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  • 8/8/2019 MPI Group9

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    Strategic Options for Growth

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    ObjectivesProtect the current dominant share in the currentmarketIncrease exports to 15% of total sales by 1998

    AlternativesRemain focused on domestic market and exportopportunistic basis

    Export to developing countries with minimumadaptationPromote to developed countries focusing on lowerend of moped market

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    Stagnant(declined by 5% in 1991-92)Stiff Japanese competition1993-Indian two wheeler industry suffering from Chronic Overcapacity

    Stagnant(declined by 5% in 1991-92)Stiff Japanese competition1993-Indian two wheeler industry suffering from Chronic Overcapacity

    DomesticMarket

    Growth Opportunities in Latin America, South East Asia, Sri Lanka andBangladeshLarge customer base-economies of scaleReduced dependence on one marketPotentially greater profit opportunities

    Growth Opportunities in Latin America, South East Asia, Sri Lanka andBangladeshLarge customer base-economies of scaleReduced dependence on one marketPotentially greater profit opportunities

    GlobalMarkets

    Why go abroad?

    R ecommendation : With all these advantages of going abroad we suggest movinginto newer territories

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    High on MarketAttractiveness

    CompetitiveAdvantage

    Low MarketRisk

    Basis of selecting a Market

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    Which Market to enter

    D eveloped CountriesD eveloped Countries

    Mature two wheeler market

    Opportunity mostly in moped-50cc segmentNon existent 3 wheeler market

    Mature two wheeler market

    Opportunity mostly in moped-50cc segmentNon existent 3 wheeler market

    Marketttractiveness

    Technology not our strengthEstablished Japanese playersExacting product performance requirements-weak spot

    Price-our only competitive advantage a low priority

    Technology not our strengthEstablished Japanese playersExacting product performance requirements-weak spot

    Price-our only competitive advantage a low priority

    Competitive

    dvantageTough regulations on emissions, performance and electricalQuick Model Changes and Latest Features-continuous evolvementrequired

    Tough regulations on emissions, performance and electricalQuick Model Changes and Latest Features-continuous evolvementrequired

    Market Risk

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    Maj r s g t- cc a cc s g t No i ort ti s as c omp ar t o on Japane se veh icle s

    Major se gmen t-moped cc a nd cc segmen t No impo rt du tie s as c omp ar ed to on Japane se veh icle s

    Marke t

    Attractiv ene ss

    Con side rabl e price advan tag e of Bajaj Sunn yFe we r f e at ure s in Sunn y as c omp ar ed to Piaggi o s Sf e ra

    125 cc scoo te r f or a n iche no stalgia m arke t

    Con side rabl e price advan tag e of Bajaj Sunn yFe we r f e at ure s in Sunn y as c omp ar ed to Piaggi o s Sf e ra

    125 cc scoo te r f or a n iche no stalgia m arke t

    Compe titiv e Advan tag e

    Change in re gu lat ory en vironmen tChanging p re f e ren ce s-from moped s t o fash ion abl e au tom atic sc oo te rs

    Change in re gu lat ory en vironmen tChanging p re f e ren ce s-from moped s t o fash ion abl e au tom atic sc oo te rs

    Marke t Risk

    EuropeEurope

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    Stron g and ste ady gr ow th expe ctedOpportunity both for scooters and three wheelersLow consumer purchasing power and access to foreign exchange in

    Africa; intense competition in china; opportunity in middle east andnorth Africa

    Stron g and ste ady gr ow th expe ctedOpportunity both for scooters and three wheelersLow consumer purchasing power and access to foreign exchange in

    Africa; intense competition in china; opportunity in middle east andnorth Africa

    Mark e t

    Attractiv ene ss

    Price sensitive matches our strengthStraig h t Exten sion - Le ss stri ngen t pe rf o rma nce re gulati on s; m ode l change sa ne gativ eUsed p rimarily f o r wo rk a nd tra nspo rtati on

    Price sensitive matches our strengthStraig h t Exten sion - Le ss stri ngen t pe rf o rma nce re gulati on s; m ode l change sa ne gativ eUsed p rimarily f o r wo rk a nd tra nspo rtati on

    Compe titiv e Advan tag e

    Tariff barri e rs a nd impo rt ba ns in sout h e ast AsiaTariff barri e rs a nd impo rt ba ns in sout h e ast AsiaMark e t Risk

    D eveloping CountriesD eveloping Countries

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    Strong and steady growth expectedN titi i t r l r Strong and steady growth expectedN titi i t r l r

    Market

    Attractiveness

    Pri i li it v t v r JJapanese products considered too sophisticated

    Pri i li it v t v r JJapanese products considered too sophisticated

    CompetitiveAdvantage

    Fear of a technical licensing agreement meetinga fate similar to Taiwan and IndonesiaFear of a technical licensing agreement meetinga fate similar to Taiwan and IndonesiaMarket Risk

    Latin AmericaLatin America

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    Recommendation

    Focus intensively on developing markets

    Attractive growing marketCompetitive advantage of price and low complexityStable with models, model changes a negative

    Low focus on developed markets

    Stagnating marketTechnology driven-Japanese holding greater competitive advantageTough regulations and continuously evolving preferences

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    How to Enter/Consolidate the market?

    J oint Ventures or D irect InvestmentsReasons : Large size of the market , greater control of investment, low risk as themarket is growingPsychic proximity

    Sri Lanka andBangladesh

    Sri Lanka andBangladesh

    High sales in Argentina and MexicoGo for technical licensing . Assemble CKD unitsRecommended licensee location Argentina and/or Mexico

    Latin AmericaLatin America

    Indirect/direct export of CKD units

    Existing sales not substantial

    Middle East andNorth Africa

    Middle East andNorth Africa

    Continue indirect/direct exportingDon t spend on product adaptation in these markets as this entails higher costs

    Europe, U.S.and Japan

    Europe, U.S.and Japan

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    Product

    StraightExtensionNeeds similarto IndianconsumerLow price and

    lowmaintenance

    StraightExtensionNeeds similarto IndianconsumerLow price and

    lowmaintenance

    Price

    Market BasedpricingLowest costmanufacturer-pricing to getcompetitiveadvantage

    Market BasedpricingLowest costmanufacturer-pricing to getcompetitiveadvantage

    Place

    Focus onexclusive andnon-exclusivedistributionLocaldistributors-better

    understandingof marketTechnicaltraining todistributionstaff

    Focus onexclusive andnon-exclusivedistributionLocaldistributors-better

    understandingof marketTechnicaltraining todistributionstaff

    Promotion

    CommunicationadaptationSame creativetheme globallyAdapt thespecificexecutions todifferent localmarkets

    CommunicationadaptationSame creativetheme globallyAdapt thespecificexecutions todifferent localmarkets

    Marketing program for Developing countries

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    The company has three options:

    Marketing Organisation

    Set up an export department

    Set up an International Division

    Become a truly global organization

    We recommend setting up an International D ivisionInternational D ivision under which the followingcome:

    Sri Lanka/ BangladeshLatin AmericaMiddle East and North AmericaEurope, U.S. and Japan

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    T hank YouT hank You