Está en la página 1de 61

IBS Mumbai Sec A PGPM Sem IV (2012)

Presented By: Rohit Khushalani 10BSP1403 KirtiVardhan Bhalerao 10BSP0700 Shaili Sirohi 10BSP0771

Overview

Founded in 1926 by JamnaLal Bajaj. In 1942 Kamalnayan Bajaj The present Chairman of the group, Rahul Bajaj, 1965 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 India's second largest motorcycle maker 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 importing of two and threewheelers . 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

Timeline of New Product release


1971 - Three-wheeler goods carrier 1972 - Bajaj Chetak 1976 - Bajaj Super 1977 - Rear engine Autorickshaw 1981 - Bajaj M-50 1986 - Bajaj M-80, Kawasaki Bajaj KB100 1990 - Bajaj Sunny 1991 - Kawasaki Bajaj 4S Champion 1994 - Bajaj Classic 1995 - Bajaj Super Excel

Contd

1997 - Kawasaki Bajaj Boxer, Rear Engine Diesel Autorickshaw 1998 - Bajaj Caliber, Bajaj Legend, India's first fourstroke scooter, Bajaj Spirit 2001 - Eliminator, Bajaj Pulsar 2003 - Caliber115, Bajaj Wind 125, Bajaj Pulsar 2004 - Bajaj CT 100, New Bajaj Chetak 4-stroke, Bajaj Discover 2005 - Bajaj Wave, Bajaj Avenger 2006 - Bajaj Platina 2007 - Bajaj Pulsar-200(Oil Cooled), Bajaj Kristal, Bajaj Pulsar 220 DTS-Fi, XCD 125 DTS-Si (Pronounced Exceed 125 DTS-Si)

Hamara Bajaj
Positioned CHETAK brand with this ad campaign. Core Values : Reliable & Trustworthy. Campaign based on V-F-M products. Ad campaign helped bajaj position CHETAK: a geared model-scooter occuping near iconic status.

Products

1950s

-1980s: "License Raj .

Scooter

were more preferred to motorcycles.2-wheelers demand increased due to inefficient transport system, the Chetak & the Super launched.
Customers

had to wait for many years for delivery.(10-12 yrs for Bajaj Chetak).
It

plays a major role in dowry in India.

After Liberalization

GoI changed several policies in 1970s & early 1980s to give impetus to auto industry. Focus on :modernization, technology upgradations,& healthy competitions in domestic market. 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.

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 campaign.

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

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 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

Chetak Achieving Iconic Status

ConsideringAs a Product

(A)

(B) As BAL (C) Other factors

The brand which ruled the Indian roads Chetak was an unavoidable dowry in 1970's and 80's Had a waiting period of more than 10 years Officially stopped the production of Bajaj Chetak from December 2005 Reason:- product no longer has any relevance to the customer

Rajiv bajaj quoted " Any one who clings to the past is a failure".

Sucess

Inefficient public transport system Indian Auto Industry A sellers market Policy changes by GoI in Auto Industry sector Building up a reliable and trustworthy brand Hamara Bajaj

Challenges/Failure

Shift in Consumer Preference:

-> Scooter becoming less popular with rise in motorcycles


90 80 70 60 50 40 30 20 10 0

Scooters motorbikes

mopeds

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Challenges

Competitors with Competent products:


Name of the Indian Firm Enfield India Ltd API Escorts Ltd. Ideal Jawa Name of foreign Firm Enfield Ltd. , UK Innocenti Ltd., Italy CEKOP, Poland Jawa Ltd, Czechoslovakia Segment Brand name of the product Royal Enfield Lambretta Rajdoot Yezdi

Period of Entry 1955-1969

Motorcycle Scooter Motorcycle Motorcycle

1970-1980

Kinetic Engineering SIL Majestic Auto Ltd Maharashtra Scooters Ltd

---------

Moped Scooter Moped Scooter

Luna Vijai Super Hero Majestic Priya

Challenges

Neglecting Customers

Sales

After Sales Services

Waiting period Extending from 3-10 yrs

Limited Product Depth No variation in existing products with respect to various segments as:People Product Price

Technological Innovation

The Turning Point

Early 1990s saw a recession in the Indian two wheeler market. Overall sales of two wheelers declined by 15% in 1991 and 8% in 1992. Steep rise in fuel price is the main reason for declination of sales of two wheelers.

