Description
This is a report describes on Royal Enfield using the concepts and theories of Organizational Theory and Practice.
Organizational Analysis – A Case Study of
The Royal Enfield Motorcycle Company
Submitted By Aditya Dixit Anand Agrawal Nayantara Maria Rodriguez Shovan Kumar Kundu Subhayu Roy
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Contents Part-I 1.1 Introduction……………………………………………………3 1.2 History………………………………………………………….3 Part-II 2.1 Financial Performance 2000-2001…………………………..12 2.2 Financial Performance 2004-2005…………………………..13 2.3 Financial Performance 2006-2007…………………………..15 Part-III 3.1 Organizational Practices – A Discussion…………………....18 3.2 Factors Conducive for the Growth of the Organization…...20 3.3 Growth of the Organization…………………………………21 3.4 Factors that led to Expansion & Growth…………………..21 3.5 Decline & Subsequent Expansion – Factors……………….21 Part-IV 4.1 Conclusion……………………………………………………22 4.2 Learning from the Project…………………………………..22 4.3 References……………………………………………………22
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1.1 Introduction Amongst all the two-wheelers sold in India, no Indian brand commands as much respect as the Royal Enfield marquee. With a rich heritage and a multi-continental history behind it, this brand today represents the aspirations of the Indian biker to ride a world-class vehicle. One of the only Indian brands to be exported to 14 countries across the globe, the Royal Enfield brand is a true story of an organization managing enormous amount of dynamism in the market, and rivaling a new set of competitors every year. With a sale of 7 lakh 2-wheelers every year, the Indian 2wheeler industry has to keep up with the changing tastes of the customers and every participating corporate is therefore hard pressed to deliver year on year. The following study aspires to study the history of this illustrious organization and analyze the organizational strategies and moves that has enabled this company to stay profitable while catering to a niche segment of customers across the globe.
1.2 History The Beginning Hunt End, England was a village of several small mills manufacturing needles and fish-hooks. It was here in 1851 that George Townsend put up his needle-making mill, which he named Givry Works. But it wasn’t until his passing away that his son, George Jr. and his half-brother brought into Givry Works one of the first 'boneshakers' – a crude cycle. It had a backbone of iron, with wooden wheels, iron tyres and pedals of triangular pieces of wood! Though the bike was a source of some amusement, George and his team felt they could easily improve on it. The earliest modern safety bicycle with two wheels of equal size had appeared in about 1880. All manufacturers were trying their hand at this new venture. So was George Townsend Jr. By luck, he chanced upon an invention in his neighborhood – a saddle that only used one length of wire in the two springs and in the framework. This was adopted, patented and marketed as the 'Townsend Cyclists Saddle & Spring'. He had entered the bicycle parts trade! From bicycle parts, Townsend slowly moved on to producing bicycles himself. He was also supplying a wide range of parts to other manufacturers - Givry Works was growing rapidly. Over the next three years he developed his own range of over two-dozen machines. Each machine, known locally as the 'Townsend cycle' was reputed for its sturdy frame, a character that all Enfield bikes would follow.
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1891 A Little Trouble Townsend got himself into a bit of financial trouble in about 1890 and called in some financiers from Birmingham. Unfortunately, they didn’t quite see eye to eye. So Townsend parted ways with the financiers leaving the company to them. The financiers then brought in Albert Eadie and R.W. Smith. They took control of Townsend’s in November 1891. The following year the firm was rechristened ‘The Eadie Manufacturing Company Limited’. Soon after, Albert Eadie got a lucrative contract to supply precision rifle parts to the Royal Small Arms Factory in Enfield, Middlesex. To celebrate the contract, Eadie and Smith decided to call the first new design of bicycle, the ‘Enfield’
1909 Motorcycle Craze It would be interesting to note here that motorcycling was thought to be a temporary enthusiasm that would soon fade out! A brief spin on a motorbike then took several hours of preparations tuning the tiny water-cooled engine, getting the tyres pumped, the gears oiled and a supply of spare parts packed. In 1909, Royal Enfield took the biking world by surprise. At the motorcycle show that year, they displayed a small 2 1/4 hp V twin-engine machine built in the Swiss tradition, which ran very well. A slightly larger model was developed in 1911. A 2 3/4 hp, with all chain drive incorporating the well-known Enfield two-speed gear. This model stood up until 1914.
THE ROYAL ENFIELD BIKES (1911 - 1920) 1911 Enfield and the War The First World War began in 1914. Royal Enfield was called on to supply motorcycles to the British War Department and even awarded a contract to build bikes for the Imperial Russian Government during the same period. The machine gun combination and the 6hp stretchercarrying outfit were some of the models produced for the war purpose. Enfield started using its own engines - a 225cc two-stroke single and a 425cc V-twin about this time. Post-war, it produced a larger 976cc twin and continued to produce the two-speed 225L until 1929. In 1917, the officers of the Women’s Police Force were issued with a 2 1/4 RE 2 stroke.
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Interestingly, the models of this period featured 600cc, inlet-over-exhaust, closed valve gear, hand-operated oil pump, two-speed countershaft gearbox and chain final drive. In the 1913-1914 Enfield V-Twin the lubricating oil was contained in a glass tank attached to the frame tube that ran from the seat to the rear of the engine. This worked perfectly and also had the added advantage of providing an instant visual check of oil levels. The 1915 make 675cc in-line 3cylinder 2-stroke prototype was the worlds’ first with this configuration and engine type.
THE INTERWAR YEARS (1921 - 1930) 1924 The First Four-stroke The interwar year was a period when the sidecar reached its zenith. In July 1925, the Royal Enfield V-Twin-engine Dairyman’s Outfit took part in the ACU Six Days’ Trial for Commercial Sidecars and obtained a Special Certificate of Merit for completing an arduous course without loss of marks. The year 1924 saw the launch of the first Enfield four-stroke 350cc single using a JAP engine.
1928 The Depression In 1928, Royal Enfield adopted saddle tanks and centerspring girder front forks – one of the first companies to do so. The bikes now with a modern appearance and comprehensive range, meant continuous sales even during the dark days of depression in Great Britain towards the end of 1930. In 1927 Royal Enfield produced a 488cc with a four-speed gearbox, a new 225cc side-valve bike in 1928, and a four-stroke single in 1931. Several machines were produced in the next decade, from a tiny two-stroke 146cc Cycar to an 1140cc V-twin in 1937. Can you even imagine that Royal Enfield’s range for 1930 consisted of 13 models!
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ESTABLISHING BULLET (1931 - 1940) 1933 The Bullet Arrives
In 1931 a four-valve, single-cylinder was introduced, and christened 'Bullet' in 1932. It had an inclined engine and an exposed valve gear. It was then that the first use was made of the now famous Bullet name. Longer stroke, four-valve head exposed valves and heavily finned crankcase were the features that ran from 1932 until the end of 1934.
