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Submitted To: Submitted By:
Prof. Govinda Sharma INDRA SWETABH MANI (11022)
GUNDA V RAJYALAKSHMI (11079)
MANNE RAMYA RAVALI (11089)
GIRISH S D (11137)
HANIYA ERAM (11139)
KANISHKA SHARMA (11144)
BPSM Proje
ct on
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Agenda
Industry Overview
Company Overview
CPM
Porters Five Forces
SWOT
SPACE Matrix
Quantitative Strategy Planning Matrix
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About CompanyYear Historical Significance
1948 Birth of Ashok Motors
1949 First A40 Assembled
1950 Ashok Motors and Leyland (UK) collaboration
1954 Govt. approval for manufacture of commercial vehicles
1955 Ashok Motors becomes Ashok Leyland
1967 Nations first Double decker bus (Titan) rolls out from AL
1970 Special purpose Tipper vehicle (1,000 Nos.) delivered to Indian Army
1974 Rs. 1,000 million Turnover
1982 Nations first articulated bus introduced in Bangalore
1987 The Hinduja Group acquired Ashok Leyland1993 First Indian Auto company to receive ISO 9002 (QA in PIS) Certification
1997 All-Terrain logistic vehicle Stallion for Indian Army (Adv. during Kargil war)
2006 Acquisition of AVIA
2007-2008 Joint venture with Nissan, Continental AG, Alteams, John Deere
2010 - 2012 Hybrid CNG, U truck platform, controlling stake in Optare, DOST, Jan Bus
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Hinduja Group
Ashok Leyland
Ashok Leyland Defense Gulf Oil (Commercial explosives, Lubricants, Mining, Specialty
chemicals
IndusInd Bank(Switzerland)
Hinduja Global Solutions (formerly named HTMT Global Solutions) P. D. Hinduja National Hospital and Medical Research Centre
Hinduja Realty Ventures Limited
Impeccable Imagination (Design related Infrastructure)
IndusInd Media and Communications Ltd. Hinduja Foundries (Education, Arts & Culture, Social Welfare,
Sports)
Defiance Technologies Limited
British Metal Corporation (India) Pvt Ltd.
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Products
1. Buses (City, Sub-Urban, Inter-City, School, Special)
2. Trucks (Long haul, Mining & Construction, Distribution)
3. Light Vehicles (Dost)
4. Defense
1. Logistical (Fox, Stallion, Rhino)2. Tactical(MPV)
3. Special Purpose vehicles (Buses)
5. Power Solutions
1. Leypower (Diesel Generating Sets)2. Leymarine (Marine Engines and Aggregates)
3. Special Engines (Engines for Crane, Sprinkler)
4. Leygas (Generating sets running on Natural Gas)
5. Leyfire (Engines for Fire Fighting applications)
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CPM
Critical Success Factors Weights Ashok Leyland Tata Motors Eicher Motors
Rating Weighted
Score
Rating Weighted
Score
Rating Weighted
Score
Distribution channel 0.2 3.5 0.7 4 0.8 2.5 0.5
After Sales Service 0.2 2.5 0.5 3.5 0.7 2 0.4
Financial
Position
0.15 3 0.45 2 0.3 4 0.6
Product Quality 0.13 3.5 0.455 3 0.39 2 0.26
Brand Value 0.12 3.5 0.42 4 0.48 2 0.24
Market Share 0.1 3 0.3 4 0.4 1 0.1
Price Competitiveness 0.1 3 0.3 3 0.3 4 0.4
Total 1 3.125 3.37 2.5
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CPM Contd..
Distribution ChannelTATA:
1. 19 Distributors and approximately 1200 authorized retail outlets
2. Distribution agreement with Apex Greatest Industrial Co Ltd (AGI), Myanmar to sell
Commercial Vehicles
3. Integrated CRM-DMS, linking more than 1,200 dealers and tracking 25,000 customers
Ashok Leyland:
1. 220 dealer outlets and 410 service centers across the country
Eicher:
1. 381 dealers across the country
2. Presence in 40 countries
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CPM Contd.. After Sales Service
Tata Motors
1. Breakdown assistance in association with MyTVS (Repair and Towing service).
2. Response time within city limits 60 Mins, State/National Highways 90
Mins, Ghat roads 120 Mins
Ashok Leyland
1. Every major highway has a service centre every 75 Kms, reaching customer
within 4 hours and restoration of vehicle within 48 hours.
