strategic management term paper on mico bosch

BOSCH – INVENTION FOR LIFE

P.E.S Institute of Technology

Department of MBA

“TERM PAPER STRATEGIC MANAGEMENT”

SUBMITTED TO,

Mr Murali Murti

Professor of Management

Department of MBA

P.E.S Institute of Technology

Bangalore

SUBMITTED BY, Sandeep

Pesit MBA dept. Usn.no-1PB11MBA02

Roll no- 42 ‘c’

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ACKNOWLEDGEMENT

I really thank PESIT and I express my sincere thanks to my term paper guide Prof. Murali.Murti who guided me through my term paper.

INDEX

COMPANY PROFILE

Organization structure

Financial statements

Mission &vision

Objectives

Industry environment

Competitor analysis

Environment analysis

Porter’s 5 force model

SWOT Analysis

Value chain& core competencies

Corporate strategy

Joint venture M&A Exports

BCG matrix

Culture & CSR

Strategic control & evaluation

Future strategies recommendations

Conclusion.

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Company overview:

HISTORY:

On November 15, 1886, Robert Bosch opened a “Workshop for Precision Mechanics and Electrical Engineering” at 75 B Rotebuhlstrasse in Stuttgart. The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the Company to plan over the long-term and to undertake significant up-front investments in the safeguarding of its future

In India the Company was Incorporated on 12th November, in Chennai and shifted to Bangalore on 16th November, 1953. The main objects of the company are to manufacture spark plug for petrol engines and fuel injection equipment for diesel engines in technical and financial collaboration with Robert Bosch GmbH, West Germany. Trade Mark is `MICO'.

INTRODUCTION:

The Bosch Group is one of the world’s biggest private industrial corporations. Headquartered in gerlingen, Germany, the Bosch Group has some 303,000 employees worldwide, and generated annual sales revenue of 51.4billion Euros in 2011. There are about 300 subsidiary and regional companies around the world. Founded in 1951, Bosch Limited is India’s largest auto component manufacturer and also one of the largest Indo – German company in India. The company generated net sales of 85,331,640 in2011.

The Bosch Group holds close to 70% stake in Bosch Limited .Bosch Limited has a strong nationwide service network which spans across 1,000 towns and cities with over 4,000 authorized representations to ensure widespread availability of both products and services. osch Group’s flagship in India, Motor

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COMPANY PROFILE

Industries Company Limited (Mico) was established in the year 1951. It is a pioneer and leader in the Indian automotive segment for the last 56 years. The Bosch Group holds close to 70% stake in Mico. Mico is the largest auto component manufacturer and one of the largest Indo-German companies in India.

From the year Bosch entered India (1922) it has focussed on state-of-the-art technology and continued commitment to world-class quality. Mico is the country's largest manufacturer of diesel fuel injection equipment and one of the largest in the world.

Mico is headquartered in Bangalore with manufacturing facilities in Bangalore, Nashik, Naganathapura and Jaipur. All the four plants

are TS 16949 and ISO 14001 certified. Mico has its presence across automotive and nonautomotive sectors with a strength of approximately 10,300 associates. It manufactures and trades products as diverse as diesel and gasoline fuel injection systems, Blaupunkt car multimedia systems, auto electrical, industrial equipment, special purpose machines, packaging machines ,electric power tools and security systems.

The Company has developed excellent R&D and manufacturing capabilities, a strong customer base and its market leadership is testimony to the high quality of technology .In India, the Bosch Group operates through the following companies

• Bosch Ltd.

• Bosch Chassis Systems India Ltd

• Bosch Rexroth India Ltd

• Robert Bosch Engineering and Business Solutions Ltd

• Bosch Automotive Electronics India Private Ltd

• Bosch Electrical Drives India Private Ltd.

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ORGANISATIONSAL STRUCTURE

Chairman

Directors

Joint Managing Director

Managing Director.

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FINANCIAL STATEMENTS

Balancesheet - Bosch Ltd.

Particulars Dec'11 Dec'10 Dec'09 Dec'08 Dec'07

Liabilities12 Months

12 Months

12 Months

12 Months

12 Months

Share Capital 31.40 31.40 31.40 32.02 32.05

Reserves & Surplus 4,697.04 4,066.64 3,353.83 3,063.43 2,531.36

Net Worth 4,728.44 4,098.04 3,385.23 3,095.46 2,563.41

Secured Loans 18.11 3.04 28.41 9.92 12.37

Unsecured Loans 289.03 273.35 255.90 254.44 232.72

TOTAL LIABILITIES5,035.58 4,374.43 3,669.54 3,359.82 2,808.50

Assets

Gross Block 3,430.14 3,023.80 2,871.19 2,728.56 2,345.89

(-) Acc. Depreciation 2,810.05 2,587.81 2,357.92 2,119.94 1,858.83

Net Block 620.09 435.99 513.27 608.62 487.07

Capital Work in Progress.

