LAHORE SCHOOL OF ECONOMICS

Bajaj Autos
Business Policy

Presented to: F.A.Fareedy





Presented by:
Sidra Khan
Sec D

Introduction
Bajaj Auto has been in auto trading business since 1945. It has dominated the market right since
its inception and is the market leader in motorized two wheeler vehicles in India. In 1960, Bajaj
Trading Corporation entered into the field of auto parts.
Qualitative Facts
Bajaj has wide variety of mix-scooters, motorcycles, scooterettes and three wheelers.
It is cash rich company with substantial reserves built over years.
Bajaj is slow to react to environmental changes which may be due to overhang of its past
success and operating in sellers market.
Quantitative Facts
At the time of their inception, there were only 2 companies in auto wheeler market
Enfield India and Automobile Products of India.
The company obtained license for 48000 scooters collaborated with Piaggio & Company,
Italy.
Currently, their capacity of scooter manufacturing has increased to 1000000 per annum.
Bajaj Autos entered into a joint venture with Maharashtra Government with an initial
capacity of 30,000 scooters.
Sales of two-wheelers increased from 1556703 to 3403427 from year 1992 to 1998. The
increase as expressed in percentage is 118%.
Quantitative Analysis
Table 1 depicts that over the years Scooters demand has been decreasing. It has dropped
from 48% in 1992 to 36% in 1999. While the market for Motorcycles have increased over
the years as stated by a rise from 26% in 1992 to 41% in 1999. For Mopeds the demand
has slightly increased as reported by a rise of only 3%.

Table 2 above shows the percentage change of market share calculated for each product
category for Bajaj Autos. For scooters the market share has been dropping over the years
with just a 1% increase in year 1999. For Motorcycles in the first two years the market
share increased however in 1998 it decreed sharply by 11%. The total Market share
shows that market share for Bajaj Autos has been slipping away fast over the years.


Table 3 above shows that company hasnt been doing well financially. Its growth has
followed a declining pattern as depicted by decreased percent changes of sales, OPM and
net profit.








Table 4 above shows that as compared to its competitors Bajaj Auto share prices have
dropped more drastically as depicted by a fall of 34% in 1997 and another 10% decrease
in 1999. Whereas the share price of its competitors has been mostly increasing over the
year.

Problems Identified
Bajaj was unable to keep pace with the dynamic market environment. It has failed to keep
track of changes in its environment especially in terms of the changing customer needs
and wants and was unable to incorporate these changes in its products.
Its manufacturing plant was old and its maintenance incurred huge costs. In addition, the
location of these plants was not very feasible as high transportation costs materialized.
Moreover, the company experienced a decrease in share price as the share price of Bajaj
Motors had decreased substantially since 1996.
Core Problem
Decline in the growth rate in the two wheelers segment coupled with a decreasing market
share
Recommendations
Bajaj should develop strategies to deal with the decreasing market share and implement specific
goals throughout the organization so every function plays its part in eradicating this problem.
The company needs to redesign its marketing strategy and try to capture demand through regular,
timely and effective marketing activities.
Bajaj needs to realize that the environment has changed drastically since its inception. In order
to stay abreast of the rising competitive pressure Bajaj should invest in R&D and innovate its
products as well as introduce new models.
Bajaj could also consider investing in a new plant whose location is ideal geographically and
also helps decreasing transportation costs.