2. 19,000 mechanics and 5,800 retailers
Eicher Motors
1. Repairs within 48 hours in North-South and East-West corridors
2. Breakdown compensation if it fails to attend
3. Mobile service vans at all dealerships, to support running repairs
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CPM Contd.. Financial Position
Terms Ashok Leyland Tata Motors Eicher
2011 2010 2009 2011 2010 2009 2011 2010 2009
PBIT
990.73 646.63 365.75 3686.48 4219.82 1769.85 144.07 89.06 47.1
Invested
capital
6621.15 5936.75 5435.87 35912.05 31429.69 25559.83 557.1 474.14 413.3
ROIC
0.1496 0.1089 0.0672 0.1026 0.1342 0.0692 0.2586 0.1878 0.1139
ROIC %14.96 10.89 6.72 10.26 13.42 6.92 25.86 18.78 11.39
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CPM Contd.. Market Share
Company 2006 2007 2008 2009 2010 2011
Tata motors 62% 62.9% 60.5% 61.9% 63.3% 60.1%
Ashok
Leyland
27% 27.9% 27.5% 25.7% 23.3% 25.5%
Eicher
motors
7.4% 6.8% 8.2% 7.4% 8.6% 9.3%
Others 3.5% 2.4% 3.9% 5% 4.7% 5.15%
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Threat of Substitute
Products
Threat of new
Entrants
Industry Rivalry Bargaining Power of
Supplier
Bargaining Power of
Customers
1. Railway and
Aviation form the
substitutes
2. Railway
connectivity is still
poor, though the
freight cost might be
low.3. Air cargo has a
CAGR of 10.9%
(international cargo is
67%). Complexities in
expanding network.
1. Bharat Benz, SML
Isuzu, Kamaz Vectra,
Man Se, Volvo, and
Scania AB
2. Capital
requirements to start
the business are huge
3. Customers cannoteasily switch loyalty
4. Developing
technology suited to
Indian conditions
takes time
5. Developing sales
and service channel
takes time
1. CV Industry
expected to grow with
a CAGR of 15%, every
competitor wants a
share of the pie
2.Ashok Leyland JV
with John Deere to
distribute and marketconstruction
equipment in India
landed in court due to
Telcon (TATA
Subsidiary)
3. Exit barriers are
high, hence
competitors will stay
1. Number of
dedicated suppliers
2. Supplier an equal
partner in the process
3. Support to
improvise the supplier
process
1. 1st level - Fleet
owners (bulk buy)
2. 2nd level State
Road Transport
corporations (Price
conscious)
3. No drastic product
differentiation withcompetitor products
4. Cost of switching is
low
5. Too many
competitors, hence
customer has the final
say
Porters 5 Forces Model
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SWOTSTRENGTHS
1. Strong Brand Name
2. Standard, innovative, unique quality Products
3. Extensive Dealer Network400 full service outlets in the
country
4. Better supplier understanding
5. Long term relationship with customers
6. Own comprehensive R&D base - 1000 membered product
management team
WEAKNESS
1. Late entrant in LCV segment
2. Too much dependency on state road transport corporations
3. Failure to capitalize on new emerging African and Asian
markets
4. Undifferentiated Product
OPPURTUNITIES
1. Projects like JNURM are expected to boost the urbaninfrastructure which in turn is expected to drive demand
2. Expansion to Global Markets
3. Commercial vehicle Industry is expected to grow with a
compound annual growth rate of 15% by FY 2016-2017
(Young)
4. Delhi Mumbai Industrial Corridor is expected to drive the
demand.
5. Proposed 51% in FDI Retail is expected to improve the supply
chain system creating demand for commercial vehicles.
Indian Army needs:
o 1,500 light bullet-proof vehicles
o 4,500 light specialist vehicles
o 16,000 infantry combat vehicles
o 4,000 light armoured vehicles
o Heavier vehicles needed to tow Howitzers (Telegraph)
THREATS
1. Entry of new global competitors2. Weak Index of Industrial production
3. Tight monetary policy viz., Higher lending rate
4. Suspension of mining activities in many parts of the country
5. Deferment of capacity addition by fleet owners
6. Higher inflation Higher raw material costs
7. LCV demand from the rural sector dependent on monsoon
success.