440.66 224.22 99.67 167.11 158.32

Investments. 1,606.36 1,607.30 1,417.61 866.53 1,063.78

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Inventories 1,183.06 809.28 551.18 548.07 484.68

Sundry Debtors 949.21 720.97 583.33 699.51 586.20

Cash And Bank 951.45 1,325.87 1,067.77 1,070.81 679.06

Loans And Advances 1,380.14 1,114.17 757.01 555.05 447.79

Total Current Assets 4,463.86 3,970.29 2,959.29 2,873.44 2,197.73

Current Liabilities 1,527.13 1,337.05 854.53 720.66 738.10

Provisions 568.27 526.31 465.76 435.22 360.30

Total Current Liabilities

2,095.40 1,863.36 1,320.29 1,155.88 1,098.40

NET CURRENT ASSETS

2,368.46 2,106.92 1,639.00 1,717.57 1,099.33

Misc. Expenses 0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS (A+B+C+D+E)

5,035.58 4,374.43 3,669.54 3,359.82 2,808.5

Profit & Loss - Bosch Ltd

Particulars Dec'11 Dec'10 Dec'09 Dec'08 Dec'07

12 Months

12 Months

12 Months

12 Months

12 Months

INCOME:

Sales Turnover 8,650.93 7,149.69 5,107.54 5,131.33 4,783.99

Excise Duty 603.69 441.67 275.62 491.12 488.71

NET SALES 8,047.24 6,708.03 4,831.92 4,640.21 4,295.28

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Other Income 0.00 0.00 0.00 0.00 0.00

TOTAL INCOME 8,314.15 6,922.25 5,039.51 4,833.49 4,458.26

EXPENDITURE:

Manufacturing Expenses 312.20 293.49 169.41 157.75 148.46

Material Consumed 4,653.73 3,781.54 2,672.67 2,608.95 2,390.47

Personal Expenses 896.14 802.47 614.18 530.40 480.65

Selling Expenses 322.31 347.72 322.90 252.84 228.94

Administrative Expenses 533.93 437.62 414.94 367.65 304.38

Expenses Capitalised -70.92 -34.16 -15.57 -29.10 -19.26

Provisions Made 0.00 0.00 0.00 0.00 0.00

TOTAL EXPENDITURE

6,647.39 5,628.67 4,178.54 3,888.50 3,533.64

Operating Profit 1,399.85 1,079.36 653.38 751.70 761.64

EBITDA 1,666.76 1,293.58 860.97 944.99 924.62

Depreciation 257.84 253.97 303.63 302.46 253.91

Other Write-offs 0.00 0.00 0.00 0.00 0.00

EBIT 1,408.92 1,039.61 557.34 642.52 670.71

Interest 0.43 3.93 1.19 8.73 3.75

EBT 1,408.49 1,035.68 556.15 633.79 666.96

Taxes 461.60 349.20 217.89 231.94 265.90

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Profit and Loss for the Year

946.89 686.48 338.26 401.85 401.06

Non Recurring Items 82.04 10.19 101.36 137.23 61.40

Other Non Cash Adjustments

94.11 162.60 152.49 94.79 146.74

Other Adjustments -0.4 -0.3 -1.47 0.00 0.00

REPORTED PAT 1,122.56 858.90 590.65 633.86 609.21

Net sales for the year 2011 grew by 19.6%. The Profit Before Tax (PBT)in 2011 as a percentage of net sales was at 19.8% as compared to 18.1%in 2010. The Profit after Tax (PAT) as a percentage of net sales was14.1% in 2011 as against 13.0% in 2010.

Material costs as a percentage to sales increased to 56% in 2011 asCompared to 54.3% in 2010.

Overall, the Profit before Interest, Depreciation and Taxes, for theYear shows an increase of 22.7% over the previous year.

Investments

Capital investment during 2011 was higher than previous year, atRs. 6,587 mio. as against Rs. 3,021 mio. in 2010.

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Dividend

The Board of Directors recommends a dividend of Rs.50 per equity shareFor the year 2011 as against a dividend of Rs.40 per equity share in2010. This dividend is subject to the approval of the shareholders atThe forthcoming Annual General Meeting.

A special dividend of Rs.85 per equity share was paid to the shareholdersin 2011, on the occasion of 125th anniversary of Bosch and toCommemorate 60 years of the Company since its incorporation in the year1951. The total dividend payout for the year 2011 is at Rs.135 per equityShare.

Module 1

What Is Strategy?

Competitive moves and business approaches used to run the company

Management’s “game plan” to

-Attract and please customers

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-Stake out a market position

-Compete successfully

-Grow the business

-Achieve targeted objectives

Definition: By Michael .E. Porter

“The pattern of decisions in a company that shapes and reveals its objectives, purposes or goals, produces the principal policies and plans for achieving the goals”

Definition of strategic management:

“The set of decisions and actions resulting in formulation and implementation of strategies to achieve the objectives of the organization”Strategic management importance for Mico BoschIt gives a role to everyone in an organization to manage strategically.It helps the organization perform well.It helps the organization to effectively cope with the uncertainties in the external and internal environment.It helps to coordinate various functions and activities.Mico Bosch ltd organizational move is Top- Down approach, strategies are usually formulated by top management & communicated downwards.

Strategic formulation process is done in the following manner

Identify vision and mission of the company

Evaluating external & internal environment ( SWOT )

Drawing inference from SWOT

Formulate strategies

Implement strategies

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Evaluate result.

Module 2 :

Mission Statement of Bosch

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SWOT Analysis


“Their mission helps them achieve their vision. They need outstanding accomplishments and continuous improvement in order to achieve long-term success. The title of Bosch's mission is,“BeQIK,” it summarizes what’s most important: quality (Q),innovation (I), customer orientation (K for the German term“Kundenorientierung”) and speed”.Mico Bosch main emphasis is on the fact quality, innovation, and customer centric which have paid rich evidence in growth of the company.

Vision statement:

“Creating values - sharing values

If we want to work successfully as a team in a global and complex world, then we need a common image of the future for our company. This image – this vision – will help us bring our strategic thinking into clear alignment. The Bosch slogan 'Invented for Life' is part of its long tradition, through which it communicates the Group's core competencies and vision, that include technological leadership, modernity, dynamics, quality and customer orientation”.

