Liaison with trade unions
2. SALES AND MARKETING
Market research
Promotion strategies
Pricing strategies
Sales strategies
The sales team
Product-advice on new product development, product
improvement, extension strategies, target markets.
3. RESEARCH AND DEVELOPMENT
New product development
Product improvements
Competitive advantage
Value added
Product Testing
Efficiency gains
Cost savings
4. PRODUCTION / OPERATION
Acquiring resources
Planning output-labour, capital, land
Monitoring costs
Projections on future output
Production methods
- Batch
- Flow
- Job
- Cell
5. CUSTOMER SERVICE
Monitoring distribution
After-sales service
Handling consumer enquiries
Offering advice to consumers
Dealing with customer complaints
Publicity and public relations
6. FINANCE AND ACCOUNTS
Cash flow
- Monitoring income/revenue
- Monitoring expenditure
Preparing accounts
Raising finance
- Shares
- Loans
Links with all other functional areas
7. ADMINISTRATION AND IT
Managing Estates – Cleaning, Health and Safety,
Maintenance, security.
Reception
Clerical work – reporting, recording, record keeping,
communication
Overview of quality control
Use of IT systems.
FUNCTIONS OF SECRETARIAL DEPARTMENT AND DUTIES
The secretary must observe all legal formalities in respect of
the companies act and other laws which have a bearing on the
activities of the company.
To maintain register of investments held by the company in
the name of its nominees.
To sign any document or proceedings requiring
authentication by the company.
To deliver for registration written off allotment.
To give notice of increase in share capital or of members to
register.
To deliver the share certificates within 3 months of allotment
or within 2 months of registration of transfer.
To make entries in the register of members on issue of share
warrants.
To make trust deed available to members and debenture
holders for inspection and to forward a copy of it to them on
request on payment of prescribed fee.
To deliver for a registration particular of mortgages and
charges to the register.
To maintain registration of charges.
To maintain index of members.
To maintain register and index of debenture-holders.
To sign the annual return.
To allow inspection of and to furnish copies of register of
members.
To send notices of general meetings of members.
To file resolutions and agreements requiring registration with
the registrar.
To prepare minutes of every general meeting and of every
meeting of the board of directors and of every committee of
the board.
To make available for inspection the minutes books of
general meetings.
To sign the annual accounts of the company.
To send the notices of meetings of the board of directors.
To maintain register of contracts in which directors are
interested.
To maintain register of directors, managers and secretary.
To mark available register of directors etc. for inspection.
To maintain register of director’s shareholdings.
To maintain register of inter-corporate loans.
To maintain register of inter-corporate investments.
He is responsible for deduction of requisite income tax from
dividends and interest and from salaries of employees, for timely
filing of tax returns with the income tax authorities and for issue of
a certificate of income tax deducted to every shareholder receiving
dividend.
He must see that the provisions of any other act applicable to
the company, E. g.: Foreign Exchange Regulation Act, Payment Of
Wages Act, etc.
Directors should formulate policy. The secretary helps them
in formulating this policy.
The company secretary must serve in the best interest of the
shareholders. Safeguard the interest of the shareholders.
He should replies to the inquires and complaints of the
shareholders on behalf of the board.
Maintaining records of meetings, issuing letters of
allotments, calls etc. registering transfer, issuing share certificates,
supplying information and copies of documents, arranging payment
of dividends etc.
As a chief administrative officer. The secretary is called upon
to supervise and control the functioning of officer and to co-
ordinate the activities of various deparments.
CONTENTS
Page No
1. Overview 1
1.1. Murugappa Group 1
1.2. TI Cycles of India 1
1.3. Vision 1
1.4. Mission 1
2. Competitive Analysis of Indian Cycle Industry 2
2.1. Competitors of TI Cycles 2
2.2. Core Competencies 2
2.3. SWOT Analysis 2
3. Value Chain Analysis of TI Cycles 3
3.1. Support activities 3
3.2. Primary activities 4
4. Five Force Model Application 4
4.1. Rival
4.2. New Entrants
4.3. Substitute
4.4. Supplier
4.5. Buyers
5. Future Strategic Options 5
5.1. Market Development
5.2. Product Development 5
6. Recommendations 5
Appendix
1. Overview
1.1. Murugappa Group
Headquartered in Chennai, the Rs.7300 plus crore Murugappa Group is
India's leading business conglomerate, which fosters an environment of
professionalism for its strong workforce of 28,000 employees. The group
has 29 registered companies, which are market leaders in diverse areas of
business viz. engineering, abrasives, finance, general insurance, sanitary
ware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and
nutraceuticals. The Group has manufacturing units in 12 states.
The Group has forged strong joint venture alliances with leading
international companies like Roca, Cargill, Cerdak, DBS Bank, Mitsui
Sumitomo and Groupe Chimique Tunisien and has consolidated its status
as one of the fastest growing diversified business house in India.
1.2. TI Cycles of India
TI Cycles of India is a part of Tube Investments of India (TII), a flagship
company of the Rs.7300 plus crore conglomerate Murugappa Group. TI
is the second largest manufacturer of bicycles in India, marketing top
brands like Hercules and BSA. The company is a market leader in the
value-added special segment, with a 50 percent market share. At present,
TI has twelve BSA GO stores across India.
Certified with ISO 9001:2000 and ISO 14001, TI Cycles is one of the
most quality and customer centric organizations. TI Cycles is an exporter
to many regions across the globe including Europe, South East Asia and
Africa.
