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Strategy AnalysisTwo Wheeler Industry In India
GROUP - 3 (VLMP 2012-13)
Vivek Deshmukh ( Reg No 09)
Chetan Patil (Reg No 16)
Ravi Chandrawanshi (Reg No 21)
Sharad Katwa (Reg No 27)
Sitikantha Das (Reg No 28)Sridhar Prasad V (Reg No 29)
Submitted to : Prof Ranjan Das
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1948-1980
1948: Two-wheeler industry came into existence in India
1948: Bajaj Auto began trading in imported Vespa Scooters from Italy
1950s: Automobile Products of India (API) started production ofscooters
1980-2000
1980's: JVs launched with Japanese manufacturers for building motorcycles
1980s: Kinetic introduced gearless scooter in collaboration with Honda 1990s: Two wheeler Industry deregulated, competition intensified
1995-98: Industry faced worst recession, YoY Salesgrowth declined to 3%
Till 2000: Bajaj Auto undisputed market leader, 32% market share
2000-2012
1996 05: Motorcycles segment share doubled to 79% , Scooters declinedto 16%, and Mopeds 5%,
2000-05: HHML, due to motorcycle segment, doubled market share from20% to 40%, emerge as market leader.
2000-05: TVS market share declined from 22% to 18%
Evolution Of Two Wheeler Industry
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0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2008-09 2009-10 2010-11 2011-12
Total sales
Motorcycles
Scooters
Total Sales (# Units)
0
5000
10000
15000
20000
25000
30000
35000
40000
Annual Sales in Rs crore
Two Wheeler Current Industry (2012) Scenario
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Bargaining Power ofSuppliers
LOW
Threats of new Entrant
LOW
Bargaining Power ofBuyers
HIGH
Threats Of Substitutes
LOW
Jockeying among currentplayers
HIGH
Porters Five Competitive Force Analysis :
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Bargaining Power of Suppliers - Low
Common components / multiple suppliers / Powerful buyers dictate the terms
Threats of new Entrant - Low High Capital Investment / Skilled Labour / High R & D Capability / Branding
Strength / IP , Patents / Accessibility to distributors & suppliers
Economies Of scale / Product Differentiation
Bargaining Power of Buyers - High
Availability of full Information / Plenty of Varieties available / Low switching
Cost
Jockeying among current players Oligopoly market - High
Products being matched in few months by competitors
Threats Of Substitutes - Low
Cheap alternativesBus, Auto, Low End Cars / however none offers convenience
Moderately
Attractive
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SELECTION OF BEST & WORSTPERFORMING COMPANIES
Best Bajaj AutoWorst Kinetic Motors
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0
10
20
30
40
50
60
70
80
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
ROCE Bajaj
ROCE Industry
ROCE Kinetic
ROCE Analysis
-5000
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Velocity Bajaj
Velocity Industry
Velocity Kinetic
Velocity Analysis
-1200
-1000
-800
-600
-400
-200
0
200
400
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 RONW BajajRONW Industry
RONW Kinetic
RONW Analysis
0
1
2
3
4
5
6
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Asset Turnover Ratio
Bajaj
Asset Turnover Ratio
Industry
Asset Turnover Ratio
Kinetic
Asset Turnover Ratio Analysis
Financial Analysis
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1960-1980
Emerged in the Automobile industry in 1960 with 2 wheeler VESPA
under license from Piaggio Of Italy
Bajaj Chetak,1976 - Bajaj Super,1981 - Bajaj M-50
1980-2000
Two wheeler Industry was deregulated and faced the competition inthe 1990s, Bajaj Auto began to face a threat from foreign players
Kawasaki Bajaj KB100, Kawasaki Bajaj KB125,1990 Bajaj Sunny ,1991 -Kawasaki Bajaj 4S Champion,1993 - Bajaj Stride,1994 - Bajaj Classic
1995 - Bajaj Super Excel,1997 - Kawasaki Bajaj Boxer, 1998 - KawasakiBajaj Caliber
2000-2012
2001 - Eliminator, Bajaj Pulsar, Discover DTS-I,2005 - Bajaj Wave, Bajaj
Avenger, 2006 Bajaj Platina 2007 - Bajaj Pulsar-200 (Oil Cooled), XCD 125 DTS-Si,2008 - Bajaj
Discover 135 DTS - i - sport (Upgrade of existing 135cc model),2009,XCD -135 cc
2012 - Bajaj RE 60, mini car for intra-city urban transportation
2012 - KTM Duke 200, launch of 200cc bike from the KTM stable
HISTORY OF BAJAJ AUTO
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Vision :
To attain world class excellence by demonstrating
value added products to customers.
