Description
A CASE STUDY ON BAJAJ AUTO LIMITED
BAJAJ Auto Limited
INTRODUCTION
• Company – Market Position • Company’s History • Indian Two Wheeler Market • Brief Case Outline
26-06-2012 2
Bajaj - Growth
• 1926
? Formation of Bajaj Group
• 1938
? Bajaj Electronics
• 1945
? BTCL
• 1950 – 1956
? Collaboration with Piaggio
• 1959
? License from GoI
• 1960
? BTCL renamed
26-06-2012 3
Cont.
• 1971
? End of Piaggio Collaboration
• 1975
? JV with Govt. of Maharastra
• 1982
? Foreign Tech. and Expansion of Capacity
• 1985
? Second Plant at Waluj
• 1984
? Collaboration with Kawasaki
26-06-2012
4
Main Issues
• Examine the evolution of an industry • Appreciate the impact of the economic, social, and cultural changes • Analyze the strategies adopted
• Adopting a customer-oriented product strategy
26-06-2012
• Competition
5
Micro Environmental Factors
• Suppliers… • Marketing Intermediaries…
? Dealers ? Advertisements
• Consumers… • Competitors…
26-06-2012 6
Macro environment
• Demographic environment • Economic environment
• Natural environment
• Technological environment • Political environment • Cultural environment
26-06-2012
7
Demographic Environment
• Favorable Demographics
• size and growth rate of population
26-06-2012
8
Demographic Environment…
• The customer is likely to be salaried and in the first job
• The attributes that are sought of a two-wheeler have also changed
26-06-2012
9
Demographic Environment…
• The youth - demanding stylish and sleek products
• rural markets:- favours bigger wheels and longer wheelbases
26-06-2012
10
Economic Environment
• Income distribution and consumer spending patterns.
• Rural consumer have lower
incomes than urban consumers.
26-06-2012
11
Economic Environment…
• reduced purchasing power due to significant rise in general price level
• 30 % rise in fuel prices
26-06-2012
12
Natural Environment
• Tightening of Indian emission regulations
• forced to upgrade their technology • Affects price advantage over motorcycles
26-06-2012
13
Technological environment
• 1993 - 12 different 2 & 3 wheeler models
• Simpler technology in 2 wheelers • Modernization of both Plants
? 50% components sourced from outside
• World’s lowest cost manufacturer of 2 wheelers
26-06-2012 14
Technological envi..
• Lacked in design capability & translation of new products • Lacked in sufficiently skilled R&D and high quality of suppliers • 1993 - Agreement with “orbital”
• Lost export opportunity to developed countries
26-06-2012 15
Political environment
• Restricted by Indian economic & political environment • Was granted license after 14 years of its inception • Restrictions also helped BAL and other 2 wheeler manufacturers
26-06-2012
16
Political environment…
• Early 1980’s-liberalization of Indian economy • Rise in fuel prices by 30%
• Early 1990’s-Entry of many other consumer goods like televisions, washing machines, etc
• Restrictions in finance for purchase of two wheelers
26-06-2012
17
Cultural environment
• Two wheelers as a means of daily commuting • Rural consumers –
? “Value for money” ? 40% of domestic sales
• Urban consumers –
? “concept of value that included visual appeal of the product”
26-06-2012
18
Cultural environment
• Used “Kawasaki” as a brand name
• Consumers believed it as a “company selling a good quality product at a reasonable price”
26-06-2012
19
EXPORT PREVIEW
?
STARTED IN 1975 WITH BANGLADESH
?
TECHNICAL LICENSING ARRANGEMENT
?
CKDS SALES IN ASIA
26-06-2012
20
FOREIGN DISTRIBUTORS
?
FIRST DISTRIBUTORSHIP WAS EASTABLISHED IN SRI LANKA EXPANSION IN DISTRIBUTORS PIAGGIO THREAT RIGHTS AND RESPONSIBILITIES OF DISTRIBUTORS
?
?
?
26-06-2012
21
GLOBAL MARKET
?
DEVELOPED COUNTRIES EUROPE JAPAN NORTH AMERICA
?
DEVELOPING COUNTRIES SOUTH EAST ASIA AND CHINA AFRICA AND MIDDLE EAST LATIN AMERICA
26-06-2012
22
THREE WHEELER MARKET
MOST OF EXPORT TO DEVELOPING COUNTRIES.
SMALL THREE WHEELER MARKET IN DEVELOPED COUNTRIES CHINA WAS MAJOR PLAYER
26-06-2012
23
Global Three Wheeler Market Share- 1992
Others 8%
Chinese 38%
Piaggio (Italy) 18% Tuck Tuck (Thailand) 3%
Piaggio (Italy) Tuck Tuck (Thailand) Bajaj Auto (India) Chinese Others
Bajaj Auto (India) 33%
26-06-2012
24
TWO WHEELER MARKET
?