1.3. Vision
No one should lose business with whom you do business, so the
company will be successful.
1.4. Mission
Ethical norms in dealing with all the stakeholders
Provide value of money to customers through quality and services
Treat employees with respect; provide opportunity to learn
innovativeness and creativity in business.
2. Competitive Analysis of Indian Cycle Industry
2.1. Competitors of TI Cycles
Table No.1
NO COMPETITORS MARKET SHARE IN 1999-2000
1 TI 23.3
2 Hero 43.43.
3 Atlas 24.95
4 Avon 8.31
Interpretation.
The market share of TI s not significant in terms of its competitors which
must be improved through market and product development. It should
exploit the market in special category and standard category.
2.2. Core Competencies.
Murugappa Family’s experience, knowledge, values, decision making
and strong financial support has played important role in the success of
TI over a long time period; they came to rescue the company when ever
the company needed the guidance and support.
2.3. SWOT Analysis
Strengths:
Strong Financial Support from group
Brand name awareness – Most cycle enthusiasts know the TI
name.
TI is known as a high-performance leader in the bicycle industry.
Good relationships with customers/dealers.
Research and Development capabilities: TI R&D department
keeps them up to date with the latest technologies involving
manufacturing of bicycles.
Weaknesses:
Accuracy of future analysis.
Lack of established manufacturing capabilities.
No products offering in motorcycle category.
Lack of global operations.
No new market tapping.(North)
Opportunities:
Internet/Mobile introduces new avenues to customer. This can
save costs of dealerships.
New markets in India and around the world
Entry into the lower cost bicycle market may add to market share.
Entry into market where Bicycles are the substitute product.
Threats:
The popularity of less expensive substitute products (Scooty)
More competitors entering the market.(China,Tiawan)
Shift of demand for higher priced to lower priced bicycles.
Unsure trends in the bicycle industry.
3. Value Chain Analysis of TI Cycles
3.1. SUPPORT ACTIVITIES
Firm Infrastructure.
a) Dedicated management team
b) Home-grown Financial Support
c) Formal Planning and Execution
Human Resource Management
a) Unionised
b) Competitive Pay structure
c) Fringe benefits
d) Divisional Monitoring
Technology
a) Indigenous Technical system and facilities
b) Appropriate R&D
c) Total Quality management
Procurement
All necessary inputs provided by one location shop floor only few input are imported.
3.2. PRIMARY ACTIVITIES
Inbounds. Frames, Forks, Mudgaurds, Rims, Tubes, Tyres
Operations. Manufacturing of Metal tubes, assembling of parts by
charge brazing and welding.
Out Bound. Complete Knocked Down kits to dealers in small quantities
in cases.
Marketing/Sales.
a) Well knitted dealers network and sub-dealers.
b) Sales cum services showrooms
c) Effective advertisement and sales promotion through celebrities
organizing events.
Services.
a) Cyclinics
b) Services and Spare parts available at show rooms
4. Five Force Model Application
4.1. Rival.
TI is facing stiff competition from the rival companies Like, Avon,
Atlas, Hero and few foreign competitors. The competition is strong in
standard cycles because the market growth of standard cycles is slow.
But it is weak in a sense that market for special cycles is growing
rapidly. Switching cost in special is low so the buyer may shift the
demand.
4.2. New Entrants
Over all the industry is growing so there is strong threat of new players
particularly form China, Indonesia and Taiwan with low priced cycles. It
is also weak because access to distribution channels is difficult and strict
regulatory control of the Government.
4.3. Substitute
TI is facing a considerable threat of substitute because close substitute of
cycles Scooty which is offered by Hero but switching cost is high.
4.4. Supplier
TI is not facing sizeable threat from suppliers because the major parts of
cycles are manufactured by them except some of the parts for special
cycles are imported from Japan.
4.5. Buyers
The Dealers and sub-dealers are compelling to provide the cycles
of their choice (Special) which may cause losing the market for standard
cycles. Buyers switching cost is low because of the availability of Hero,
Atlas, Avon and Chinese Cycles in the market.
5. Future Strategic Options
5.1. Market Development
The TI should consider following future strategies for the market
development.
a) Northern markets should be focused for broadening sales.
b) Offering cycles to Indian Postal Services.
c) Offering cycles and tricycles to Ice Cream vendors, Home
delivery services restaurants, Tea Companies and Soft Drink
Companies.
d) Offer cycles to courier companies.
e) Offering cycles for athletes.
5.2. Product Development
a) The TI should develop an advanced version of standard cycles for
rural area by
adding shock absorbers to carry heavy load with ease.
b) light and folding cycles should be developed the urban areas to
avoid traffic
congestion and parking problems.
c) A purpose built cycle with wide carrier for lunch providers in the
urban areas.
d) Purpose built cycles for house wives with added carriers.
6. Recommendations
1. TI should focus on redeveloping its bicycle manufacturing.
2. Include lower cost segment of bicycles. Create another brand of bikes.
These bikes will
be of the lower cost variety.
3. Outsource manufacturing of lower cost products to different countries.
4. Change distribution strategy to include major retailers. Lower cost line
can be sold in
these stores.
5. Include sales over the Internet.
Overall, there is great room for improvement on TI’s position. Although
the threats to TI are large, the company has opportunity that it is not
currently taking advantage of favourable environment. Although the
situation is not attractive, with the right change in strategy, TI can have a
brighter future.