Bosch Values

“Our values serve as a benchmark by which we can measure our activities. Future and result focus have been placed on top of our value system on purpose. But the others Responsibility, Fairness, Compliance and Diversity are equally important. These values show us the way to achieve our central objective of securing the future success of Bosch,”says Franz Fehrenbach, Chairman, Board of Management.

Strategic objectives of Mico Bosch:

Transferring values of MICO to Bosch without losing any of what is

Already built

Build Bosch imagery in the country to acquire leadership in the

automotive sector

Establish awareness among all Target Groups that they will not lose

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anything they are used to expect from MICO but gain additional benefits

from the proven experience of Bosch.

Financial objectives of Mico Bosch:

Revenue Growth

Profit Margin

Sustainability

Return on investment

Wealth maximisation.

Module 3

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Environment Analysis

General External Environment

The Indian Auto components industry consists of over 500 companies in the organized sector and about10,000 firms in the unorganized sector.

The general external environment can be analysed by breaking it into the following heads.

Economic

The Indian economy grew at 6.5% during the year 2011-12. Various forecasts predict the growth rate during 2012-12 to be between 5.8 and 6.1%. Although the growth has slowed down considerably from the last few years, India would still retain its status of the 2nd fastest growing major economy after China.

In terms of International Trade, the auto components industry grew rapidly in both exports and imports over last 5 years. However, India has become a net importer of auto components as imports are growing at a much faster rate than exports. The investment spending on capacity creation is estimated to be US$ 1.5 billion annually.

Political

The government has taken many initiatives to promote foreign direct investment (FDI) in the industry.

Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and components is permitted.

The automobile industry has been de-licensed.

There are no restraints on import of components. The Auto Ancillary industry comes under the purview of the Department of Heavy Industries (DHI) in the Ministry of Heavy Industries and Public Enterprises. The departments vision under its Auto Policy for the decade 2006 - 16.

Technological

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The auto components industry is a very technology-intensive industry. Historically, India's strength in exports has lied in forgings, castings and plastics. But this is changing with more component manufactures investing in up gradation of technology in recent years. The organized sector has increased focus on quality and has been resorting to increased automation to reduce the defect levels. The Planning Commission has recommended setting up of an auto design centre at National Institute of Design (NID), Ahmadabad. The DHI has recommended the creation of a Rs. 1000 crore modernization /automotive development fund. ACMA has also spoken about a similar fund.

Social

Social environment is intrinsically linked with automobile sector and has changed the demand to the tune of preferences of customers in major way:

1. Business is booming as the Indian middle class is increasing its consumption

2. Also, more and more companies are getting ISO 14001 certification (Environment Management Systems).

3. The increased focus on environment sector has also resulted in companies researching in developing parts to use energy efficiently and reduce carbon emissions.

4.Entry of global players in Asian countries such as India and China has also necessitated a change in their organisation culture.

Competitive Environment

The fortunes of the auto ancillary sector are closely linked to those of the auto sector. Demand swings in any of the segments (cars, two-wheelers, commercial vehicles) have an impact on auto ancillary demand. Lower labour costs give the Indian auto ancillary companies an absolute cost advantage. To put things in perspective, ACMA numbers suggest that wage cost equal for 3% to 15% of revenues for Indian manufacturers as compared to 20% to 40% for US player.

PORTERS FIVE FORCE MODEL

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The model originated from Michael E. Porter's 1980 book "Competitive Strategy: Techniques for Analyzing Industries and Competitors." Since then, it has become a frequently used tool for analyzing a company's industry structure and its corporate strategy.

In his book, Porter identified five competitive forces that shape every single industry and market. These forces help us to analyze everything from the intensity of competition to the profitability and attractiveness of an industry.

Figure shows the relationship between the different competitive forces.

Analysis of Mico Bosch through Porters 5 force model:

T hreat of new entrants

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1. De-licensing has opened the market new entrants2. However, there are still many barriers to entry for the auto components market. Initial capital is very huge in the organised market restricting smaller players3. Technology and quality demands are very stringent.4. Other advantages to existing players include customer service and distribution network.

We can conclude that threat of new entrants is Moderate.

B argaining power of suppliers

1. Raw material cost comes to 50-60% of the total production cost.2. Suppliers to the auto component sector include companies from the electronics, fabrication, plastic and rubber, casting/forging, machine tools industries.3. Bargaining power is low for high technology products4. Unorganized sector dominates the domestic component market due to excise benefits.

We can conclude that generally excess supply persists.

Bargaining power of customers

Bargaining power of customers is very high. The demand for auto ancillary products in linked to automobile demand. Due to global slowdown India witnessed considerable dip in sales of automobiles this led to outsourcing .

We can conclude that customers bargaining power is high .

T hreat of Substitutes

The only substitutes to auto component manufacturers are organised component players working closely with R&D team. However, this threat is very low. The unorganised components market faces a greater threat as replacement market consumers are shifting to genuine components

Threat is too low as there are very less organised manufacturers in current scenario in india.

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Rivalry among Competitors

Competition is moderate

At the domestic level, market structure is fragmented for a large number of ancillary products. Most companies adopt low cost and differentiation strategies. In some products (like batteries), only two or three companies control over 80% of the market., as global players enter the market leading to consolidation.

Competition is moderate here in India.

Module 4

SWOT ANALYSIS

Strengths at the Strategic Level:

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1 .The hierarchical, centralised structure and the authoritarian leadership style facilitate control over the company’s worldwide activities and employees.

2. Competences as well as responsibilities and decision taking are clearly defined. Boschs business model enables it to provide innovative products and services. None of the other companies have utilised this strategy in their mass production activities. Bosch was able to build a name in the market solely by developing parts solely based on the requirements of customers.

3. Boschs level of globalisation, (presence of numerous agencies and production sites all over the world) helps it reach new markets and react very quickly to changes in the external environment.

