36421489 bajaj-auto-ltd-business-strategy-case-study-ppt

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  • Bajaj Auto Ltd: Overtaken in the Indian Scooter Market Group F:- Manish Kumar (09BS0002819) Taslim Qureshi (09BS0002530) Umang Jalan (09BS0002611) Varun Saxena (09BS0002653) Vibhuti Bhardwaj (09BS0002667) Vinay Verma (09BS0002703) Yashaskar Paliwal (09BS0002776)
  • Overview Founded in 1926 by JamnaLal Bajaj. His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942. The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from Rs.72 million to Rs.100.76 billion (USD 2.3 billion). The company was incorporated on April 30, 2007 as a wholly owned subsidiary of erstwhile Bajaj Auto Ltd (the holding company) with the name Bajaj Investment & Holding Ltd. The company received the certificate of commencement of business on May 7, 2007.
  • Bajaj Auto Ltd.(BAL) Bajaj is Indias second largest motorcycle maker, smaller than Honda Motorcycle Scooter India, but larger than TVS Motor Co. Ltd. Bajaj Auto, is ranked as the worlds fourth largest two- and three- wheeler manufacturer. The company is well known for their R&D, product development, process engineering and low-cost manufacturing skills.
  • INTRODUCTION In the mid -1940s,BAL started as an important of two and three-wheelers .in the early 1960s,BAL ,in collaboration with piaggo ,started manufacturing vespa brand scooters at its plant near Pune , Maharashtra. In 1970s,BAL started manufacturing scooters under the Bajaj brand. Bals first scooter model under the Bajaj brand was introduced in 1972.(Chetak) In the late 1990s the Indian two wheeler market witnessed a shift in consumer preferences. In 2005-06 scooter sales in the Indian market were around 1 million units annually and consisted predominantly of gearless scooters. In early 2006 BAL announced that it would launch two new models of gearless scooters in 2006-07.
  • CSR Bajaj Auto is committed to nation-building and contributing to the uplift and development of the weaker sections of society. This is a legacy of the founders, Jamanalalji, Kamalnayanji and Ramkrishna Bajaj. Jankidevi Bajaj Gram Vikas Sanstha (JBGVS) Samaj Seva Kendra. Kamalnayan Bajaj Hospital
  • BACKGROUND NOTE: 1926- Bajaj Auto was found by JamnaLal Bajaj. 1956- Company secured a license from the GOI. 1960- Company went public & collaboration with Piaggio. 1961- Started the production of scooters. 1962- Started the production of three wheelers. 1971- Started selling scooters under the Bajaj brand 1972- BAL Introduced the Bajaj Chetak scooters. 1975- BAL entered into a joint venture with western Maharashtra Development corporation. Cont
  • BACKGROUND Cont.. 1986:- BAL entered into a technical partnership with Kawasaki Heavy Industries & launched the Kawasaki Bajaj. 1990:- The Bajaj Sunny was introduced. 1997:- BAL launched the Bajaj Boxer. 1998:- BAL introduce the Bajaj Caliber. 1999:- The company launched the Bravo, a geared scooter. 2000:- Bal launched the Saffire, a gearless scooter. 2001:- It introduced the Pulsar. 2004:- Bal created a new Logo. 2005:- The Saffire was relaunched as the Wave. 2006:- Bal launched the Platina. 2006:- Indian two wheeler industry was the second largest in
  • BAL & the Indian Two-Wheeler Market. 1950s -1980s: "License Raj . Domestic market protected-Govt.restriction. 1950s-Automobile Products of India(API). Other players: Enfield(Bullet),Escorts(Rajdoot),Jawa(Yezdi). 1960s:Govt.relaxation to domestic companies. 1970s: BAL manufacture scooters under the "Bajaj Brand. Scooter were more preferred to motorcycles.2- wheelers demand increased due to inefficient transport system, the Chetak & the Super launched.
  • Contd It act as Sellers Market like other consumer goods & customers had to wait for many years for delivery.(10-12 yrs for Bajaj Chetak). It plays a major role in dowry in India. 1970s-1980s-Govt. introduced MRTP Act & FERA. Indian manufacturing motorcycles were not fuel efficient, results low sell. GoI changed several policies in 1970s & early 1980s to give impetus to auto industry. Focus on :modernization, technology upgradations,& healthy competitions in domestic market.