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SPACE Matrix
Environmental stability
Criteria Remarks Score
Overall economic condition 100% dividend in the year ended March 2012 -2
GDP growth India is the 4th biggest commercial vehicle market in the world.30%
Average 24% Y-o-Y growth over last 3 fiscals
-2
Inflation High Inflation and Political Issues -4
Price elasticity Demand is price Inelastic in long run -2
Technology Headquartered in Chennai (Detroit of South India).Automobile hub of
India.1000 membered product management team
-1
Competitive pressures Now, manufacturers from China, India, and perhaps other emerging
nations will be significant sources of supply, and customers around the
world will demand new vehicles at ever-decreasing prices.
-4
Average -2.5
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SPACE Matrix
Industry Strength
(PR Web)
Criteria Remarks Score
Industry growth
potential
India is expected to have the fastest-growing auto sales. since end of
the License Raj era gave local VMs time to develop, India has capable
manufacturers and suppliers, which provide talented partners for
foreign companies
6
Barriers to entry The barriers to enter the automotive industry are substantial. Although
the barriers to new companies are substantial, established companies
are entering new markets through strategic partnerships or through
buying out or merging with other companies
5
Global Market
Development
Asia-Pacific is forecast to emerge into the fastest growing market, great
future growth opportunities in African countries (Sub-Saharan AfricaTransport Policy Program, SSATP)
5
Average 5.3
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Financial strength
(Capitaline)
Criteria Remarks Score
Return on assets Ashok Leyland ROA is 10.52% and Industry average is 6.30% 6
Leverage Ratio Ashok Leyland leverage ratio is 0.59 higher the industry's 0.52 3
Profitability Profit over sales for Ashok Leyland is is 5.53% that is higher than
industry average of 3.93%
5
Average 4.67
SPACE Matrix
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Competitive
Advantage
Criteria Remarks Score
Market Share Ashok Leyland hold 25.50% market share which has increased by
9.44% over the year, Still far behind Tata Motors which hold
60.10%
-2
Global Presence Ashok Leyland is exporting pessenger vehicles to 30 countries.
Targeting Emerging markets of Asian and African Countries.
-2
Average -2
SPACE Matrix
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Point on X-axis (3.3)
Industry Strength (5.3) + Competitive Advantage (-2)Point on Y-axis (2.17)
Financial Strength (4.67) + Environmental stability (-2.5)
The Coordinate of X-axis and Y-axis will fall on 1st Quarter
SPACE Matrix
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QSPM
Strategy 1
Product Line extension of Bussegment to provide luxury Intercity
Coach (Bus)
Strategy 2
Marine engine product line extensionto provide sales and service to vessel
owners
Key Internal Factors Weight Attractive Score Total A Score Attractive Score Total A Score
Strengths
1. Strong Brand Name 0.12 4 0.48 3 0.36
2. Better supplierunderstanding
0.1 3 0.3 2 0.2
3. Long term relationship with
customers
0.12 4 0.48 2 0.14
4. Unique Product 0.08 2 0.16 4 0.32
5. Own comprehensive R&D
base
0.1 3 0.3 4 0.4
Weakness
Sensitive to globalization 0.14 2 0.18 3 0.42
Undifferentiated Product 0.13 2 0.3 3 0.45
Marketing 0.08 2 0.16 1 0.08
Service & Support 0.13 2 0.16 3 0.19
Sub Total 1.0 2.52 2.56
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QSPM Contd..
Strategy 1
Product Line extension of Bussegment to provide luxury Intercity
Coach (Bus)
Strategy 2
Marine engine product line extensionto provide sales and service to vessel
owners
Key Internal Factors Weight Attractive Score Total A Score Attractive Score Total A Score
Opportunities
Growth of market 0.15 3 0.45 2 0.3
Global alliance 0.15 3 0.45 4 0.6
Corridors between cities 0.15 3 0.45 2 0.3
Threats
Inc. market competition 0.1 2 0.2 4 0.4
Govt. Policy and Taxes 0.15 3 0.45 1 0.15Economy fluctuations 0.15 2 0.6 3 0.45
Dependency on Customer 0.15 2 0.3 3 0.45
Sub Total 1.0 2.9 2.65
Sum Total Attractiveness 5.42 5.21
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Pointers on Strategy 1
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