competitiveness at bajaj

8/6/2019 Competitiveness at Bajaj

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COMPETITIVENESS ATBAJAJ AUTO LTD.

Submitted By:

B.Praveen 2002 MBF 035

Soumya Chatterjee 2002 MBF 117

Rakesh M Choudhary 2002 MBT 009



H AMARA BAJAJ««««

Indian 2 wheeler & 3 wheeler major. 17 Products ranging from step-thrus to scooters

Company Belief :� Transparency:a commitment that the business is

managed along transparent lines.� Fairness:to all stakeholders in the Company, but

especially to minority shareholders.

� Disclosure:of all relevant financial and non-financial information in an easily understoodmanner.

� Supervision:of the Company¶s activities by aprofessionally competent and independent board

of directors.



Rational for Selection

Bajaj is the 4th largest 2 wheeler producerin the world

Hero Honda is the market leader in themotorcycle segment which Bajaj istargeting for future growth.

Honda is the largest producer of motorcycles in the world.

Honda planning to introduce its models inIndia by 2005



Industry Analysis:

India is the third largest manufacturer of two-wheelers in the world, and the largestmanufacturer of three-wheelers.

Till 1999, Scooters were major contributorsto sales.

Surge in motorcycles sales have resulted in

a growth of 42% for the sector.



INDIAN 2 WHEELER INDUSTRY

Production:



Exports :

INDIAN 2 WHEELER INDUSTRY



Capacity Utilization in Indian

Companies:

Manufacturer 2001 2002

Bajaj Auto Ltd 52.27 57.97

Hero HondaMotors Ltd 86.31 88.94

Kinetic

EngineeringLtd 47.83 44.59

LML Ltd 38.40 29.41



Level of Indigenization:

Year Bajaj Auto Hero Honda Kinetic LML Ltd TVS Motor

2001 9.18 19.25 2.68 18.24 13.90

2002 7.48 8.77 5.33 14.61 7.40

Imported Raw Materials & Components as a % of Total RM consumed



Porter¶s 5 Force Model

More discerning

customer ±asking f or

better

Value for money

Easy financing options

After sales service

Suppliers still

doesn¶t command

any bargaining

power

Severe threat from

Hero- Honda , Tvs

Suzuki , Yamaha ,

Kinetic Honda

High growth ( 18-

20%)of the sector will

attract more players

No real threat of

substitutes for the

two wheeler market



Key Competitiveness Problem:

1. Accessing new technologies

2. Introducing new models

3. Building a presence in rapidly growingmotorcycle market

4. Creating a market culture

5. Focusing on quality

6. Improving the supply chain

7. Revamping the manufacturing practices

8. Helping the new managers into aconservative corporate culture



SWOT ANALYSIS

Strength:

Technical expertise, in collaboration with

Kawasaki Heavy Industries, Japan. Self reliance

Worlds lowest cost manufactures in the market

Extensive service and dealer networks

Global-scale production Lined up a range of 17 two wheelers covering

the entire spectrum from motorcycles toscooters to step-thrus & scooterettes



SWOT ANALYSIS

Weaknesses:

In the late seventies there was skid in

production due to intermittent laborproblems.

Underutilization of capacity

Not considered living with times

Late realization of market opportunities



SWOT ANALYSIS

Opportunities:

Launching of new products and variants of

existing models backed up by appropriatemarketing efforts.

Fuel efficiency which is much higher thancompetitors

Virtual zero maintenance among theproducts

Bajaj plans to offer CNG models with euro-IIcompliant

Focusing more on motorcycles to capture

the urban market.



SWOT ANALYSIS

Threats:

Hero Honda's switch start automatictransmission 100cc scooter

Competition from MNC's

Government regulations

Dealers not adjusted with changing realities

Change in tastes of consumers

Increase of secondary or resale market fortwo-wheelers



Key competitiveness Issues & Options

Broad sources of competitiveness tofocus on:

Technological up-gradation --Bajajshould plan for upgrading in technicalperformance with a manufacturer who has the

desired expertise and the technology for making

the power bikes

. Product innovation and expansion of

customer base



Key competitiveness Issues &

Options

Cost / Price monitoring

-Bajaj should concentrate more at reducing the costsand thereby translate this in the price of the vehicle.The cost if controlled shall help it in competing against

competitions. Target Market:

- What bajaj should do is that it must come up withboth high displacement and low displacementmotorcycles that could cater not only to the upwardlymobile biker type but also to the general customer.