1940 The Second World War The most well known offering for the Second World War was no doubt the ‘Flying Flea’. Also known as the ‘Airborne’, this lightweight 125cc bike was capable of being dropped by parachute with airborne troupes. The Flea was fitted into a steel tubular cage called the ‘Bird Cage’, which had a parachute attached to it. The cage aided in packing turning handlebars easily. The Enfield Cycle Company was called upon by the British authorities to also manufacture a variety of special instruments and apparatus to use against enemy forces. So it was not bikes alone during the war years.
POST WAR BULLETS (1941 - 1950) 1948 Bigger and Better The 1939 Bullet 350 kick-started the post-war models. They used two rocker boxes for the first time. This enabled better gas flow and consequently higher volumetric efficiency. Royal Enfield’s own designed and manufactured telescopic front fork placed the Redditch marquee at the very forefront of motorcycle design. The biggest advancement introduced by the new Bullet was its swinging arm rear suspension system and hydraulic damper units themselves. In 1947 Enfield made a J2 - the first model with a telescopic front end, followed in 1948 by a 500cc twin (Enfield's 25bhp answer to the Triumph Speed Twin), which stayed in production until 1958.
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1949 The Indian Debut In 1949, the 350cc Bullet was launched in India, when Madras Motors won an order from the Indian Army for the supply of motorcycles. It was the beginning of the reign of the Bullet in the subcontinent. The Madras Motor Company started off by receiving the Bullet in kits and simply assembling them. Then they began making the frames. After this Enfield started sending the engine in parts to be assembled in India. Eventually they were also manufacturing the engines, which meant that they were making the complete bike. For the next thirty years, the design of their bike remained unchanged! In 1950, several models were introduced: the 650cc Meteor twin; a 250cc Clipper; a short stroke 250cc Crusader; 250cc Trials; Super 5; Continental; 500 Sports Twin; Super Meteor; Constellation and the Interceptor.
A TALE OF TWO CITIES (1951 - 1960) 1951 In the UK… Never before in British automobile history had so much been done in a single decade, not just by Royal Enfield, but the every other marque of the time. All new engines, all new configurations, new paint schemes, new capacity classes… the motorcyclist had never had such a wide choice ever before. The 1950s saw the market open up both ways, downwards for smaller capacity, light and maneuverable machines, and upwards for larger capacity, high powered and reliable motorcycles. The Royal Enfield showrooms in the UK saw everything from 125cc two strokes to the mighty 700cc Meteor.
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1955 Meanwhile in Madras… The Indian Army, the sole reason why the Bullet was brought to India in the first place, insisted that they would continue doing business with Madras Motors only if the Bullet was produced indigenously.The Enfield India Bullet of the late fifties was quite a different motorcycle from the one we are used to today. Using the famed Lucas Magdyno ignition system, the 1955 Bullet was almost a clone of the 52 Redditch Bullet. The frame, electricals tinware and rolling chassis, however, were to undergo many changes over the next ten years, with the Bullet slowly evolving into the familiar form we know and love today. 1961 Back in the UK… In 1960, the badge arrangement with Indian (Of America) had ended, so Enfields were no longer sold under the Indian marquee (Royal Enfield rival, British AMC company, acquired the Indian Sales Corp. in 1959). However, in 1961, Eddie Mulder won the Big Bear Enduro on an Enfield, which gave the company a new foothold in the U.S. under its own name and started a new marketing of the product. Models available in the U.S. that year included a 700cc twin and six street scramblers, ranging from the 250cc Hornet to the 500cc Fury (essentially the singlecylinder Bullet) to the 700cc Interceptor. Elliot Shulz also dominated the half-mile dirt track in Los Angeles on an Enfield that year. Enfields won 31 out of 39 races in 1961 and had several spectacular victories in 1964. Royal Enfield had arrived on The Continent!
1963 But back home in Madras… By 1970, Enfield India was a company established in its own right, and with a production line going full steam, the need for collaboration with Enfield of the UK and Villiers of the UK was no longer seen. But the Bullet flew true and strong. A number of changes had already been made to the tinware on the Bullet. Mudgaurd design took on different forms, taking into account the wet, slushy and messy road conditions during the Indian monsoon. The Magdyno also gave way to the alternator ‘Delco’ ignition system. And front and rear hubs were designed to provide more efficient cooling for Indian conditions, and thus improve braking performance.
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ENFIELD BECOMES ROYAL ENFIELD (1991 - 2000) 1990 Heavy Fuel The 1990's saw many revolutionary models from the company. The Taurus Diesel was the first productionised Diesel motorcycle in the world. 1993 Bullet 500 The Bullet 500 was launched in June this year. It went on to become the most coveted model of the brand.
1994 Eicher acquires Enfield
In March the ailing company got a new lease of life when Eicher group acquired Enfield India Company. The company name changed to Royal Enfield Motors Limited.
ROYAL ENFIELD (2001 - 2010) 2001 The Dare Devils, the motorcycle display team of the Corps of Signals, Jabalpur forms a Human Pyramid of 201 men on 10 Enfield 350cc bikes and rides a distance of more than 200 meters. distance 2002
India’s first Cruiser – The ‘THUNDERBIRD’- is launched. BBC Wheels awards it ‘The Best Cruiser 2002’ title. The Bullet Machismo enters commercial production. Dan Holmes and Johnny Szoldrak won the National Road Race Rac Championship (60’s Class) on a Bullet.
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2003 The first ‘RIDER MANIA’ get together is held in Goa. REDS are formed in Pune. The Bullet enters the Automotive ‘Hall of Pride’ at the ICICI Overdrive awards. 1000 Riders descend on Redditch for the Royal Enfi Owners Enfield Club 25th Anniversary. Royal Enfield is one of the top ten 125 500 cc brands in UK. 125-500
2004 The 2004 Bullet Electra is launched. The retro styled Bullet Machismo is rated ‘No.1 Cruiser’ in TNS rated AutoC survey. AutoCar The Bullet Electra International w a lean-burn engine is with burn launched in the UK. 34 men ride simultaneously on a Bullet, setting a new world record.
2005 Royal Enfield India Celebrates 50 glorious years of motorcycling and unveils a blueprint for the future. The 2005 Bullet Electra features a revolutionary 5-Speed left 5 side gear shift that makes the marquee more accessible to motorcyclists. The Legend rides on…
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2006 Royal Enfield develops a fully integrated Twin Spark, 5 Speed engine that delivers a dramatic 5-Speed increase in performance and efficiency. The new engine will power all domestic and International models from 2007 onwards. 2007
Royal Enfield launches the all new limited edition Machismo 500LB with customized accessories.
2008
Royal Enfield exports India’s first EFI, Euro III compliant motorcycle. The Thunderbird Twin-Spark is launched with a new Unit Spark Construction Engine (UCE).