DEVELOPED COUNTRIES TWO SEGMENT UNDER 50cc AND ABOVE 250cc LUXURY AND LEISURE PRODUCT
DOMINANCE OF JAPANESE MANUFACTURERS
BENEFIT OF GENERALISED SYSTEM TO INDIAN VEHICLES PRICE BENEFIT OF BAJAJ SUNNY
26-06-2012
25
Bajaj Auto Ltd's Exports- 1992 ( Rs '000s)
Africa, 12850, 5% Latin America, 104498, 38%
Europe, 24796, 9% Europe Asia Middle East Asia, 121295, 44% Latin America Africa
Middle East, 12271, 4%
26-06-2012 26
DEVELOPING COUNTRIES
TARIFF BARRIERS IN SOUTHEAST ASIA
INTENSE COMPETITION IN CHINA LOW PURCHASING POWER IN AFRICA LATIN AMERICA WAS AN ATTRACTIVE MARKET
?
?
?
?
26-06-2012
27
Imports By Countries
Rest of World 26% Europe Europe 53% North America 21% North America Rest of World
26-06-2012
28
STRATEGY FOR EXPORT IMPROVEMENT
?
BAL should go for DEVELOPING country market Greater co-operation with Foreign Distributor Further research in export market EASTERN EUROPE –huge potential
?
?
?
26-06-2012
29
CONCLUSION FOR DOMESTIC MARKET
Development of R&D and outsourcing
Decreasing dependence on supplier Full capacity utility of existing plant and new plant by 1998
?
?
?
?
Greater emphasis on motorbike
26-06-2012
30
CONCLUSION..
?
Advertisement of Sunny for higher age group target customer
R&D allocation should be based on future estimate of product demand Highlighting on product differentiation and features
?
?
?
?
26-06-2012
Development of diesel Auto rickshaw
High end bikes with updated style for urban population Development of 4-stroke bikes
31
CONCLUSION for RURAL INDIA
?
More dealership for rural area Increase advertisement for rural India-Radio advertisement for better coverage Increase in service station and availability of spare parts
?
?
?
Fuel efficient and low priced bike
26-06-2012
32
doc_280658850.ppt
A CASE STUDY ON BAJAJ AUTO LIMITED
BAJAJ Auto Limited
INTRODUCTION
• Company – Market Position • Company’s History • Indian Two Wheeler Market • Brief Case Outline
26-06-2012 2
Bajaj - Growth
• 1926
? Formation of Bajaj Group
• 1938
? Bajaj Electronics
• 1945
? BTCL
• 1950 – 1956
? Collaboration with Piaggio
• 1959
? License from GoI
• 1960
? BTCL renamed
26-06-2012 3
Cont.
• 1971
? End of Piaggio Collaboration
• 1975
? JV with Govt. of Maharastra
• 1982
? Foreign Tech. and Expansion of Capacity
• 1985
? Second Plant at Waluj
• 1984
? Collaboration with Kawasaki
26-06-2012
4
Main Issues
• Examine the evolution of an industry • Appreciate the impact of the economic, social, and cultural changes • Analyze the strategies adopted
• Adopting a customer-oriented product strategy
26-06-2012
• Competition
5
Micro Environmental Factors
• Suppliers… • Marketing Intermediaries…
? Dealers ? Advertisements
• Consumers… • Competitors…
26-06-2012 6
Macro environment
• Demographic environment • Economic environment
• Natural environment
• Technological environment • Political environment • Cultural environment
26-06-2012
7
Demographic Environment
• Favorable Demographics
• size and growth rate of population
26-06-2012
8
Demographic Environment…
• The customer is likely to be salaried and in the first job
• The attributes that are sought of a two-wheeler have also changed
26-06-2012
9
Demographic Environment…
• The youth - demanding stylish and sleek products
• rural markets:- favours bigger wheels and longer wheelbases
26-06-2012
10
Economic Environment
• Income distribution and consumer spending patterns.
• Rural consumer have lower
incomes than urban consumers.
26-06-2012
11
Economic Environment…
• reduced purchasing power due to significant rise in general price level
• 30 % rise in fuel prices
26-06-2012
12
Natural Environment
• Tightening of Indian emission regulations
• forced to upgrade their technology • Affects price advantage over motorcycles
26-06-2012
13
Technological environment
• 1993 - 12 different 2 & 3 wheeler models
• Simpler technology in 2 wheelers • Modernization of both Plants
? 50% components sourced from outside
• World’s lowest cost manufacturer of 2 wheelers
26-06-2012 14
Technological envi..
