ti cycles case study

Murugappa grouphead quarter- Chennai

employees- 28,000No. of registered companies- 29

diverse areas of business- eng, finance, insurance, cycle, sugar, farms,

plantations, bio-products, nutraceuticals

TI cycles India

TI cycle part if Tube Investment of India

business of 7300 crore2nd largest mfg of bicyclestop brands- BSA, Herculesno.of stores till today- 12

certified with- ISO 9001:2000and ISO 14001

VisionNo one should lose business with

whom you do business, so the company will be successful

MissionEthical norms in dealing with all the

stakeholdersProvide value of money to customers

through quality and servicesTreat employees with respect; provide

opportunity to learn innovativeness and creativity in business.

Competitors of TI Cycles

Interpretation.

The market share of TI s not significant in terms of its competitors which must

be improved through market and product development. It should

exploit the market in special category and standard category.

Core Competencies.

Murugappa Family’s experience, knowledge, values, decision making

and strong financial support has played important role in the success of TI over a long time period; they came to rescue the company when ever the

company needed the guidance and support.

SWOT Analysis

Strengths:Strong Financial Support from group

Brand name awareness – Most cycle enthusiasts know the TI name.

TI is known as a high-performance leader in the bicycle industry.

Good relationships with customers/dealers. Research and Development capabilities: TI R&D

department keeps them up to date with the latest technologies involving manufacturing of bicycles.

Weaknesses:Accuracy of future analysis.

Lack of established manufacturing capabilities.

No products offering in motorcycle category.

Lack of global operations.No new market tapping.(North)

Opportunities:Internet/Mobile introduces new

avenues to customer. This can save costs of dealerships.

New markets in India and around the world

Entry into the lower cost bicycle market may add to market share.

Entry into market where Bicycles are the substitute product.

Threats:The popularity of less expensive

substitute products (Scooty)More competitors entering the

market.(China,Tiawan)Shift of demand for higher priced to

lower priced bicycles.Unsure trends in the bicycle industry.

Value Chain Analysis of TI Cycles

SUPPORT ACTIVITIES

Firm Infrastructure. Dedicated management teamHome-grown Financial SupportFormal Planning and Execution

ProcurementAll necessary inputs provided by one location shop floor only few input are

imported.

Human Resource Management

UnionisedCompetitive Pay structure

Fringe benefitsDivisional Monitoring

Technology

a) Indigenous Technical system and facilities b) Appropriate R&D

c) Total Quality management

PRIMARY ACTIVITIES

Inbounds. Frames, Forks, Mudgaurds, Rims, Tubes, Tyres

Operations. Manufacturing of Metal tubes, assembling of parts by charge brazing and

welding.

Out Bound. Complete Knocked Down kits to dealers in small quantities in cases.

Marketing/Sales. a) Well knitted dealers network and sub-dealers.

b) Sales cum services showroomsc) Effective advertisement and sales promotion

through celebrities organizing events.

Services.Cyclinics

Services and Spare parts available at show rooms

Five Force Model Application

Rival.

TI is facing stiff competition from the rival companies Like, Avon, Atlas, Hero and few

foreign competitors. The competition is strong in standard cycles because the market growth of standard cycles is slow. But it is weak in a sense that market for special cycles is growing rapidly. Switching cost in special is low so the buyer may

shift the demand.

New Entrants

Over all the industry is growing so there is strong threat of new players

particularly form China, Indonesia and Taiwan with low priced cycles. It is also

weak because access to distribution channels is difficult and strict

regulatory control of the Government.

Substitute

TI is facing a considerable threat of substitute because close substitute of cycles Scooty which is offered by

Hero but switching cost is high.

Supplier

TI is not facing sizeable threat from suppliers because the major parts of

cycles are manufactured by them except some of the parts for special

cycles are imported from Japan.

Buyers The Dealers and sub-dealers are

compelling to provide the cycles of their choice (Special) which may cause losing the market for standard cycles. Buyers switching cost is low because

of the availability of Hero, Atlas, Avon and Chinese Cycles in the market

Future Strategic Options

Market Development

The TI should consider following future strategies for the market development.

Northern markets should be focused for broadening sales.

Offering cycles to Indian Postal Services.Offering cycles and tricycles to Ice Cream vendors,

Home delivery services restaurants, Tea Companies and Soft Drink Companies.

Offer cycles to courier companies.Offering cycles for athletes.

Product Development

a) The TI should develop an advanced version of standard cycles for rural area by

adding shock absorbers to carry heavy load with ease.

b) light and folding cycles should be developed the urban areas to avoid traffic

congestion and parking problems.A purpose built cycle with wide carrier for lunch

providers in the urban areas. Purpose built cycles for house wives with added

carriers.

Recommendations

1. TI should focus on redeveloping its bicycle manufacturing.

2. Include lower cost segment of bicycles. Create another brand of bikes. These bikes will

be of the lower cost variety. 3. Outsource manufacturing of lower cost products to

different countries. 4. Change distribution strategy to include major

retailers. Lower cost line can be sold in these stores.

5. Include sales over the Internet.

Overall, there is great room for improvement on TI’s position.

Although the threats to TI are large, the company has opportunity that it is

not currently taking advantage of favourable environment. Although the

situation is not attractive, with the right change in strategy, TI can have a

brighter future.