As recently as January 2009, Royal Enfield showcased the new EFI, Euro III compliant 500cc UCE powered Bullet Classic at the Intermot motorshow, Germany. It brings together the oldred . old world charm of the Bullet while running it on cutting edge technology.
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Performance The financial performance of the Royal Enfield company has ranged from dismal to ballistic. It had almost reached extinction in 1994 when Eicher Motors Limited took it over and ever since, it has posted a rise in sales year on year. The following lists the performance of the Eicher limited since 2000-2001 with the note on their 2-wheeler division as quoted from their annual reports for each year. 2.1 Financial Performance 2000-2001
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2.2 Financial Performance 2004-2005 “TWO WHEELERS The two-wheeler industry registered a growth of 17% during the year with motorcycle segment growing by 20 %. Your company which operates in the power segment with engine capacity of 350 cc and above, recorded its highest ever sales of 29475 motorcycles during the financial year 2004-05 as against 28361 nos. in the previous year registering a growth of 4%. The turnover at Rs.187 crores as compared to Rs.175 crores in the previous year reflects a growth of 7%. “Bullet Electra 2004” introduced at the end of the last financial year received good response from the customers and accounts for 45 % of the domestic sale. As a part of continuous improvement, your Company has also introduced Electric Start in this model. The “Bullet Machismo “ introduced in the end of 2003-04 with conventional shift gears to cater to younger age group, has set a new bench-mark in the motor cycle industry by being ranked first in Total Customer Satisfaction in the cruiser segment. During the year, International Bullet Electra was introduced and has been well accepted in the international market. Your company has also set up new Company Showrooms at Chennai and Jaipur. These will provide customers with different kind of experience during sales and post sales period as well. The major initiatives launched to improve the infrastructure and customer experience at our leading dealerships has been accepted well. We intend taking it further by enhancing the service experience at our dealership workshops. Costs continued to be under focus. Reduction in manpower costs was achieved through one more Facilitative Retirement Plan carried out during the financial year 2004-05 resulting in net reduction of manpower by 114 nos. New product development and Quality enhancement continued to be a major focus area during the year. Your company upgraded Bullet 500 cc model with electric start and introduced in the Indian market. New models of Electra and Thunderbird with conventional left shift gears, dual tone paints, electric start etc are planned for domestic market introduction in mid 2005.” “RESEARCH AND DEVELOPMENT For the two-wheelers New Engine platform based on a Unit Construction design has been successfully prototyped and is currently under rigorous testing.”
“OPPORTUNITIES, THREATS AND OUTLOOK - Two wheelers The growth in the motorcycle market is likely to continue. Royal Enfield will continue to exploit the emerging trend towards more powerful bikes for the modern segments, through launch of variants as well as new products. Cost reduction, quality improvements to deliver customer expectations and effective channel management will remain the focus for Royal Enfield. For international markets, your Company will continue to make efforts directed on delivering contemporary technology and performance on the ‘Classic’ appeal derived from the brand heritage. In the Total Customer Satisfaction (TCS) survey conducted by TNS Automotive Singapore, your Company scored 87 points, which is higher by 3 points against its scores last year and is also higher than industry average of 78 points. The "Bullet 350cc" topped the motorcycle industry with score of 93 points. All other models of your company also scored higher than the industry average. Your Company expects growth in both domestic and overseas markets in the coming years.”
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Under the leadership of Mr. Siddhartha Lal, CEO, Royal Enfield, the company decided to reorganize itself and create value through constantly finding new avenues to improve upon its product.
Despite the performance of the Two Wheeler division being positive, the slump in the sales of commercial vehicles and gears in 2004-05 led to a small dip in the figures of Eicher in that Financial Year.
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2.3 Financial Performance 2006-2007 “TWO WHEELERS The Two-wheeler industry registered a growth of over 18% during the year with motorcycle segment growing by 14 . Your company, which operates in the power segment with engine capacity of 350 cc and above, recorded its highest ever sales of 32612 motorcycles as against 30777 motorcycles in the previous year registering a growth of 6%. Sales could have been more but for capacity constraints in the last quarter. As a result, dealer inventory has almost been squeezed out with retails exceeding wholesale by more than 1500 motorcycles. Export sales have recorded 2233 motorcycles in 2006-07 as against 2345 Nos in the previous year. A major order from Germany that could not be serviced in the current year has been carried over to the next financial year. Total revenue for the year at Rs.229 Crs grew by 10% as compared to Rs.209 Crs in the previous year.” “MARKET AND FUTURE PROSPECTS - TWO WHEELERS Even though overall Two wheeler industry is experiencing some slow down, 350CC niche segment in which your Company operates is growing well. Some constraints have been felt in the year under review in capacity and therefore the key focus in the current year is on manufacturing supported by quality assurance, materials and component development and strategic sourcing. The target is to achieve a growth of 20% in volumes through improving the deliverable capacity. The Company has completed reliability and endurance tests for the New Engine (Unit Construction Engine) both for domestic and exports markets to meet the future emission norms. The new engine, will be offered to export market and will be tested in the European terrain before it is officially launched in the second half of the current year. Similarly the new engine will be launched in the premium models of Royal Enfield in India in the current year.” “RESEARCH AND DEVELOPMENT - TWO WHEELERS Euro III emission norms compliance for Europe was obtained and based on this new bikes would be homologated in the current year. Electronic Fuel Injection (EFI) technology has been adopted to meet Emission norms. Unit Construction Engine in 350 cc with twin spark ignition developed and ready for pilot launch in the current year.” “TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION - TWO WHEELERS Engine Machining and Assembly have been strengthened by adding new CNC machines for achieving quality parameters for the new engine. Methods, tooling and inspection standards have been improved by replacement of tools, gauges and equipment.” “HUMAN RESOURCES During the year under review, the Company had undertaken extensive steps for optimising the use of its manpower through automation, productivity improvement, offloading of components and services and role enrichment. There is a continuous focus on enhancing productivity in all facets of our operations. Industrial relations were cordial throughout the year. As on 31st March 2007, the total number of full time salaried employees stood at 2620 Nos.”
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By 2006, Mr. Siddhartha Lal had become the MD & CEO of the Eicher Motors Limited and a part of the Board of Directors. Under his management, Royal Enfield was receiving greater priority in the company and undertaking better R&D Projects. The UCE engine, which was being researched for years now, was almost ready.
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The following table shows the financial performance of Eicher Motors Limited during 19972007.
