ti cycles case study
TRANSCRIPT
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.