ADVENT OF NEW TREND

Advent of new trend(contd..)

In the late 1990s,Motorcycles became the fastest growing segment of two wheeler market. People started buying them for their fuel efficiency, Power and later, even for their style. Motorcycles with their improved styling and power attracted young men

Contd..

Hero- Honda became the new market leader with its splendor, a 100 cc motorcycle. Sales of Scooters fall tremendously, This shift take toll on BAL, the market leader till then.

Thus BAL lost its number one position to Hero-Honda.

Market share of different two wheeler segments

Even as late as 1997-1998,the scooter segment was the largest sub-segment in the two wheeler market.

Present scenario of the Indian 2 wheeler market

Double-digit growth rates to continue in 2011-12 What are the Demand and Growth Drivers ?
Personal Income Demography and Inspiration III. Penetration Level IV. Other Factors
I. II.

I.

Negative Growth
Interest Rates , Credit Crunch & Oil Prices Launch of Low Priced Cars Like Tata Nano Tightening Regulations (Emission Standards)

II. III.

Current Scenario
Positioning of Bajaj Auto in the TwoWheeler Industry Thecore competence of Bajaj Auto Ltd is its technology and innovation. Both DTS-i (Digital Twin Spark Ignition) and DTS-Fi (Digital Twin Spark Fuel Ignition) are technological breakthroughs by Bajaj.

BAL is also a pioneer in product innovation having introduced technologies such as ExhausTEC (Exhaust Torque Expansion Chamber), LED Tail Lamps, LCD Display, SNS, Spare parts (Tubeless tyres, rear disc brakes), Black colour scheme etc.

Thus we observe that BAL which used to be a Defender in 1970-1990 through Bajaj Chetak radically moved towards becoming an Analyzer (1990-1997) by focussing on bike segments
It has now become a Prospector (1997-date) with several patents in its kitty and new bike launches every year. Therefore, for a follower to move on and become a market leader it is essential that it focuses on innovation and consumer demand.

Shares of the major players in the two wheeler market segment

Positioning of Bajaj Auto in the Two Wheeler Industry


Graduating Customers from the 100cc to Higher Segments Focus on Gearless Scooters Entry into Four Wheeler Segment Scaling Up Service Centers Focus on Easy Credit Lending

BCG Portfolio Decision Matrix

Supplier Bargaining Power: Suppliers of auto components are fragmented and are extremely critical for this industry since most of the component work is outsourced. Proper supply chain management is a costly yet critical need. Buyer's Bargaining Power: Buyers in automobile market have more choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent.

Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players. Substitutes: There is no perfect substitute to this industry. Also, if there is any substitute to a twowheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential.

SWOT

Strengths: Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network. High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing automobiles) High economies of scale. High economies of scope. Weaknesses: Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki)

Threats: The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Price as well as Cost) TATA Ace is a serious competition for the three-wheeler cargo segment.
Opportunities: Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles. The growing gearless trendy scooters and scooterette market. Growing world demand for entry-level motorcycles especially

Organizational Structure (Before Restructuring)

Demerger of Bajaj Auto Ltd


The board of directors of bajaj auto ltd agreed to a demerger on 17th May 2007, under which the company was split into three entities. The company created two subsidiaries: Bajaj Holdings and Bajaj Finserv. It announced the company's new structure with five broad strategic units under different heads Of the five segments, the two wheeler, commercial vehicles and international business segments will be the special business units (SBU) and will have separate revenue structures.

Cont..