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3.1 ORGANIZATIONAL PRACTICES – A DISCUSSION
Structure Over the years, Royal Enfield has undergone considerable changes in its organization structure. In 1955, when there was a requirement for 800 of these motorcycles for the Indian army and police force, the Redditch plant failed to deliver them and outsourced it to a subsidiary in outsourced Chennai called the Enfield India Limited. This geographical diversification was what lasts as Royal Enfield today as the UK parent company ceased production in 1970. When Eicher bought this company, they proceeded to revamp the ailing company through rapid ailing restructuring. Introducing new models necessitated a Product Division Structure. The Jaipur plant was shut down to achieve greater centralization and also to enable better vendor management. Siddhartha Lal also created cross cross-functional teams to enable Royal Enfield to come tional up with models that would match the customers’ aspirations while fulfilling the requirements of efficient production. He created a feedback network whereby the customers’ feedback was taken into consideration while they researched the new products. This led to new developments like the ile AVL engine, and the Glass Wool Silencer. While Thunderbird was launched to cater to the newer market segment who needed a cruiser lookalike that would give them the ‘Indian ‘Indian-Harley’ feeling, Electra was launched to meet the y’ retro-segment with the same look as the classic Bullet but with more reliable electrical systems segment and greater fuel efficiency. After Sales Service, a traditional sore point with Royal Enfield was structured into the organization with incentives and rewards instituted. All this drastically instituted. improved the image of the company.
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Culture Royal Enfield has always been the aspirational motorcycle in India. Being the only product above 250cc in the country, it has attracted motorcycle enthusiasts over the years. The company ensures that every individual working for it takes immense pride in the fact that they are part of a heritage. Being a he manufacturing sector company, they follow a mechanistic structure, which generally gives rise to tall hierarchies and therefore a more rigid culture. At Royal Enfield, however, the managers foster a culture of participative development and there exists a great ease of communication between shop floor supervisors and the management. The workers who are part of the “hand “hand-crafting” division that makes the hand-painted fuel tanks painted are treated as royalty at the plant and this respect for workmanship often serves as the greatest socializing factor for new recruits who join the factory.
Managing the External Environment Amongst its external environment, three factors that impact the company most profoundly are i. Competitors ii. Government iii. Customers 1. Competitors – Since its foray into India, Royal Enfield has borne witness to the complete gamut of motorcycles that have ventured into this market. Some, like Rajdoot and Yezdi have vanished without a trace. Others like Hero Honda and Bajaj have made their mark. Royal Enfield remains ahead of the competition by being the only motorcycle to cater to the l category above 250cc. Now that other companies are upgrading displacement capacities, Enfield has taken a step forward in installing the new twinspark and Unit Construc Construction Fuelinjected engines. These would enable Enfield to stay in the race with the lighter lighter-weight motorcycles without compromising on its marquee value. 2. Government – The Government norms about emission dictate that any automobile company shall constantly stay on its toes to make sure that they conform to the rules. Enfield manages this through constant Innovation in silencer design. In fact, there are three different varieties of silencer and ECUs that are fitted on the various models as of now. 3. Customers – Being a premium segment product, Royal Enfield needs to constant build rapport with its customers and create greater aspiration value for the brand. This is done by organizing various national level events around the year.
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The Calendar generally begins with the Rider Mania around January. This is the annual Enfield Owners’ get together that getstarted in 2003 with 32 motorcycles and saw 600 motorcycles riding to Ooty for the 2009 edition.
Also long-distance and endurance rides li the distance like Rajasthan Tour and Himalayan Odyssey organized by the company add to the tourer image of this vehicle.
3.2 Factors Conducive for Growth of the Organization India has, in recent years, seen a tremendous increase in the spending potential of its yout youth. This high demographic dividend has enabled more customers to spend on lifestyle and leisure. This enlarges the market segment for a premium product like the Royal Enfield which are priced around the Rs. 1 lakh mark. Also, the lack of other motorcycles in its segment gives it an almost monopolistic control over its target customer niche. Any individual who wishes to buy a powerful motorcycle with long distance and endurance riding capabilities without having to import one would go for one of Royal Enfield’s products. d’s The spares and components that go into a Royal Enfield are almost exclusive to the company. For example, the 230 mm disc brake manufactured by Pricol is exclusively for Enfields and this gives the company an excellent opportunity to manage its suppliers. This control over its symbiotic interdependencies holds the company in good stead against its more generic competitors. In the international markets, it is the cheapest entry and it appeals to the retro retro-sensibility of the youth in these countries. This would also aid the sales of the brand in the foreign markets s. where it is exported.
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3.3 Growth of the Organization As seen from the Annual reports, the sales of the brand have climbed steadily from 28000 in 2003-2004 to 33000 in 2006-2007. This growth has been made possible by the proactive steps taken by Mr. Siddhartha Lal at the helm of the organization. Royal Enfield exports its bikes to over 25 countries including developed countries such as USA, Japan, UK and several European countries. Royal Enfield is the only motorcycle company to be certified with the coveted ISO 9001 and ISO 14001 for quality and environmental systems. 3.4 Factors that Led to Expansion & Growth Since the take-over by Eicher, Royal Enfield has shown steady growth. This has been possible because of the plethora of new products that were introduced. The high level of innovation made sure that they increase their market share without taking the conventional revamp route taken by most other Indian manufacturers. The passion and drive of Mr. Lal has also played a major role in shaping the culture of the organization into a more pro-customer model that has made it more accessible. It is today the only Indian manufacturer that invites the general public to visit its factory. 3.5 Decline & Subsequent Expansion - Factors After the entry of Hero Honda into the motorcycle market in the early 1990s, the Indian public shifted to the more fuel efficient variants while Royal Enfield failed to deliver a new product. Its sales dwindled and it seemed like it was going to close shop like Yezdi and Rajdoot had already done. The take-over by Eicher was perhaps the turning point that gave this company a fresh lease of life and enabled it to expand to its present strength.
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4.1 Conclusion The Royal Enfield Bullet is the longest standing motorcycle brand in India. It has been in different countries spanning centuries and today, represents the aspirations of the Indian biker. Organizationally, it has seen ups and downs alike. From a merger with Zundapp going bad to forging alliances with AVL, Austria to source successful engine licenses, it portrays a story of constant organizational change. It also speaks about how the manager’s vision can translate into a company’s culture. It was Siddhartha Lal’s zeal as the CEO of Royal Enfield that in reality enabled this company to tide over adverse times. With the entry of premium foreign brands like Harley-Davidson into Indian markets, it is left to be seen how Enfield tackles the latest challenges, but under the present leadership of Mr. R. Ravichandran, who had engineered success stories for TVS and Bajaj in the past, it holds potential and promise to reach its goal of becoming a multi-million dollar brand from India. 4.2 Learning from the Project This project deliberates on the importance of Organizational Change and Culture. It was through the constant innovation and adaptability that this company has managed to hold its own in difficult times. It shows how important it is for a company to manage the internal and external stakeholders to survive in a globally challenging environment. It brings out the key role that top managers and their vision play in the shaping of an organization’s culture and thereby aids in the creation of value effectively. 4.3 References • • • • • • http://www.royalenfield.com/ http://www.eicherworld.com/ http://www.wikipedia.org http://www.team-bhp.com Gareth R. Jones & Mary Mathew, Organizational Theory, Design And Change (5th Edition) Bike India Volume 5 Issue 001 August 2009
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doc_804151486.pdf
This is a report describes on Royal Enfield using the concepts and theories of Organizational Theory and Practice.