4. Apart from being the biggest independent automotive supplier, a broad product range in sector such as electronics, household sectors ld appliances, security systems and many more minimises the business risk of a decreasing market in one sector..

At the Operational Level:

The company has streamlined both procurement and inventory by redesigning computers so that different models utilize as many of the same components as possible. Through this process, the complexity of managing its procurement and inventory parts was minimized.

A significant strength of Bosch is its very good overall reputation in terms of quality, punctuality and reliability. This is ensured in different ways.

Building strategic networks of reliable suppliers selling quality parts at wholesale price.

Organized assembly line to achieve efficiency to maximize output while minimizing the wastage of time and resources.

Coordinating the delivery of computer components to customers without letting the products pass through different middlemen.

Weaknesses:

1. Bosch strength in its hierarchical, centralised structure sometimes acts as a weakness as well. Being a German company, the leadership style has developed in a typical way, where leaders enjoy a high degree of authority and respect. With this culture being exported in foreign countries which have different

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acceptances of leadership, unavoidable personal conflicts arise especially on an inter-human level.

2. As Bosch works in different industrial sectors with a broad product range, the level of complexity is very high. A high level of bureaucracy and formalisation slows down procedures leading to additional costs.

3. Especially because of the strict hierarchies and bureaucratic workflow, Bosch is far away from the so called modern leadership. Due to the fact that employees are highly controlled and responsibility diminishes considerably further down on the hierarchical pyramid conflicts inhuman relations and a lack of motivation can easily arise. On the other hand if the decision making process is faulty, the employee will not be corrected or will not get any feedback, which may have negative consequences

4. Another weakness might be the level of centralisation. As Bosch strongly centralises its business, the adaptation may fail and foreign subsidiaries often face the conflict of adapting their business according to the market, hence opposing the instructions of the headquarters

5. Regarding the product range, weaknesses can be determined in the Industrial Technology Sector which shows losses of 221 million Euros due to strong competition from low-wage countries. Boschs manufacturing sites in high-wage countries in Western Europe and especially in Germany have caused very high production costs.

6. The company also holds the risk of losing its fast paced growth due to the lack of network with resellers and delivery firms in the international market. The goal of the company to sell directly to customers to minimize cost also plays against it sometimes. The company has to consider that it may not be able to meet demand in the international market the same way it did in the US. There are only a number of assembly plants around the world targeting millions of customers. Thus the company may need external channels of distribution in the future.

Opportunities:

1. Domestic Investments and Growth

a. The size of the Indian automotive industry is expected to grow at 13 per cent per annum to reach around US$ 130 billion to US$ 150 billion by 2016.

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b. The demand growth at 14% CAGR makes India one of the fastest growing markets.

c. Though India's auto component industry has conventionally relied on exports for its profits, the domestic market itself is ripe with rapidly growing opportunities.

d. Industry experts are hopeful that the country will be able to offset China and other Southeast Asian countries' traditional manufacturing advantage in the coming years, facilitating the industry's achievement of its targeted market value of US$ 40 billion by 2014.

e. The relaxation of FDI norms for the small-scale sector could emerge as one of the key growth drivers in the long run.

f. With investments around US$ 15 billion slated for the sector over the next few years, the prospects for India's auto market look very bright indeed.

2. Huge Labour Force

a. With 400,000 engineering graduates every year, out of which 7 million enter the work force, there is a huge supply of labour force.

b. Skilled labour costs in India are also among the lowest in the world.

3. Linked to Automobile Sector

The opportunities for the industry are also tied to the fortunes of the automobile industry showed above in porters 5 force model, auto manufacturers hold the greatest influence.

a. The automobile sector is cyclical and dependent on the growth of the economy and improvement in infrastructure. Factors like increased public spending, favourable interest rates and general improvement in per capita income point towards higher demand for automobiles in the future.

b. There has been a conscious effort by auto manufacturers to improve productivity of their suppliers (i.e., component providers) in the past few years. Though the number of active vendors has declined significantly for auto manufacturers, technology transfer and fresh fund infusions have resulted in improved productivity in the remaining ones.

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c. Also, government's initiatives in the infrastructure sector are likely to give boost to four-wheeler sales especially CVs. The CV segment is expected to grow by 7% to 8%, 2-wheeler demand to increase by around 12% to 15% and passenger car sales growth at 10% to 12% over the medium to long term. This is a positive for auto ancillary manufacturers.

d. The growing Chinese automotive market also presents attractive business opportunities for automotive component manufacturers for exports.

THREATS:

1. Lower Margins

a. Highly competitive: Margins are likely to come under pressure in the long term because as competition increases, auto manufacturers will find it difficult to increase prices and will try to cut costs. The burden will eventually fall on auto ancillary players

.b. Consolidation: As manufacturers sourcing components are keen to get components from fewer sources in future, this will lead to consolidation in the sector. Companies will have to focus on quality and abide by delivery schedules if they want to survive.

2. Trade Agreements

The growing number of Free and Preferential trade agreements being signed by India with countries like Thailand, Singapore and other ASEAN countries will hurt the cost competitiveness of Indian companies as Indian players play significantly higher duties than their Asian counterparts. Therefore, Indian companies might lose out on big orders if the duty structure is not rationalised.

VALUE CHAIN ANALYSIS

Primary Activities:

Inbound Logistics- Best quality products from many suppliers

Operations- Focus on BPS (lean manufacturing concept)

Outbound Logistics-Direct supply to customers

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Marketing & Sales-Marketing of new products

Service- Efficient customer service.

