Student’s Name : Amit S Rizwani

Campus : Nasik
Stream : HR
Level : PCL – II
Semester : Fourth
Module Name : OCPA
Assignment Type : Module

Q1. What value creation strategy was adopted by TI Cycles? How did it work for the
company?
Ans.1 Before coming to the value creation strategy adopted by the TI Cycles it is necessary
to understand what is value creation. Value creation is to create a reasoned growth path for
the future. Value creation is all about utility and functionality and refers therefore, to those
the company serves, rather than to those who own it. Profits and growth are the outcomes of
effective value-creation logic.
The value creation strategy adopted by TI cycles was based on value creation strategy
as in UK as it was a joint venture. They built high quality, elegant bikes based on drawings
and designs from England. To successfully implement this strategy the company went for
vertical integration. They built each and every component required for bicycle manufacturing
in - house. They also implemented organization values and people process as per British
expertise which lead the company to be a dominant manufacturing unit rather than customer
oriented.
As we have seen what value creation logic is and also the strategy adopted by TI
Cycles and also after going through the case study I can concluded that the strategy adopted
by TI cycles did not work for the organization. Though at the initial stage company achieved
success in getting profit but it could not meet the customer needs as all the cycles
manufactured by them were based on the designs from England where the needs of the
customers was different than the Indian customers.
Q2. Compare and contrast the value strategies of TI Cycles and Hero Cycles. Which
company had more profit making capacity due to its value creation logic and why?
Ans.2 The value strategies of TI Cycles & Hero Cycles can be stated as under:
TI CYCLES VALUE CREATION LOGIC:
Value creation at TI Cycles was based on UK expertise and they made a policy of
vertical integration which means they started each and every product i.e. from tubes to steel
required for manufacturing cycles in house. Which though profitable for the company; but
incurred huge cost and high labor turnover. All the designs & drawings of cycles
manufactured where from England.
HERO CYCLES VALUE CREATION LOGIC:
The value creation of Hero Cycles was towards customer satisfaction by meeting its
need and this is what they did. Hero Cycles developed its products to meet specific Indian
needs. It designed a cycle that could carry two people plus a heavy load, and that could be
manufactured at the lowest possible cost. Not quite as elegant as the BSA or Hercules models
of TI and, therefore, not perhaps as appropriate for spare time cycling. Its bicycles, on the
other hand, helped the farmers of Punjab carry a heavy load of vegetables to the village
market. Instead of vertical integration like TI Cycles, Hero Cycles outsourced most of the
components and focused on creating a highly efficient assembly operation in-house. Indeed,
to a significant extent, Hero Cycles created local component supplier infrastructure by
inducing friends and family to set up ancillary units, often supporting them with both funds
and technical assistance. Also before the concept of just-in-time production became famous;
the Hero group adopted the system, leading to extremely low costs which allowed them to
undercut the prices of cycles as compared to TI Cycles for the cheapest models.
CONCLUSION:
Hero Cycles had more profit due to it’s value creation and the reason are that they
made cycles which were according to the need s of the Indian Customer market and also they
developed new vendors for manufacturing heavy cycles and thus became a major competitor
to TI Cyles.
Q3. What lessons one can learn form its competitors to design a successful plan for future
growth.
Ans.3 Lessons one can learn from its competitors to design a successful plan for future
growths are:
One key lesson from the above case study is that no company can achieve radical
performance improvement without transforming resource productivity; the other equally
important lesson is that no company can achieve such results only through improvement in
operating efficiencies. Just an overall vision and a logical plan are not good enough for
creating a continuous growth process, to shape and manage the future a company also needs
the ability to effectively act on the vision and implement the plan. For managing growth,
attention must be paid to both the content and the process. A company needs to align clear
value-creation logic with its organizing principles and people processes. It is exactly such a
position that which has to support or strengthen from beneath the historical success of
companies like Hero Cycles. Effective position leads to success, resulting in both internal and
external satisfaction, and that satisfaction further supports the position. Over time, this
supporting process acquires greater and greater force, with the position becoming tighter and
tighter.
CONCLUSION:
Thus we can state that to design a successful plan for future growth we should have the
ability to manage value creation, principles and peoples process in such a way that they
should be effective for long term basis.