Bajaj Auto Limited

Soni Rachel Oommen

Overview
Bajaj Auto is the flagship company of the Bajaj group.

On November 29, 1945 Bajaj Auto came into existence as

M/s Bachraj Trading Corporation Private Limited. Bajaj Auto business: 2 wheeler segment 3 wheeler segment Bajaj Auto, is ranked as the world's fourth largest two- and

three- wheeler manufacturer

It operates at Waluj, Chakan and Pantnagar all located at Maharashtra

Company strategy
A highly focused brand-centered strategy Less is more: A few high class, choice brands at strategic and tactical price points Focused on continuously leveraging its two dominant brands, Discover and Pulsar Market positioning:
Commuter STD Commuter DLX Sports Entry segment Mid segment Premium segment

International Business Approach

Africa
o o o o o o o o Deeper penetration through exclusive sales network Ensure after sales reach and reparability Build Boxer brand Develop new markets for CV Defend high shares. Drive growth through penetration in Bangladesh Indonesia : re-jig portfolio with Pulsar 135 Reposition Pulsar brand

Asia

Latam
o Focus on Pulsar and Discover brands o Selectively strengthen routes to market

Invest in last point capability Develop strategies for larger new markets

Sales (units)
4,500,000 4,000,000 3,500,000

3,000,000
2,500,000 2,000,000 1,500,000 1,000,000 500,000

Exports: 28.5% of the Companys total net sales

Industry v/s BAL

Year ended 31 March 2006 2007 2008 2009 2010 2011 Market (nos.) 6,200,749 7,099,551 6,544,482 6,806,114 8,444,243 10,500,073 Market growth 18.8% 14.5% -7.8% 4.0% 24.1% 24.3% BAL (nos.) 1,912,306 2,379,499 2,139,783 1,907,853 2,506,791 3,387,043 BAL growth 31.9% 24.4% -10.1% -10.8% 31.4% 35.1% BAL market share 30.8% 33.5% 32.7% 28.0% 29.7% 32.3%

Two wheeler segment

Market share (in units)
2% 3% 7%

13% 43%

Hero Honda
Bajaj TVS Honda Suzuki Yamaha

14%

Others

18%

SWOT
Strengths Weakness Widespread distribution Defensive strategy and negligence of network.(Concentrated plant locations 3 wheeler market reducing the cost of inbound logistics) Core competence in high-end products No established brand to match Hero Hondas splendor in commuter TPM initiative to build perfection segment and speed High performance products across all categories with individual brand identity Extensive R &D focus : Process engineering Highly experienced management. Not a global player in spite of huge volumes (unlike the JV partner Kawasaki) Dealers have reported dissatisfaction for Bajaj Unsuccessful with Bajaj Kristal

Competencies
Distinctive Competencies
o Individual brand identity o Widespread distribution network.

Core competencies
o Vast pool of industry experience o Manufacturing of high end products o TPM initiative

Analysis of strengths n weakness

Automobile sector: Quality manpower Capital efficiency High economies of scale Strong distribution network Technical expertise. Bajaj well match these key success factors but it needs to have offensive strategies so as not to repeat its mistakes Maintain dealer satisfaction Become competitive in terms of prices without undermining quality and promotions.

SWOT
Opportunity Threat

Double-digit growth in two-wheeler market

Growing population and Increasing disposable income Motorcycle is becoming a lifestyle statement Increasing acceptance for 4-wheelers The growing gearless trendy scooters and scooter market

The competition catches-up any new innovation in no time

TATA Ace is a serious competition for the three-wheeler cargo segment Increasing fuel prices Margins getting squeezed( price as well as cost) Adverse movements in foreign exchange rates

Actions to improve
The foremost step should be to improve its competitiveness in the three segments of 2 wheelers. Change its strategy from defensive to offensive. Concentrate on commercial vehicle segment as it currently has upperhand in it or might lose its market to piaggio or ace

BAL Value chain

Primary activities

Purchasing of raw materials

Chassis manufacturing

Auto part assembling

Marketing

R&D
Human resources General administration
Support activities

Value chain costs for Discover

Value chain activities Purchasing of raw materials Chassis manufacturing Auto part assembling Sales and after sales Technical know how Labour Other overheads Profit margin Amount(crores) 2514.603 161.19 181.178 120.894 29.654 116.862 92.684 822.082 Amount(crores)

Total sales
No. of units sold :8,06,750 Average price to a consumer per bike : 49,951Rs

4029.816

Analysis
BAL lost its market leadership due to its incompetency in keeping up with the market trends and the growth projected is mainly due to industry growth Due to increasing competition, BAL has to keep its prices competitive or might lose its market share Extensive value chain analysis of the competitors can reveal the discrepancies Not the right time for the launch of Bajaj-Lite under the 4 wheel segment

Strategic issues
BAL might fall into the trap of compromising on quality to reduce cost in order to face competition as they cant further increase their price

They have reduced their marketing promotion to the level that dealers are not even provided with sufficient marketing accessories like brochures and pamphlets

There is a possibility of losing market share to the competitors

Alternatives ..
If inventory selling is taking place, they need to slow down their production and address the grievances Suppliers: negotiate prices mutual cost saving ventures Increasing promotions and taking feedback from dealers To reduce further product line stretch.

Thank you!!!