Secondary activities:

Infrastructure - Centralized cost control

Human Resource Management- Intensive training centres, stable job, encourage employees to look for newer ways

Technology- Heavy investment in R&D, focus on quality and cleaner products, learning and experience

Procurement- Amplified purchasing in low cost locations.

Core Competencies

Bosch core competency revolves around developing high class innovative products and achieving cost leadership. For that it invests heavily in R&D and focus on a lean efficient system in highly competitive environment of auto component sector. With investments in R&D, Bosch is able to focus more on cleaner and economical product. Also with economies of scale and skilled, educated workforce of India, it is able to reduce cost.

1. High Market Share: With a market share of almost 95%, it has a virtual monopoly in the Diesel Fuel Injection Equipment.

2. Technological competencies:

A. Manufactures modern gasoline and diesel engine systems of high quality, cleaner and economical.

B. Diesel Fuel Injection Equipment (FIE)has been the core business of Bosch Ltd., right from its inception in 1951.

C. Today MICO (Motor Industries Co. Ltd., a Bosch company) continues to be a supplier of FIE to a majority of Original Equipment Manufacturers (OEMs) with a market share of over 81%..

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3. Alternative Energy : MICO Bosch is moving towards energies such as electricity while also improving existing power train technologies, including diesel systems, gasoline direct injection and hybrids to reduce the energy from conventional resources. It has also taken up bio diesel and CNG technologies to address energy challenges.

4. Service: In India 50 per cent of Boschs current business is accounted for by the diesel segment. Bosch positions itself as a one-stop shop for sales and service and to make available the entire range of products to those who come for service. Bosch is expanding the product range in this business by bringing some of its global technology products into India. It is also planning to manufacture some of these products in India. A CORE COMPETENCY CENTRE has been created in the country to manufacture these equipments in the MICO production complex.

5. Quality : MICO Bosch has ISO Certified Quality Management System. Certified Locations are MICO, Incorporated; MICO Europe ltd. and MICO Mexico

MODULE 5

Strategy

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Corporate Strategy

Boschs economic strategy corresponds to a common aim of the group for Innovation, independence and integrity . The aim is to be among the world market leaders and to be a major player in all of the company’s business sectors. The strategy to achieve this goal is by strong marketing of new products and ongoing investment in Research and Development to innovate continuously . The emphasis on innovation is underlined by the huge number of associates, working in Research and Development departments, 21,250 world-wide.

Efficient sales and customer service also play a key role in Boschs corporate strategy.

Two-pronged Business Strategy

Bosch has followed a Two-pronged strategy

1. Innovation Leadership

2. Cost Leadership

Bosch has invested heavily in R&D much above the industry average. This has resulted in Bosch pioneering many technological advances -

1. Anti-lock braking systems

2. Electronic Stability Control

3. High-pressure diesel injection

4. Parking assist systems

Such systems account for more than 50 per cent of Bosch's business in automotive engineering. At the same time, Bosch realises that technical advances of cutting-edge innovation may melt away rapidly. This is why cost leadership is also part of Boschs strategy formulation.

One way by which Bosch manages the balance between innovation leadership and cost leadership is the Bosch

Production System (BPS). This is a lean manufacturing concept which ensures that the production processes are simple and transparent, thus saving them from excessive production costs. Bosch has also invested in new development centres at low cost locations.

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INTERNATIONAL LEVEL STRATEGIES:

Joint venture

BSH Bosch und Siemens Hausgeräte

BSH Bosch and Siemens Hausgeräte GmbH, in which Bosch and Siemens AG each hold a 50% share, is one of the world's top three companies in the household appliances industry. In Germany and Western Europe, BSH is the market leader. Its portfolio includes the principal brand names Bosch and Siemens, Gaggenau, Neff, Thermador, Constructa, Viva, and ufesa brands, and further six regional brands.

Purolator Filters

Bosch owns 50% of Purolator Filters in a joint venture with Mann+Hummel. Bosch also owns 50% of the home appliance manufacturer Bosch-Siemens Hausgeräte. The vehicle audio equipment company Blaupunkt was a subsidiary of Bosch until March 2009.

SB LiMotive

In June 2008 Bosch formed SB LiMotive, a 50:50 joint company with Samsung SDI.

MERGER & ACQUISITION

1982 - Company acquires photographic equipment division from Braun AG.

1995 - Acquisition of Atco-Qualcast Ltd.

2000 - Acquisition of Rexroth.

2003 - Acquisition of Buderus AG.

2003 - The formation of the Robert Bosch Tool Corporation and acquisition of S-B Power Tool Corporation and Vermont American Corporation including the brand names for Bosch Power Tools, Skil Power Tools, Dremel, Vermont-American, Primark brands, and Gilmours.

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http://en.wikipedia.org/wiki/Dremel

http://en.wikipedia.org/wiki/Bosch_Rexroth

http://en.wikipedia.org/wiki/Braun_(company)


2006 - Bosch acquires Telex Communications, a maker of hearing aids, headsets and audio equipment, and partners with Daewoo to build Bosch refrigerators in Mexico.

2007 - Bosch acquires Health Hero Network.

2008 - Tata Nano, the $2,500 People's Car powered by Bosch-designed engine

is unveiled at Auto Expo in New Delhi. Bosch plans to acquire majority stake

in Ersol photovoltaics .

Bosch acquires CST/berger, maker of professional measuring equipment.

2009 - Bosch acquires LR Nelson, a maker of lawn and garden products,

including ponds, and merges the Gilmour and Nelson brands into Bosch -

Garden and Watering.

2009 - Robert Bosch acquires Akustica.

EXPORTS

EXPORTS:

The Regulators from Naganathapura Export Unit are exported to Robert Bosch

plants in following countries.