Organizational Analysis – A Case Study of
The Royal Enfield Motorcycle Company
Submitted By Aditya Dixit Anand Agrawal Nayantara Maria Rodriguez Shovan Kumar Kundu Subhayu Roy
1
Contents Part-I 1.1 Introduction……………………………………………………3 1.2 History………………………………………………………….3 Part-II 2.1 Financial Performance 2000-2001…………………………..12 2.2 Financial Performance 2004-2005…………………………..13 2.3 Financial Performance 2006-2007…………………………..15 Part-III 3.1 Organizational Practices – A Discussion…………………....18 3.2 Factors Conducive for the Growth of the Organization…...20 3.3 Growth of the Organization…………………………………21 3.4 Factors that led to Expansion & Growth…………………..21 3.5 Decline & Subsequent Expansion – Factors……………….21 Part-IV 4.1 Conclusion……………………………………………………22 4.2 Learning from the Project…………………………………..22 4.3 References……………………………………………………22
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1.1 Introduction Amongst all the two-wheelers sold in India, no Indian brand commands as much respect as the Royal Enfield marquee. With a rich heritage and a multi-continental history behind it, this brand today represents the aspirations of the Indian biker to ride a world-class vehicle. One of the only Indian brands to be exported to 14 countries across the globe, the Royal Enfield brand is a true story of an organization managing enormous amount of dynamism in the market, and rivaling a new set of competitors every year. With a sale of 7 lakh 2-wheelers every year, the Indian 2wheeler industry has to keep up with the changing tastes of the customers and every participating corporate is therefore hard pressed to deliver year on year. The following study aspires to study the history of this illustrious organization and analyze the organizational strategies and moves that has enabled this company to stay profitable while catering to a niche segment of customers across the globe.
1.2 History The Beginning Hunt End, England was a village of several small mills manufacturing needles and fish-hooks. It was here in 1851 that George Townsend put up his needle-making mill, which he named Givry Works. But it wasn’t until his passing away that his son, George Jr. and his half-brother brought into Givry Works one of the first 'boneshakers' – a crude cycle. It had a backbone of iron, with wooden wheels, iron tyres and pedals of triangular pieces of wood! Though the bike was a source of some amusement, George and his team felt they could easily improve on it. The earliest modern safety bicycle with two wheels of equal size had appeared in about 1880. All manufacturers were trying their hand at this new venture. So was George Townsend Jr. By luck, he chanced upon an invention in his neighborhood – a saddle that only used one length of wire in the two springs and in the framework. This was adopted, patented and marketed as the 'Townsend Cyclists Saddle & Spring'. He had entered the bicycle parts trade! From bicycle parts, Townsend slowly moved on to producing bicycles himself. He was also supplying a wide range of parts to other manufacturers - Givry Works was growing rapidly. Over the next three years he developed his own range of over two-dozen machines. Each machine, known locally as the 'Townsend cycle' was reputed for its sturdy frame, a character that all Enfield bikes would follow.
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1891 A Little Trouble Townsend got himself into a bit of financial trouble in about 1890 and called in some financiers from Birmingham. Unfortunately, they didn’t quite see eye to eye. So Townsend parted ways with the financiers leaving the company to them. The financiers then brought in Albert Eadie and R.W. Smith. They took control of Townsend’s in November 1891. The following year the firm was rechristened ‘The Eadie Manufacturing Company Limited’. Soon after, Albert Eadie got a lucrative contract to supply precision rifle parts to the Royal Small Arms Factory in Enfield, Middlesex. To celebrate the contract, Eadie and Smith decided to call the first new design of bicycle, the ‘Enfield’
1909 Motorcycle Craze It would be interesting to note here that motorcycling was thought to be a temporary enthusiasm that would soon fade out! A brief spin on a motorbike then took several hours of preparations tuning the tiny water-cooled engine, getting the tyres pumped, the gears oiled and a supply of spare parts packed. In 1909, Royal Enfield took the biking world by surprise. At the motorcycle show that year, they displayed a small 2 1/4 hp V twin-engine machine built in the Swiss tradition, which ran very well. A slightly larger model was developed in 1911. A 2 3/4 hp, with all chain drive incorporating the well-known Enfield two-speed gear. This model stood up until 1914.
THE ROYAL ENFIELD BIKES (1911 - 1920) 1911 Enfield and the War The First World War began in 1914. Royal Enfield was called on to supply motorcycles to the British War Department and even awarded a contract to build bikes for the Imperial Russian Government during the same period. The machine gun combination and the 6hp stretchercarrying outfit were some of the models produced for the war purpose. Enfield started using its own engines - a 225cc two-stroke single and a 425cc V-twin about this time. Post-war, it produced a larger 976cc twin and continued to produce the two-speed 225L until 1929. In 1917, the officers of the Women’s Police Force were issued with a 2 1/4 RE 2 stroke.
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Interestingly, the models of this period featured 600cc, inlet-over-exhaust, closed valve gear, hand-operated oil pump, two-speed countershaft gearbox and chain final drive. In the 1913-1914 Enfield V-Twin the lubricating oil was contained in a glass tank attached to the frame tube that ran from the seat to the rear of the engine. This worked perfectly and also had the added advantage of providing an instant visual check of oil levels. The 1915 make 675cc in-line 3cylinder 2-stroke prototype was the worlds’ first with this configuration and engine type.
THE INTERWAR YEARS (1921 - 1930) 1924 The First Four-stroke The interwar year was a period when the sidecar reached its zenith. In July 1925, the Royal Enfield V-Twin-engine Dairyman’s Outfit took part in the ACU Six Days’ Trial for Commercial Sidecars and obtained a Special Certificate of Merit for completing an arduous course without loss of marks. The year 1924 saw the launch of the first Enfield four-stroke 350cc single using a JAP engine.
1928 The Depression In 1928, Royal Enfield adopted saddle tanks and centerspring girder front forks – one of the first companies to do so. The bikes now with a modern appearance and comprehensive range, meant continuous sales even during the dark days of depression in Great Britain towards the end of 1930. In 1927 Royal Enfield produced a 488cc with a four-speed gearbox, a new 225cc side-valve bike in 1928, and a four-stroke single in 1931. Several machines were produced in the next decade, from a tiny two-stroke 146cc Cycar to an 1140cc V-twin in 1937. Can you even imagine that Royal Enfield’s range for 1930 consisted of 13 models!
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ESTABLISHING BULLET (1931 - 1940) 1933 The Bullet Arrives
In 1931 a four-valve, single-cylinder was introduced, and christened 'Bullet' in 1932. It had an inclined engine and an exposed valve gear. It was then that the first use was made of the now famous Bullet name. Longer stroke, four-valve head exposed valves and heavily finned crankcase were the features that ran from 1932 until the end of 1934.