  • Motorcycle segment Joint Venture: Foreign players had only option) Many players like Honda,Suzuki,Yamaha had joint ventures with Indian companies. The foreign players came with latest technology, efficient production system etc that enhance the quality of the motorcycle in India . Soon new models come with new style, advanced technology & fuel efficient.Scooter segment LML entered into joint venture with Piaggio in 1982 , to produce Vespa, sold well in 1980s-1990s after Chetak. 1984:The Kinetic tied up with Honda ,introduced new models , new features like self start & automatic gear transmissions. 1980-1990s :BAL dominate by Chetak & Super model with their values for money appeal durability, versatility, low maintenance,avaliablity of spare parts ,etc.Hamara Bajaj add
  • The Turning Point: In 1991 & 1992 overall sales of two wheelers declined by 15% & 8% respectively because of a recession in the Indian two wheeler market The scooter segment was the largest sub-segment in the two wheeler market with 42% share (in terms of unit sales) followed by motorcycles (37%) & mopeds (21%) However, in 1990, the pattern of demand changed & motorcycles became the fastest growing segment Motorcycles were preferred to scooters in the rural areas because of poor road conditions Demographic changes Increasing proportion of younger people in the overall population
  • Cont.. Lower interest rates on vehicle loans made motorcycles more affordable Sales of motorcycles surpassed that of scooters for the first time in 1999 (with Hero Honda SPLENDOR) In 1999-2000 scooter sales fell by around 75,000 units, while motorcycle sales increased by more than 400,000 units BAL had volumes falling 40% year-on-year as scooters were 80% of their total business In 2000 Bharat Stage II, a new set of emission norms, came into effect. It was for petrol two-stroke engines & it gave a blow to BAL, which primarily sold two-wheelers with two- stroke engines
  • BAL FIGHTS BACKCategory FY 2001 FY 2000 Growth (%)Geared Scooters 426,334 757,714 -43.7Un Geared 78,892 69,726 13.1ScootersMopeds 121,238 176,961 -31.5Motorcycles 427,088 254,847 67.6Total two- 1,053,552 1,259,248 -16.3 Failedwheelersto anticipate consumer response. Poor research. BAL increased its production of motorcycles by 67.6% in 2001 even as the production of scooters fell by44% By 2001, the company was manufacturing as many motorcycles as geared scooters.
  • BAJAJ HAS RECORD FY 2010, TARGETS 4 MILLION VEHICLES IN FY 2011Particulars April ~ March April ~ March Growth % 2010 2009MOTORCYCLES 2,506,749 1,907,853 31TOTAL 2 2,511,600 1,919,625 31WHEELERS
  • Change Portfolio New launch gave wider range Refresh image.
  • Oct 2010 sales Data For Domestic Market Others 8% 3w Pulsar 16% 28% Discover 48%
  • Rebranding of Hamara Bajaj
  • TheFlying
  • Brand Positioning StatementDEFiNiTELY MALE
  • Trying to resurrect Scooter sales
  • Trying to Resurrect Scooter Sales Price differential between scooter and motorcycles had narrowed. In 2001, BAL lowered the prices of Chetak and Super by Rs. 5000 to Rs. 8000 and removed some accessories like spare wheel, luggage box, etc., from the base models. In the late 1990s while geared scooter sales were falling, the gearless scooter segments had been growing at 25% per annum. Main purchaser of gearless scooters were teenagers, women, and older people. In 1999-2000, BAL had a market share of 20% in this segment. In 2000 BAL introduced a new gearless scooter with a four stoke engine Saffire. In 2002, the Legend NXT 2, a four stroke geared scooter that was claimed to offer a motorcycle like mileage of 60-70kmpl was launched
  • To add to BALs problems, HMSIs sold about 10,100 unites of the Activa within just three months of its launch in 2001. Kinetic launched the Nova, another gearless scooter in 2002, which also become quite popular. In April 2003, TVS launched the Scooty Pep (with a 75cc, four-stroke engine), an upgrade version of its Scooty, with better styling, technology, and storage capacity. In 2004 Chetak was introduced with a new gear system called wondergear in which no gear shifting require. New ad campaigns were also launched to brush up the Chetaks image. BAL was forced to phase out several models including the Spirit, the Sunny Spice, the Legend and NXT 2, and the Barvo.The Saffire, reportedly, suffered from several technical problems. It was replaced by Wave 2005.
  • The Fall OF An Icon In Jan 2006, BAL announced that it had stopped production of the Chetak. So that the company could upgrade its scooter portfolio and regain the title of Indias largest scooter manufacturer. Chetak had to phase out because BAL had neglected it in terms of design, technology, and innovation. Chetak had remained unchanged for more than 30 years. Customer used to call it car on two wheels. At that time BAL had just one scooter model, the Wave. By 2005-200