Cardiff (UK), Gottingen (Germany), South Africa, Treto (Spain), and

aftermarket in Karlsruhe in Germany.

These are used in LIC types (compact alternators) which are produced by these

plants.

Exports from Nasik plant.

following parts were produced by Bosch Limited (Formerly known as MICO),

and exported to various Asian and European countries.

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http://en.wikipedia.org/wiki/Photovoltaics

http://en.wikipedia.org/wiki/Ersol

http://en.wikipedia.org/wiki/Tata_Nano

http://en.wikipedia.org/wiki/Daewoo

http://en.wikipedia.org/wiki/Telex_Communications


• Injector Body (German name: Koerper)

• Armature Group (German name: Ankergruppe)

• Valve set (German name: Ventilsatz).

MODULE 6

Tailoring strategy to fit specific industry :

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Some of the attributes that justify industry leadership of Mico bosch are as

follows:

1. Strong to powerful market position.

2. Well-known reputation.

3. Proven strategy.

These attributes corresponds to the fact that Mico bosch is a industry leader.

Since Mico bosch is a Industry leader although with a stiff competition from its competitors here are some of the strategies that mico bosch would adapt and attain growth, sustainability, market share etc.

Stay-on-the-offensive strategy.

Fortify-and-defend strategy.

Muscle-flexing strategy.

1. Stay on offensive strategy:

Concentrate on achieving a competitive advantage and then widening the advantage overtime. Relentlessly pursue continuous improvement and innovation, being first to market with technological improvements. New or better products. More attractive performance features. Aggressively attack profit sanctuaries of important rivals. Launch fresh initiatives to expand overall industry demand

Spur creation of new families of products. Make product more suitable for consumers in emerging-country markets. Discover new uses for product. Attract new users of product. Promote more frequent use.

2. Fortify and defend strategy:

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Grow faster than industry, taking market share from rivals

Make it harder for new firms to enter and for challengers to gain ground

Hold onto present market share

Strengthen current market position

Protect competitive advantage.

3. Muscle flexing:

Be quick to meet price cuts of rivals

Counter with large-scale promotional campaigns if rivals boost advertising

Offer better deals to rivals’ major customers

Dissuade distributors from carrying rivals’ products

Provide salespersons with documentation about weaknesses of competing products

Make attractive offers to key executives of rivals

Use arm-twisting tactics to pressure present customers not to use rivals’ products.

Innovation at Mico bosch

Innovations make the future secure. More than 25,000 R&D associates world wide stand by this belief and deliver products

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and services that improve the end user's quality of life. In 2010 Bosch had applied for over 3,000 patents worldwide.

Bosch R&D is keen to share its knowledge globally through cross-cultural exchange programmes for students and employees. For instance, the Bosch Research and Technology Centres at Pittsburgh and Palo Alto, have forged close relationships with US universities such as Berkeley, Stanford, and Carnegie Mellon, that enables them to exploit the latest research trends. In India, Ashok Leyland and Mico have joined hands with the Indian Institute of Technology, Madras (IIT-M) to set up the 'Ashok Leyland and Bosch Centre of Excellence in Engineering Design' at the IIT-M campus. This programme offers a dual degree – B.Tech in Engineering Design and M.Tech with specialisation in Automotive

Engineering. Bosch R&D in India – 'Technical Center India' (with over 350 qualified and experienced R&D engineers and technicians) and a hi-tech 'Application Centre' caters to the needs of the automotive industry. The Technical Centre India (TCI) offers solutions to vehicle and engine manufacturers.

Diversification of Mico bosch:

Diversifying into machining precision components across industry segments such as Earth Moving, Machine Tools, Hydraulics, Automotive, & Aerospace.

BCG matrix

Bruce Henderson for the Boston Consulting Group in 1970 designed BCG matrix to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

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The use of chart, analysis plot a scatter graph to rank the business units (or

products) on the basis of their relative market shares and growth rates.

Cash cows:

Are units with high market share in a slow-growing industry. These units

typically generate cash in excess of the amount of cash needed to maintain the

business. They are regarded as staid and boring, in a "mature" market, and every

corporation would be thrilled to own as many as possible. They are to be

"milked" continuously with as little investment as possible, since such

investment would be wasted in an industry with low growth.

Dogs or more charitably called pets :

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Are units with low market share in a mature, slow-growing industry. These units

typically "break even", generating barely enough cash to maintain the business's

market share. Though owning a break-even unit provides the social benefit of

providing jobs and possible synergies that assist other business units, from an

accounting point of view such a unit is worthless, not generating cash for the

company. They depress a profitable company's return on assets ratio, used by

many investors to judge how well a company is being managed. Dogs, it is

thought, should be sold off.

Question marks (also known as problem children):

Are growing rapidly and thus consume large amounts of cash, but because they

have low market shares they do not generate much cash. The result is large net

cash consumption. A question mark has the potential to gain market share and

become a star, and eventually a cash cow when the market growth slows. If the

question mark does not succeed in becoming the market leader, then after

perhaps years of cash consumption it will degenerate into a dog when the market

growth declines. Question marks must be analyzed carefully in order to

determine whether they are worth the investment required to grow market share.

Stars:

Are units with a high market share in a fast-growing industry. The hope is that

stars become the next cash cows. Sustaining the business unit's market leadership

may require extra cash, but this is worthwhile if that's what it takes for the unit to

remain a leader. When growth slows, stars become cash cows if they have been

able to maintain their category leadership, or they move from brief stardom to

dogdom.

We can conclude with the fact that Mico bosch is star at present with high

market share and revenues generated on a large scale.