1940 The Second World War The most well known offering for the Second World War was no doubt the ‘Flying Flea’. Also known as the ‘Airborne’, this lightweight 125cc bike was capable of being dropped by parachute with airborne troupes. The Flea was fitted into a steel tubular cage called the ‘Bird Cage’, which had a parachute attached to it. The cage aided in packing turning handlebars easily. The Enfield Cycle Company was called upon by the British authorities to also manufacture a variety of special instruments and apparatus to use against enemy forces. So it was not bikes alone during the war years.
POST WAR BULLETS (1941 - 1950) 1948 Bigger and Better The 1939 Bullet 350 kick-started the post-war models. They used two rocker boxes for the first time. This enabled better gas flow and consequently higher volumetric efficiency. Royal Enfield’s own designed and manufactured telescopic front fork placed the Redditch marquee at the very forefront of motorcycle design. The biggest advancement introduced by the new Bullet was its swinging arm rear suspension system and hydraulic damper units themselves. In 1947 Enfield made a J2 - the first model with a telescopic front end, followed in 1948 by a 500cc twin (Enfield's 25bhp answer to the Triumph Speed Twin), which stayed in production until 1958.
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1949 The Indian Debut In 1949, the 350cc Bullet was launched in India, when Madras Motors won an order from the Indian Army for the supply of motorcycles. It was the beginning of the reign of the Bullet in the subcontinent. The Madras Motor Company started off by receiving the Bullet in kits and simply assembling them. Then they began making the frames. After this Enfield started sending the engine in parts to be assembled in India. Eventually they were also manufacturing the engines, which meant that they were making the complete bike. For the next thirty years, the design of their bike remained unchanged! In 1950, several models were introduced: the 650cc Meteor twin; a 250cc Clipper; a short stroke 250cc Crusader; 250cc Trials; Super 5; Continental; 500 Sports Twin; Super Meteor; Constellation and the Interceptor.
A TALE OF TWO CITIES (1951 - 1960) 1951 In the UK… Never before in British automobile history had so much been done in a single decade, not just by Royal Enfield, but the every other marque of the time. All new engines, all new configurations, new paint schemes, new capacity classes… the motorcyclist had never had such a wide choice ever before. The 1950s saw the market open up both ways, downwards for smaller capacity, light and maneuverable machines, and upwards for larger capacity, high powered and reliable motorcycles. The Royal Enfield showrooms in the UK saw everything from 125cc two strokes to the mighty 700cc Meteor.
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1955 Meanwhile in Madras… The Indian Army, the sole reason why the Bullet was brought to India in the first place, insisted that they would continue doing business with Madras Motors only if the Bullet was produced indigenously.The Enfield India Bullet of the late fifties was quite a different motorcycle from the one we are used to today. Using the famed Lucas Magdyno ignition system, the 1955 Bullet was almost a clone of the 52 Redditch Bullet. The frame, electricals tinware and rolling chassis, however, were to undergo many changes over the next ten years, with the Bullet slowly evolving into the familiar form we know and love today. 1961 Back in the UK… In 1960, the badge arrangement with Indian (Of America) had ended, so Enfields were no longer sold under the Indian marquee (Royal Enfield rival, British AMC company, acquired the Indian Sales Corp. in 1959). However, in 1961, Eddie Mulder won the Big Bear Enduro on an Enfield, which gave the company a new foothold in the U.S. under its own name and started a new marketing of the product. Models available in the U.S. that year included a 700cc twin and six street scramblers, ranging from the 250cc Hornet to the 500cc Fury (essentially the singlecylinder Bullet) to the 700cc Interceptor. Elliot Shulz also dominated the half-mile dirt track in Los Angeles on an Enfield that year. Enfields won 31 out of 39 races in 1961 and had several spectacular victories in 1964. Royal Enfield had arrived on The Continent!
1963 But back home in Madras… By 1970, Enfield India was a company established in its own right, and with a production line going full steam, the need for collaboration with Enfield of the UK and Villiers of the UK was no longer seen. But the Bullet flew true and strong. A number of changes had already been made to the tinware on the Bullet. Mudgaurd design took on different forms, taking into account the wet, slushy and messy road conditions during the Indian monsoon. The Magdyno also gave way to the alternator ‘Delco’ ignition system. And front and rear hubs were designed to provide more efficient cooling for Indian conditions, and thus improve braking performance.
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ENFIELD BECOMES ROYAL ENFIELD (1991 - 2000) 1990 Heavy Fuel The 1990's saw many revolutionary models from the company. The Taurus Diesel was the first productionised Diesel motorcycle in the world. 1993 Bullet 500 The Bullet 500 was launched in June this year. It went on to become the most coveted model of the brand.
1994 Eicher acquires Enfield
In March the ailing company got a new lease of life when Eicher group acquired Enfield India Company. The company name changed to Royal Enfield Motors Limited.
ROYAL ENFIELD (2001 - 2010) 2001 The Dare Devils, the motorcycle display team of the Corps of Signals, Jabalpur forms a Human Pyramid of 201 men on 10 Enfield 350cc bikes and rides a distance of more than 200 meters. distance 2002
India’s first Cruiser – The ‘THUNDERBIRD’- is launched. BBC Wheels awards it ‘The Best Cruiser 2002’ title. The Bullet Machismo enters commercial production. Dan Holmes and Johnny Szoldrak won the National Road Race Rac Championship (60’s Class) on a Bullet.
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2003 The first ‘RIDER MANIA’ get together is held in Goa. REDS are formed in Pune. The Bullet enters the Automotive ‘Hall of Pride’ at the ICICI Overdrive awards. 1000 Riders descend on Redditch for the Royal Enfi Owners Enfield Club 25th Anniversary. Royal Enfield is one of the top ten 125 500 cc brands in UK. 125-500
2004 The 2004 Bullet Electra is launched. The retro styled Bullet Machismo is rated ‘No.1 Cruiser’ in TNS rated AutoC survey. AutoCar The Bullet Electra International w a lean-burn engine is with burn launched in the UK. 34 men ride simultaneously on a Bullet, setting a new world record.
2005 Royal Enfield India Celebrates 50 glorious years of motorcycling and unveils a blueprint for the future. The 2005 Bullet Electra features a revolutionary 5-Speed left 5 side gear shift that makes the marquee more accessible to motorcyclists. The Legend rides on…
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2006 Royal Enfield develops a fully integrated Twin Spark, 5 Speed engine that delivers a dramatic 5-Speed increase in performance and efficiency. The new engine will power all domestic and International models from 2007 onwards. 2007
Royal Enfield launches the all new limited edition Machismo 500LB with customized accessories.
2008
Royal Enfield exports India’s first EFI, Euro III compliant motorcycle. The Thunderbird Twin-Spark is launched with a new Unit Spark Construction Engine (UCE).