Each of the newly appointed CEOs will be responsible for top line, business growth and profitability in their respective business units. Bajaj is issuing one share each in Bajaj Auto and Bajaj Finserv for every share held in Bajaj Holdings. This means that shareholders will be alloted one share of Bajaj Auto with a face value of Rs10 each and a share of Bajaj Finserv at a face value of Rs5 each for every share they hold in Bajaj Holdings.

The demerger was done in two stages


Stage 1 Its auto business, with all assets and liabilities along with investments in Indonesia and a few vendor companies, were transferred to Bajaj Holdings. It also holds Rs1,500 crore in cash and cash equivalents. Bajajs wind power project, investments in Bajaj Allianz General Insurance Co. Ltd and Bajaj Allianz Life Insurance Co. Ltd along with associate company Bajaj Auto Finance were transferred to Bajaj Finserv. It also holds Rs800 crore in cash and cash equivalents.

Cont..
Stage2 Bajaj Holdings was renamed as Bajaj Auto to reflect its business operations and the erstwhile Bajaj Auto was renamed as Bajaj Holdings, which is now the holding company, focusing on new business opportunities for the group.

Blueprint for Restructuring


Focus & strengthen on these core businesses and competencies I. the auto company would focus on auto business; II. the wind power and financial services company will focus on wind-energy generation, insurance, consumer finance and new initiatives in financial services space; and III. the primary investment company will focus on new business opportunities. IV. The two new companies will be able to tap into the cash pool of the investment company to support future growth initiatives, if required

Cont..
The demerger will enable the investors to hold separate focused stocks. The demerger will facilitate more transparent benchmarking of the companies with its peers in their respective industries. The demerger unlocks value for the shareholders and would also benefit the employees and other stakeholders.

Obstacles for change


INTERNAL FACTORS I. Business plan change II. Technology change III. Management IV. Legal proceedings

Cont..
External Factors I. Industry II. Government III. Volatile prices

Analysis of Demerger and its effect

Inferences from Bajaj Demerger:


The Auto division unlocked value for shareholders (its EVA more than that of composite business) BFL and BHIL showed negative EVA, clearly indicating that capital was not properly used by them The sum total EVA of the three divisions after the demerger is seen to be greater than the composite business EVA, indicating a successful value unlocking for the shareholders Both these cases highlight that demergers can unlock significant shareholder value. The markets also reacted positively, with both scrips appreciating when the news of the demerger broke out.

Before restructuring

Critical data, such as planning information and partner inventory were also in silos so staff had to depend on Excel spreadsheets for data consolidation and business analysis a timeconsuming process. Neither could the company problems in real time. analyse the

There were problems of fragmented and inconsistent data.

Approaches for restructuring


Bajaj Auto engaged HP to provide business and technology consulting services to build an effective decision support and analytics system. HP consulted senior staff to establish Key Performance Indicators (KPI). It then designed and built a metrics-based analysis methodology which is delivered using SAP NetWeaver Business Intelligence (BI).

Improvements
IT improvements:

Analysis path methodology intuitively guides business users to proactively solve business issues. SAP portals lead to clear user interfaces designed with SAP Visual Composer. NetWeaver BI.

Data warehousing is tightly integrated with SAP

Achievements
Bajaj Auto now has improved real time visibility of its business performance. It can make more informed and faster decisions to support strategic business objectives. Ultimately this makes the company more efficient and successful.

Restructuring in Marketing processes

i. ii. iii. iv. v.

Focus on the product brand portfolio Decided to drop the Bajaj name Dropped all other product ranges except Pulsar Discover Platina RTK(Ninja and Avenger) RE (Rear engine three wheeler)

Restructuring in HR(leadership)Bajaj Auto

Bajaj Holdings & Investment

Bajaj Finserv

Thanking You..!!!!!
Presented By: Rohit Khushalani 10BSP1403 KirtiVardhan Bhalerao 10BSP0700 Shaili Sirohi 10BSP0771