Dealer Preparedness:The company must ensure that the dealers are wellaware of the product when it is launched and the

dealers are equipped to provide the after sales servicesas well.



KEY INITIATIVES UNDERTAKEN

Research and Development:

The Company released India's first 4-strokescooter, Legend, in July, 1998 . This is also theworld's first 4-stroke geared scooter.

Styling upgrades for Chetak, Super and Classicscooters

Development of a new 4-stroke scooter - Saffire -

with modern styling

Further strengthening its relationship withKawasaki, Kubota and Tokyo R & D of Japan andCagiva of Italy

In-plant design and development of Pulsar.




0

1

2

3

BAL HH LML TVS

2000

2001

2002

R& D Expenditureas a % of

Net Sales

Introduction of new models

Year BAL HHML LML TVS

2000 1.1 .44 1.29 .96

2001 2.02 .16 1.57 .88

2002 1.04 .16 2.03 1.53




Cost cutting:A) At Akurdi Plant :

Use of thermosol fuel activities for LDO forbetter combustion efficiency

Installation of automatic temperaturecontrollers in standard room and water chillingplant

B) At Waluj Plant : Fine tuning of equipment (thereopac , changed

temperature setting of air conditioning systemetc.)

Plant voltage optimization.




Productivity, Safety, Health & Environment:

- The company has received National Productivity

Award for Automobile Industry instituted byNational Productivity Council consistently for sixyears from 1991-92.

- Better provision of safety equipment, creationof safe working conditions and adoption of safeworking practices.



Environment Management System

The company's Akurdi plant successfullyimplemented Environment Management System(EMS) and was given the ISO 14001 certificate.The company's Waluj plant already holds this

certificate.

(This makes Bajaj Auto the firstlargest multi-locational manufacturingcompany having both the ISO 9001and ISO 14001 certificates. )



SPECIFIC INITIATIVES

Bajaj auto must come out with new models in2 and 3 wheeler segment to sustain its marketshare in the comparative domestic market

There is a need for greater decentralization atthe plant level to ensure that each workeradds value.

Bajaj auto should tighten up the supply chain

mechanism and gearing up of the distributionsystem. It is advised also Bajaj auto to takesteps for cutting costs, specially overheadsincluding salaries.




It should increase focus on its 5 differentproducts-

scooters,

motorcycles, step- thru scooters,

scooterettes &

3 wheelers-from production to dealers front.

Bajaj should strengthen its marketing andsales department by creating a separateteams for different products in the comingmonths.




To arrest declining scooter sales, Bajaj autohas to introduce a low cost variant of itsChetak scooter and a 4 stroke version of thestep-thru M-80

Stung by the declining scooter sales, Bajajauto should undertake a portfolio re-shuffleexercise by which the motorcycles division willbe main growth vehicle of the company.

It should gear up towards improving itsproductivity levels and they should be able todouble the output with the current workforce.




Bajaj should launch models with automatictransmission.

In a bid to cut costs, the company should worktowards in pushing up indegenisation for its 2-wheeler models and reduce waste at the factorylevel. It should also work in tandem with vendorsto identify for bringing down the cost at the

latter's end.

Bajaj auto has started a component procurementand product development restructuring exercisecalled 'Scorpio'. This will reduce the company'sinventory levels and cut the vendor base by half.



REFERENCES

Transformation of Bajaj Auto ltd ± GitaPiramal ,Sumantra Ghosal, SudeepBudiraja (CNBC India)

www.naviamarkets.com ±automobiles ,two wheelers ,feb-2003

www.projectshub.com ±Bajaj auto ,oct2002

www.capitalmarkets.com

www.indiainfoline.com

competitiveness at bajaj

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