As recently as January 2009, Royal Enfield showcased the new EFI, Euro III compliant 500cc UCE powered Bullet Classic at the Intermot motorshow, Germany. It brings together the oldred . old world charm of the Bullet while running it on cutting edge technology.
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Performance The financial performance of the Royal Enfield company has ranged from dismal to ballistic. It had almost reached extinction in 1994 when Eicher Motors Limited took it over and ever since, it has posted a rise in sales year on year. The following lists the performance of the Eicher limited since 2000-2001 with the note on their 2-wheeler division as quoted from their annual reports for each year. 2.1 Financial Performance 2000-2001
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2.2 Financial Performance 2004-2005 “TWO WHEELERS The two-wheeler industry registered a growth of 17% during the year with motorcycle segment growing by 20 %. Your company which operates in the power segment with engine capacity of 350 cc and above, recorded its highest ever sales of 29475 motorcycles during the financial year 2004-05 as against 28361 nos. in the previous year registering a growth of 4%. The turnover at Rs.187 crores as compared to Rs.175 crores in the previous year reflects a growth of 7%. “Bullet Electra 2004” introduced at the end of the last financial year received good response from the customers and accounts for 45 % of the domestic sale. As a part of continuous improvement, your Company has also introduced Electric Start in this model. The “Bullet Machismo “ introduced in the end of 2003-04 with conventional shift gears to cater to younger age group, has set a new bench-mark in the motor cycle industry by being ranked first in Total Customer Satisfaction in the cruiser segment. During the year, International Bullet Electra was introduced and has been well accepted in the international market. Your company has also set up new Company Showrooms at Chennai and Jaipur. These will provide customers with different kind of experience during sales and post sales period as well. The major initiatives launched to improve the infrastructure and customer experience at our leading dealerships has been accepted well. We intend taking it further by enhancing the service experience at our dealership workshops. Costs continued to be under focus. Reduction in manpower costs was achieved through one more Facilitative Retirement Plan carried out during the financial year 2004-05 resulting in net reduction of manpower by 114 nos. New product development and Quality enhancement continued to be a major focus area during the year. Your company upgraded Bullet 500 cc model with electric start and introduced in the Indian market. New models of Electra and Thunderbird with conventional left shift gears, dual tone paints, electric start etc are planned for domestic market introduction in mid 2005.” “RESEARCH AND DEVELOPMENT For the two-wheelers New Engine platform based on a Unit Construction design has been successfully prototyped and is currently under rigorous testing.”
“OPPORTUNITIES, THREATS AND OUTLOOK - Two wheelers The growth in the motorcycle market is likely to continue. Royal Enfield will continue to exploit the emerging trend towards more powerful bikes for the modern segments, through launch of variants as well as new products. Cost reduction, quality improvements to deliver customer expectations and effective channel management will remain the focus for Royal Enfield. For international markets, your Company will continue to make efforts directed on delivering contemporary technology and performance on the ‘Classic’ appeal derived from the brand heritage. In the Total Customer Satisfaction (TCS) survey conducted by TNS Automotive Singapore, your Company scored 87 points, which is higher by 3 points against its scores last year and is also higher than industry average of 78 points. The "Bullet 350cc" topped the motorcycle industry with score of 93 points. All other models of your company also scored higher than the industry average. Your Company expects growth in both domestic and overseas markets in the coming years.”
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Under the leadership of Mr. Siddhartha Lal, CEO, Royal Enfield, the company decided to reorganize itself and create value through constantly finding new avenues to improve upon its product.
Despite the performance of the Two Wheeler division being positive, the slump in the sales of commercial vehicles and gears in 2004-05 led to a small dip in the figures of Eicher in that Financial Year.
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2.3 Financial Performance 2006-2007 “TWO WHEELERS The Two-wheeler industry registered a growth of over 18% during the year with motorcycle segment growing by 14 . Your company, which operates in the power segment with engine capacity of 350 cc and above, recorded its highest ever sales of 32612 motorcycles as against 30777 motorcycles in the previous year registering a growth of 6%. Sales could have been more but for capacity constraints in the last quarter. As a result, dealer inventory has almost been squeezed out with retails exceeding wholesale by more than 1500 motorcycles. Export sales have recorded 2233 motorcycles in 2006-07 as against 2345 Nos in the previous year. A major order from Germany that could not be serviced in the current year has been carried over to the next financial year. Total revenue for the year at Rs.229 Crs grew by 10% as compared to Rs.209 Crs in the previous year.” “MARKET AND FUTURE PROSPECTS - TWO WHEELERS Even though overall Two wheeler industry is experiencing some slow down, 350CC niche segment in which your Company operates is growing well. Some constraints have been felt in the year under review in capacity and therefore the key focus in the current year is on manufacturing supported by quality assurance, materials and component development and strategic sourcing. The target is to achieve a growth of 20% in volumes through improving the deliverable capacity. The Company has completed reliability and endurance tests for the New Engine (Unit Construction Engine) both for domestic and exports markets to meet the future emission norms. The new engine, will be offered to export market and will be tested in the European terrain before it is officially launched in the second half of the current year. Similarly the new engine will be launched in the premium models of Royal Enfield in India in the current year.” “RESEARCH AND DEVELOPMENT - TWO WHEELERS Euro III emission norms compliance for Europe was obtained and based on this new bikes would be homologated in the current year. Electronic Fuel Injection (EFI) technology has been adopted to meet Emission norms. Unit Construction Engine in 350 cc with twin spark ignition developed and ready for pilot launch in the current year.” “TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION - TWO WHEELERS Engine Machining and Assembly have been strengthened by adding new CNC machines for achieving quality parameters for the new engine. Methods, tooling and inspection standards have been improved by replacement of tools, gauges and equipment.” “HUMAN RESOURCES During the year under review, the Company had undertaken extensive steps for optimising the use of its manpower through automation, productivity improvement, offloading of components and services and role enrichment. There is a continuous focus on enhancing productivity in all facets of our operations. Industrial relations were cordial throughout the year. As on 31st March 2007, the total number of full time salaried employees stood at 2620 Nos.”
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By 2006, Mr. Siddhartha Lal had become the MD & CEO of the Eicher Motors Limited and a part of the Board of Directors. Under his management, Royal Enfield was receiving greater priority in the company and undertaking better R&D Projects. The UCE engine, which was being researched for years now, was almost ready.
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The following table shows the financial performance of Eicher Motors Limited during 19972007.