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Module 7

STRUCTURE:

LEVELS IN THE COMPANY

GM General Manager

DGM deputy general manager

DM divisional manager

Gr.1 senior manager

Gr.2 Manager

Gr.3 deputy manager

Gr.4 assistant manager

Gr.5 senior engineer/senior officer/senior superintendent

Gr.6 engineer/officer/ superintendent

Gr.7 assistant engineer/assistant officer/foreman.

LEADERSHIP STYLE:

Style refers to leadership style of the top management and the over all operating style of the organization. style impacts the norms that people follow and how they work and interact with each other and the customers. They leadership style depends upon the organization culture that is in practice.MICO has a participative kind of leadership. The decision taken in the top management may be with the coordination of the subordinate In the organization some of the decisions are taken with the mutual consultation of the top management and the middle level management. These decisions are through mutual exchange of knowledge and the experience of the employees. The top management consults their immediate subordinates in case of any important decision. Only top management takes some decisions which are strategic in nature The overall strategy of the company is taken in the board meeting of the company that includes all the Directors, General Managers. The regional level decisions are

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taken by the Regional Managers with the consultation of different Branch Managers. There is a good coordination between all the levels of management in making effective decisions, which will benefit the company as well as the employees in achieving their respective goals.

CULTURE AT THE COMPANY:

The culture of the organization consists of two components:

Organization culture: The dominant values, beliefs and norms, which develop over time and become relatively enduring features of the organization life.

Management style: It is more a matter of what managers do, then what they say, how do a company’s manager spend their time.

The following aspects cauterize the company culture

Open and transparent

Free form of communication

Cross-functional forums

Employee involvement in decision making

Performance linked assessment

Mutual trust and respect.

Thus we can say that Non-interference in internal matters. To perform different functions, different departments have been established. These departments are in charge of different functions and a manager will head the department. The manager is responsible for his department. The management at MICO is partially centralized and partially decentralized. Managers can decisions independently on certain matters, which needs immediate attention. But there are certain issues, which require prior permission of Executive Director or Board of Directors.

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Corporate social responsibility:

It is what company gives back to society for welfare of the society . Recently 3 days back there is implementation of the law that company should participate in CSR with 2 % of its profits.

CSR of Bosch.

It was a matter of crucial importance to RobertBosch that his company 'should be safeguarded in its substance for future generations, and that it should remain at all times financially independent, autonomous, and able to take appropriate actions'. It was for this reason that he set up foundations for the subsequent corporate constitution in his will and guidelines to his executors.

The Robert Bosch Foundation was set up in 1964 with the aim of translating the Company founder's commitment to social and charitable causes into contemporary projects. During his life, he also described the principles which guided him in his business dealings. One well-known example is his pithy quote from 1919:

“I would rather lose money than trust.”

Mico has undertaken numerous initiatives towards the betterment of society across medical, educational, social and vocational programmes. Some of the key initiatives have been:

The donation of a distribution vehicle to the Akshaya Patra Foundation – a non-profit organisation that provides unlimited, wholesome and nutritious mid day meals to students across India

An outreach programme called Manasi –founded by the female employees of the organisation to serve the under privileged by addressing many issues in and around the neighbourhood. An orphanage, 'Anatha Shishu Seva Ashrama’, was taken up as one of their significant projects. Manasi is also active in various other social initiatives like blood donation camps, health awareness programmes, etc.

An active part in the Nasik Run – initiative to promote awareness, health and fitness in and around the city of Nasik for the underprivileged.

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Relief during the Kargil War and earthquake ravaged Gujarat Monetary help – every employee came forward with an offering of a day’s wage – in the aftermath of the Tsunami in South India.

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Module 8

STRATEGIC CONTROL & EVALUATION:

Strategic evaluation and control constitutes the final phase of strategic management. The purpose of strategic evaluation is to evaluate the effectiveness of strategy in achieving organizational objectives. Process of evaluation how it happens in every company and Mico Bosch.

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Determine What to Control:

The first step in the control process is determining the major areas to control. Managers usually base their major controls on the organizational mission, goals and objectives developed during the planning process. Managers must make choices because it is expensive and virtually impossible to control every aspect of the organization’s

.Set Control Standards:

The second step in the control process is establishing standards. A control standard is a target against which subsequent performance will be compared. Standards are the criteria that enable managers to evaluate future, current, or past actions. They are measured in a variety of ways, including physical, quantitative, and qualitative terms. Five aspects of the performance can be managed and controlled: quantity, quality, time cost, and behaviour.

Measure Performance:

Once standards are determined, the next step is measuring performance. The actual performance must be compared to the standards. Many types of measurements taken for control purposes are based on some form of historical standard. These standards can be based on data derived from the PIMS (profit impact of market strategy) program, published information that is publicly available, ratings of product / service quality, innovation rates, and relative market shares standings.

Strategic control standards are based on the practice of competitive benchmarking - the process of measuring a firm’s performance against that of the top performance in its industry. The proliferation of computers tied into networks has made it possible for managers to obtain up-to-minute status reports on a variety of quantitative performance measures. Managers should be careful to observe and measure in accurately before taking corrective action

.

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.Compare Performance to Standards:

The comparing step determines the degree of variation between actual performance and standard. If the first two phases have been done well, the third phase of the controlling process – comparing performance with standards – should be straightforward. However, sometimes it is difficult to make the required comparisons (e.g., behavioural standards). Some deviations from the standard may be justified because of changes in environmental conditions, or other reasons.

Determine the Reasons for the Deviations:

The fifth step of the control process involves finding out: “why performance has deviated from the standards?” Causes of deviation can range from selected achieve organizational objectives. Particularly, the organization needs to ask if the deviations are due to internal shortcomings or external changes beyond the control of the organization. A general checklist such as following can be helpful:

Take Corrective Action:

The final step in the control process is determining the need for corrective action. Managers can choose among three courses of action:

(1) they can do nothing (2) they can correct the actual performance (3) they can revise the standard.