• Lacked in design capability & translation of new products • Lacked in sufficiently skilled R&D and high quality of suppliers • 1993 - Agreement with “orbital”
• Lost export opportunity to developed countries
26-06-2012 15
Political environment
• Restricted by Indian economic & political environment • Was granted license after 14 years of its inception • Restrictions also helped BAL and other 2 wheeler manufacturers
26-06-2012
16
Political environment…
• Early 1980’s-liberalization of Indian economy • Rise in fuel prices by 30%
• Early 1990’s-Entry of many other consumer goods like televisions, washing machines, etc
• Restrictions in finance for purchase of two wheelers
26-06-2012
17
Cultural environment
• Two wheelers as a means of daily commuting • Rural consumers –
? “Value for money” ? 40% of domestic sales
• Urban consumers –
? “concept of value that included visual appeal of the product”
26-06-2012
18
Cultural environment
• Used “Kawasaki” as a brand name
• Consumers believed it as a “company selling a good quality product at a reasonable price”
26-06-2012
19
EXPORT PREVIEW
?
STARTED IN 1975 WITH BANGLADESH
?
TECHNICAL LICENSING ARRANGEMENT
?
CKDS SALES IN ASIA
26-06-2012
20
FOREIGN DISTRIBUTORS
?
FIRST DISTRIBUTORSHIP WAS EASTABLISHED IN SRI LANKA EXPANSION IN DISTRIBUTORS PIAGGIO THREAT RIGHTS AND RESPONSIBILITIES OF DISTRIBUTORS
?
?
?
26-06-2012
21
GLOBAL MARKET
?
DEVELOPED COUNTRIES EUROPE JAPAN NORTH AMERICA
?
DEVELOPING COUNTRIES SOUTH EAST ASIA AND CHINA AFRICA AND MIDDLE EAST LATIN AMERICA
26-06-2012
22
THREE WHEELER MARKET
MOST OF EXPORT TO DEVELOPING COUNTRIES.
SMALL THREE WHEELER MARKET IN DEVELOPED COUNTRIES CHINA WAS MAJOR PLAYER
26-06-2012
23
Global Three Wheeler Market Share- 1992
Others 8%
Chinese 38%
Piaggio (Italy) 18% Tuck Tuck (Thailand) 3%
Piaggio (Italy) Tuck Tuck (Thailand) Bajaj Auto (India) Chinese Others
Bajaj Auto (India) 33%
26-06-2012
24
TWO WHEELER MARKET
?
DEVELOPED COUNTRIES TWO SEGMENT UNDER 50cc AND ABOVE 250cc LUXURY AND LEISURE PRODUCT
DOMINANCE OF JAPANESE MANUFACTURERS
BENEFIT OF GENERALISED SYSTEM TO INDIAN VEHICLES PRICE BENEFIT OF BAJAJ SUNNY
26-06-2012
25
Bajaj Auto Ltd's Exports- 1992 ( Rs '000s)
Africa, 12850, 5% Latin America, 104498, 38%
Europe, 24796, 9% Europe Asia Middle East Asia, 121295, 44% Latin America Africa
Middle East, 12271, 4%
26-06-2012 26
DEVELOPING COUNTRIES
TARIFF BARRIERS IN SOUTHEAST ASIA
INTENSE COMPETITION IN CHINA LOW PURCHASING POWER IN AFRICA LATIN AMERICA WAS AN ATTRACTIVE MARKET
?
?
?
?
26-06-2012
27
Imports By Countries
Rest of World 26% Europe Europe 53% North America 21% North America Rest of World
26-06-2012
28
STRATEGY FOR EXPORT IMPROVEMENT
?
BAL should go for DEVELOPING country market Greater co-operation with Foreign Distributor Further research in export market EASTERN EUROPE –huge potential
?
?
?
26-06-2012
29
CONCLUSION FOR DOMESTIC MARKET
Development of R&D and outsourcing
Decreasing dependence on supplier Full capacity utility of existing plant and new plant by 1998
?
?
?
?
Greater emphasis on motorbike
26-06-2012
30
CONCLUSION..
?
Advertisement of Sunny for higher age group target customer
R&D allocation should be based on future estimate of product demand Highlighting on product differentiation and features
?
?
?
?
26-06-2012
Development of diesel Auto rickshaw
High end bikes with updated style for urban population Development of 4-stroke bikes
31
CONCLUSION for RURAL INDIA
?
More dealership for rural area Increase advertisement for rural India-Radio advertisement for better coverage Increase in service station and availability of spare parts
?
?
?
Fuel efficient and low priced bike
26-06-2012
32
doc_280658850.ppt