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3.1 ORGANIZATIONAL PRACTICES – A DISCUSSION
Structure Over the years, Royal Enfield has undergone considerable changes in its organization structure. In 1955, when there was a requirement for 800 of these motorcycles for the Indian army and police force, the Redditch plant failed to deliver them and outsourced it to a subsidiary in outsourced Chennai called the Enfield India Limited. This geographical diversification was what lasts as Royal Enfield today as the UK parent company ceased production in 1970. When Eicher bought this company, they proceeded to revamp the ailing company through rapid ailing restructuring. Introducing new models necessitated a Product Division Structure. The Jaipur plant was shut down to achieve greater centralization and also to enable better vendor management. Siddhartha Lal also created cross cross-functional teams to enable Royal Enfield to come tional up with models that would match the customers’ aspirations while fulfilling the requirements of efficient production. He created a feedback network whereby the customers’ feedback was taken into consideration while they researched the new products. This led to new developments like the ile AVL engine, and the Glass Wool Silencer. While Thunderbird was launched to cater to the newer market segment who needed a cruiser lookalike that would give them the ‘Indian ‘Indian-Harley’ feeling, Electra was launched to meet the y’ retro-segment with the same look as the classic Bullet but with more reliable electrical systems segment and greater fuel efficiency. After Sales Service, a traditional sore point with Royal Enfield was structured into the organization with incentives and rewards instituted. All this drastically instituted. improved the image of the company.
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Culture Royal Enfield has always been the aspirational motorcycle in India. Being the only product above 250cc in the country, it has attracted motorcycle enthusiasts over the years. The company ensures that every individual working for it takes immense pride in the fact that they are part of a heritage. Being a he manufacturing sector company, they follow a mechanistic structure, which generally gives rise to tall hierarchies and therefore a more rigid culture. At Royal Enfield, however, the managers foster a culture of participative development and there exists a great ease of communication between shop floor supervisors and the management. The workers who are part of the “hand “hand-crafting” division that makes the hand-painted fuel tanks painted are treated as royalty at the plant and this respect for workmanship often serves as the greatest socializing factor for new recruits who join the factory.
Managing the External Environment Amongst its external environment, three factors that impact the company most profoundly are i. Competitors ii. Government iii. Customers 1. Competitors – Since its foray into India, Royal Enfield has borne witness to the complete gamut of motorcycles that have ventured into this market. Some, like Rajdoot and Yezdi have vanished without a trace. Others like Hero Honda and Bajaj have made their mark. Royal Enfield remains ahead of the competition by being the only motorcycle to cater to the l category above 250cc. Now that other companies are upgrading displacement capacities, Enfield has taken a step forward in installing the new twinspark and Unit Construc Construction Fuelinjected engines. These would enable Enfield to stay in the race with the lighter lighter-weight motorcycles without compromising on its marquee value. 2. Government – The Government norms about emission dictate that any automobile company shall constantly stay on its toes to make sure that they conform to the rules. Enfield manages this through constant Innovation in silencer design. In fact, there are three different varieties of silencer and ECUs that are fitted on the various models as of now. 3. Customers – Being a premium segment product, Royal Enfield needs to constant build rapport with its customers and create greater aspiration value for the brand. This is done by organizing various national level events around the year.
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The Calendar generally begins with the Rider Mania around January. This is the annual Enfield Owners’ get together that getstarted in 2003 with 32 motorcycles and saw 600 motorcycles riding to Ooty for the 2009 edition.
Also long-distance and endurance rides li the distance like Rajasthan Tour and Himalayan Odyssey organized by the company add to the tourer image of this vehicle.
3.2 Factors Conducive for Growth of the Organization India has, in recent years, seen a tremendous increase in the spending potential of its yout youth. This high demographic dividend has enabled more customers to spend on lifestyle and leisure. This enlarges the market segment for a premium product like the Royal Enfield which are priced around the Rs. 1 lakh mark. Also, the lack of other motorcycles in its segment gives it an almost monopolistic control over its target customer niche. Any individual who wishes to buy a powerful motorcycle with long distance and endurance riding capabilities without having to import one would go for one of Royal Enfield’s products. d’s The spares and components that go into a Royal Enfield are almost exclusive to the company. For example, the 230 mm disc brake manufactured by Pricol is exclusively for Enfields and this gives the company an excellent opportunity to manage its suppliers. This control over its symbiotic interdependencies holds the company in good stead against its more generic competitors. In the international markets, it is the cheapest entry and it appeals to the retro retro-sensibility of the youth in these countries. This would also aid the sales of the brand in the foreign markets s. where it is exported.
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3.3 Growth of the Organization As seen from the Annual reports, the sales of the brand have climbed steadily from 28000 in 2003-2004 to 33000 in 2006-2007. This growth has been made possible by the proactive steps taken by Mr. Siddhartha Lal at the helm of the organization. Royal Enfield exports its bikes to over 25 countries including developed countries such as USA, Japan, UK and several European countries. Royal Enfield is the only motorcycle company to be certified with the coveted ISO 9001 and ISO 14001 for quality and environmental systems. 3.4 Factors that Led to Expansion & Growth Since the take-over by Eicher, Royal Enfield has shown steady growth. This has been possible because of the plethora of new products that were introduced. The high level of innovation made sure that they increase their market share without taking the conventional revamp route taken by most other Indian manufacturers. The passion and drive of Mr. Lal has also played a major role in shaping the culture of the organization into a more pro-customer model that has made it more accessible. It is today the only Indian manufacturer that invites the general public to visit its factory. 3.5 Decline & Subsequent Expansion - Factors After the entry of Hero Honda into the motorcycle market in the early 1990s, the Indian public shifted to the more fuel efficient variants while Royal Enfield failed to deliver a new product. Its sales dwindled and it seemed like it was going to close shop like Yezdi and Rajdoot had already done. The take-over by Eicher was perhaps the turning point that gave this company a fresh lease of life and enabled it to expand to its present strength.
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4.1 Conclusion The Royal Enfield Bullet is the longest standing motorcycle brand in India. It has been in different countries spanning centuries and today, represents the aspirations of the Indian biker. Organizationally, it has seen ups and downs alike. From a merger with Zundapp going bad to forging alliances with AVL, Austria to source successful engine licenses, it portrays a story of constant organizational change. It also speaks about how the manager’s vision can translate into a company’s culture. It was Siddhartha Lal’s zeal as the CEO of Royal Enfield that in reality enabled this company to tide over adverse times. With the entry of premium foreign brands like Harley-Davidson into Indian markets, it is left to be seen how Enfield tackles the latest challenges, but under the present leadership of Mr. R. Ravichandran, who had engineered success stories for TVS and Bajaj in the past, it holds potential and promise to reach its goal of becoming a multi-million dollar brand from India. 4.2 Learning from the Project This project deliberates on the importance of Organizational Change and Culture. It was through the constant innovation and adaptability that this company has managed to hold its own in difficult times. It shows how important it is for a company to manage the internal and external stakeholders to survive in a globally challenging environment. It brings out the key role that top managers and their vision play in the shaping of an organization’s culture and thereby aids in the creation of value effectively. 4.3 References • • • • • • http://www.royalenfield.com/ http://www.eicherworld.com/ http://www.wikipedia.org http://www.team-bhp.com Gareth R. Jones & Mary Mathew, Organizational Theory, Design And Change (5th Edition) Bike India Volume 5 Issue 001 August 2009
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