When standards are not met, managers must carefully assess the reasons why and take corrective action. Moreover, the need to check standards periodically to ensure that the standards and the associated performance measures are still relevant for the future.The final phase of controlling process occurs when managers must decide action to take to correct performance when deviations occur. Corrective action depends on the discovery of deviations and the ability to take necessary actions.

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CHALLENGES FOR IMPLEMENTING STRATEGIES

More time consuming challenge

Wide array of managerial challenges

Many options to proceed

Demanding people-management skills

Perseverance to get initiatives moving

Number of unexpected issues

Resistance to change, misunderstandings.

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SUMMARY & FUTURE STRATEGY RECOMMENDATIONS:

Impact on Future Strategy

Bosch India is one of the latest Indian auto-parts makers to face labour troubles. Workers salary was last revised in Dec 2008. Following failed salary negotiations (which had been going on for last 7months), Bosch declared lockout at its Bangalore plant on Mar 10th. The workers had been on a work to rule since Feb. According to Bosch, the lockout has resulted in a revenue loss of Rs. 1 crore daily. The lockout was lifted on Mar 13th.

According to workers, managers had adopted a casual approach to negotiations. Bosch had faced similar issues in its Jaipur plant in 2008 and had declared a lockout at that instance as well. The issues come at a time when the fast-growing auto industry is driving demand for parts in India. Also, global auto makers setting up manufacturing plants in the country are sourcing parts locally to reduce costs. It needs to look at these

HR issues because they can tarnish the image among customers

and so there is requirement of developing new strategy to improve its image and harness the immense potential of skilled workforce in India.

Alternative Strategies

Bosch can pursue future strategies in 3 possible ways. These are through continuous innovation and differentiation in its products and services. It can also aggressively try to find ways to reduce costs and thus achieve higher margins. Lastly it could focus on a particular sector in the wide industry. It also has the option of consolidating by acquiring smaller players. These 3 basic strategies lead to a number of specific strategies suitable for Bosch’s environment. While some of these are fundamentally exclusive, others can be implemented simultaneously as well.

Expand aggressively to tap opportunities

- Additional investments and technology transfer to meet the future demands. Build capabilities to cater large and growing domestic demand. Continue to innovate, increase R&D spending.

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- Leveraging on a long tradition of competitiveness with innovations and cutting-edge technology solutions, it will continue to offer innovative technologies in all these sectors ensuring customer delight to the Indian and exports market.

Develop green technology products

- Future trends ask for better fuel economy and multi-fuel concepts. In order to comply with stricter emission norms, new vehicles will need to be equipped with electronically controlled gasoline and diesel fuel injection systems. Safety will continue to play an increasingly important role with improving road infrastructure and consequently higher vehicular speeds. Technologies such as Antilock Braking System (ABS) and Electronic Stability Program (ESP) will play a significant role towards this. This strategy can be used to get into relationships with new O Ems

Continue cost leadership

- Bosch should continue to maintain its cost leadership to grow its market and focus on cost control with quality and process improvement.

Benefit from states tax-holiday scheme

- Substantial tax benefits are available for investments in newer locations which can allow Bosch to supply components at lower rates.

Derive cost benefits through workforce

- Take advantage of skilled workforce as skilled labour costing India is amongst the lowest in world.

Leverage I T to lower costs

- There is an increasing realisation of significance of knowledge management in this sector. The usage of IT is very low compared to other parts of the world. Bosch can leverage India’s acknowledged leadership in the IT industry.

Focus on exports

- Exports provide the highest margins. Expansion of market and low cost distribution due to India’s proximity to other Asian markets and emerging markets such as Africa. Shipments to Europe are also cheaper from India than from Brazil and Thailand.

Focus on low-cost automobiles

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- Indian markets continued focus on low-cost automobiles after the introduction of Tata Nano has led to other major players entering this market. This presents a rich opportunity for Bosch to move in early in this sector by developing low-cost parts.

Focus on distribution network

- Bosch has followed a strategy of selling directly to customers. To grow in the market, the company can concentrate on improving supplier relationships. They should also focus on Service Level Improvement and

Customer Interaction Enhancement.

Acquire smaller players

- Bosch can consider growing inorganically by acquiring ready-made capabilities from smaller players.

CONCLUSION:

After conducting a detailed organizational study of MICO, I can say that this is a purely customer driven company. It is a market leader in the country having a strong customer base and leadership in manufacturing of automotive Spark Plugs and Diesel Fuel Injection Equipment in India. What makes MICO different from its competitors? It is the special MICO touch- a feeling for customer’s needs and a prompt, appropriate response to them. A large percentage of products are in fact ‘specials’ ‘which have been tailor made to suit specific requirements of customers, because for MICO ’’CUSTOMER IS THE KING ’’

Although the human resources are grouped into various levels of responsibility, the company follows an

‘’open door “policy to encourage free interpersonal interaction, which I believe is the real strength of any organization. MICO provides a highly ‘Quality’ conscious environment that

Fosters teamwork

Encourages innovation

Rewards enthusiasm and hard work.

It is truly a dream company for aspiring MBAs; MICO welcomes people with energy, optimism, professional competence and the ability to work as a team.

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World class quality, inspired innovation, entrepreneurial leadership and high professionalism has made MICO a company to be reckoned with anywhere in the world and force that will continue to drive the Indian automotive industry through the years.

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strategic management term paper on mico bosch

Documents

lean manufacturing

broad product

strong customer

indian automotive

low cost locations

customers

high market

auto manufacturers