Introduction to the company I.

The Indian Two-Wheeler Industry The history of the Indian two-wheeler industry, comprising scooters, motorcycles, and mopeds, had its beginnings in the late 1940s, when Bajaj Auto started selling imported scooters (1948) and Automobile Products of India (API) along with Royal Enfield started manufacturing scooters (1955) and motor cycles respectively in India. In the evolution stage, the Indian two-wheeler industry was highly regulated by the Government of India (GOI) and was largely structured by Indian industrial policies. The License Raj system imposed a strict control on the industry by regulating the entry of new players, imports, and foreign investments. a.History of Bajaj Auto Founded in 1956, at the height of Indias movement for independence from the British, the group has an illustrious history. Theintegrity, dedication, resourcefulness and determination to succeedwhich are characteristics o the group today are often tracked back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was close confidant and disciple of Mahatma Gandhi. In fact Gandhiji had adopted him as his son. The close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend onhis newly launched business venture. His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942. He too was close to Ghandhiji and it was only after independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, built also diversified into various manufacturing activities. 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. 46.16 billion, its product portfolio has expanded from one to and the brand has found a global market. He is one of the Indias most distinguish business leaders and internationally respected for his business acumen and entrepreneurial spirit. This case is about the brand centric strategy that the fourth largest two and three wheeler manufacturer in the world, Bajaj Auto Ltd., adopted in 2009. The scooters produced under the Chetak brand name dominated the Indian two wheelers market from early 1970s to the early 1990s and helped Bajaj Auto became a leader in the industry. As the Indian Two wheeler Industry was deregulated and faced the competition in the 1990s, Bajaj Auto began to face a threat from foreign players. In addition, in late 1990s, due to the shift in consumer preferences and demand from scooters to motorcycles, Bajaj Autos sales and market shares started declining and posed a challenge of sustenance for the company. As a result, by the early 2000s, motorcycle sales surpassed that of scooters and Bajaj Auto lost its market share to Hero Honda. In an attempt to recapture market share, Bajaj Auto restructured its business and launched new motorcycle models. However, Bajaj Auto lost its dominance in the scooter market. Realizing the changing dynamics of the Indian two-wheeler industry and the deficiencies at Bajaj Auto, Rajiv Bajaj began to develop a new strategy for the company. He shifted the focus from scooters to motorcycles and emphasized enhancing the INTRODUCTION OF THE COMPANY

quality of products. With the twin- brand strategy, he focused in only two brands Discover and pulsar pulling back the Bajaj name, as it is associated with various other products. And with the change in strategy he was able to double his lost market share as well as sales. Bajaj Auto, which began in 1945 as a trading company, importing and selling two-and three-wheelers in India, started vehicle manufacturing in 1959 by obtaining the rights from Italy-based Piaggio. Once the agreement with Piaggio2 expired, the company made and sold vehicles under the Bajaj name. Since the mid-1960s, under the reins of Rahul Bajaj, the thirdgeneration head of the company, Bajaj Auto began to grow and create the image of a reliable scooter brand in India. B. bajaj auto is a publicly traded and it is the one of the largest private corporation in India D business modelBusiness Model: - Bajaj Auto has a strong position in motorcycle category (high-margin segment) and in passenger three wheelers. Also the company exports to 50 countries like Africa, Middle East, & Latin America which enables the company to maintain superior margins & highest profitability compared to the industry peers.

Compititors

Competitors Identification Company Production Capacity (millions units) Hero Honda 5.4 Bajaj Auto 3.9 TVS 2.4 HMSI 1.6 Suzuki 0.3 Yamaha 0.6 Royal Enfield 0.7 Porters Five Forces Analysis: 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 a 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 customershigher. With more models to

choose from in almost all categories, the market forces have empowered the buyers to a large extent. All these have been helped by the fact that the customers are well informed about the products as well through the help of Internet, i.e. customers have product information. Industry Rivalry: The industry rivalry is extremely high with any product being matched in a few months by competitors. This instinct of the industry is primarily driven by the technical capabilities acquired over years of development under the technical collaboration with international players. Substitutes: There is no perfect substitute to this industry. Also, if there is any substitute to a two-wheeler, 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. However, with the recent introduction of Tata Nano cars that come at a very cheap rate, they are slowly trying to be a substitute and a threat to the two-wheeler industry. Cycles do never even compete with the low entry-level moped for even this choice comes at a comparatively higher economic potential. Summarizing the industry analysis, it can be said that the two-wheeler market is attractive as it scores well on three out of five categories. Entry Barriers: There are high barriers to entry. The market runs on high economies of scale and on high economies of scope as well. Need for technical expertise is high and thus a new entrant will have a huge uphill task. Owning a strong distribution network is very important and is very costly which certainly takes a lot of time and energy. There is also involvement of huge cost. All these make the barrier high enough to be restraining for any new entrants in the market.

J. Distribution Showrooms o Company owned show rooms o Franchised show rooms

Dealers/Agents Service Centers

K. Key Success Factor 1. Style 2. Technology 3. Pricing strategy

SWOT Let's analyze the position of Bajaj in the current market set-up, evaluating its strengths, weaknesses, threats and opportunities available. Strengths: Has a highly experienced management that has a good history and reputation. Extensively focused on R & D. Capable of better product design and developments

 Widespread distribution network. Products across all categories have a performance that is high and noteworthy. The export to domestic sales ratio is high. Great financial support network (For financing the automobile) 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 in spite of introducing several bikes for that segment. Not a global player in spite of being the highest exporter from India. Not a globally recognizable brand (unlike the JV partner Kawasaki or other brands like Honda).

Threats: The competition catches-up on any new innovation in no time. In spite of low quality motorcycles, a sense of threat always exists from those imported motorcycles. Margins getting squeezed from both the directions (Price as well as Cost) TATA Nano and other mini-compact cars have started to become a serious threat to the two-wheeler industry in whole. They seem to have come into existence to replace the two-wheelers. 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 in emerging