Mission:
Focus on value based manufacturing
Continual improvement
Total elimination of wastePollution free and safe environment
BAJAJ : VISION AND MISSION STATEMENT
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STRENGTHExtensive R&D
Highly experienced player
Widespread distribution network
Wide product range in terms of price,
quality and categories
WEAKNESS
Not a global brand despite high
volume production
OPPORTUNITY
Premium sports bikes for urbanareas
Constant growth industry
THREATS
Entry of international brands(e.g
Hyosung , Korea)
Growth in scooter segment
Cut throat competition
SWOT - BAJAJ
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Segment
Middle-class
people who wanta bike that isstylish and has agood mileage.
Positioning
Premium Segment
Pulsar , AvengerEliminator , Ninja (KB150 cc & above )
Executive Segment135cc (Discover ,XCD)
Economic segment
100cc ( Platina)
Target Group
Youth between the
age of 20-35. Middle class & Upper
middle class .
WHERE TO COMPETE * Market Selection+
BUSINESS STRATEGY BAJAJ
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Customer Value:
VALUE [V= P+S+D+E ]
Product or core offerings [P] = (Aesthetic look
+ competitive price);
Delivery [D] = (Widespread service network +quick service + easy spare parts availability On
spot vehicle finance & Bajajs own vehicle
insurance ).
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Bajaj : Cost & Technology Leadership
Technology leadership:
Both DTS-i (Digital Twin Spark Ignition) and
DTS- Fi (Digital Twin Spark Fuel Ignition) -
Exhaus TEC (Exhaust Torque Expansion
Chamber).
Cost leadership:
Lean manufacturing practices.
Kaizens for quality and cycle time
reductions.
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VALUE DELIVERY MODEL
Efficient Vendor management:
70 % non core activities outsourced to vendors.
Vendors in close vicinity of assembly plant.
Third party logistic providers for long distance vendors. (Milk run concept)
TPM policy for vendors.
Strong inventory control through ICT implementation.
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May, 12: Recommended 450% dividend of Rs 45/ share (previous year 400%).
declared amongst the world most profitable automobile manufacturer.
Influence Customer behavior
Dec,09: End of the road for Bajaj scooters. Exit declining market
Sep,05: Strategy to countering cut-throat competition by restructuring its retail
business model and opened of 50 Pro-biking Specialised Stores across major metros.
Vertical integration
June05: launched Avenger, high-performance, high margin bike in premium segment
Niche Market
Dec, 2005: launched 112 cc Discover, to leverage highly successful Discover brand and
to capture market share in the 'Executive' segment with alloy wheels, world firstExhausTEC technology, SNS suspension, Ride Control Switch.
Technological Innovation, Economy of Scale
Dec, 2004: Signed deal with Kawasaki Motor Philippines Corp. to export 100cc entry-
level motorcycle, CT-100, to the Southeast Asian nation Capturing new Markets
Analysis Of Market Signals Bajaj Auto
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Kinetic Motors Ltd
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STRENGTH
Pioneer in gearless scooters
First Electronic Ignition system USP Convenience for women ,
old aged & differently - abled
persons
WEAKNESS
Low Turnover on R & D
Low mileage
High cost of Spare parts Poor after sale service
Market Myopia
OPPORTUNITY
Improvised Design with powerfulengine / fuel efficiency &
accessories
Tap teenagers & style conscious
customer.
THREATS
New entrants with Low price
Better fuel efficiency
Better service network
SWOT- Kinetic
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Segment
Gearless Scooters
Positioning
Kinetic Honda, onlyin metro cities.
Through a selecteddealers only.
Target Group
Middle-class Ladiesand old aged people
WHERE TO COMPETE * Market Selection+
BUSINESS STRATEGY Kinetic
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HOW TO WIN ORDERS.. [Competitive Advantage]
Kinetic
- Comfort while driving.
- Technology focused for ladies
bikes.
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Key Take away:
- Failure of success
- Benchmark the industry and change accordingly.
- Competition is eternal.
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THANK YOU