Case study 1: Bajaj Auto Ltd.

Your task : Analyze the position of Bajaj in the current market set-up, evaluating its strengths, weaknesses, threats and opportunities available.
Bajaj Auto Ltd. (BAL) is one of the oldest and the largest manufacturer of automobiles in India and has been the market leader in scooters. In 1990s, the near monopolistic market structure, perhaps, lulled the company into being complacent and they gave way to the competitors like Hero Honda and TVS. Hero Honda and TVS Suzuki tied up with foreign majors to bring in the latest in terms of aesthetics and technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there was a marked shift in customer preference from scooters to motorcycles. Bajaj found itself at a loss here, as this was largely an un chartered territory. The Company Bajaj Auto is the flagship of the Bajaj Group of Companies. Bajaj is currently India's largest two- and three wheeler company. Current Performance The directors present their second annual report and the audited statements of accounts for the year ended 31 March 2009. The highlights are as under: 2007-08 (Nos.) Motorcycles 1,907,853 Other two-wheelers 11,772 Total Two wheelers 1,919,625 Three wheelers 274,529 Total Two & Three wheelers 2,194,154 Of the above, exports were Two wheelers 633,463 Three wheelers 139,056 Total Exports 772,519 2008-09 (Nos.) 2,139,779 21,316 2,161,095 290,312 2,451,407 482,026 136,315 618,341

Financials: Rs. In Million 2007-08 Net sales & other income 89,323 Gross profit before exceptional items, interest 13,140 . & depreciation. 2008-09 91,688 14,162

New projects: Chakan 4-wheeler plant-The 'Lite' range of 4 wheeler vehicles, both in Passenger and Cargo segments of the industry, are under re-design, to sharpen the competitive positioning of the products. The Cargo version code named ' PV 1500' is likely to be launched in 2011. The Techno-economic feasibility for the Passenger 4 wheeler will be evaluated by Bajaj Renault-Nissan for a final decision, leading to firming up of the co-operation parameters among partners and a suitable JV Agreement. Research & development and technology absorption: During the year under review, BAL continued to invest substantially in R & D facilities resulting in enhancement of its infrastructure for design, prototyping and testing. Two important products, which demonstrated the technical prowess of the company, were launched during this year. These were Platina 125 DTS-si, sporting an enhanced style and XCD 135 DTS-si, a upmarket product. BAL has significant presence in all the three basic segments - Price Segment, Value Segment and Performance Segment - and has been showing increased sales in all the segments over years. Besides this, BAL is a market leader in two-wheeler exports and it consists a great chunk of their overall revenues. Currently, BAL is selling over 1 lac motorcycles annually in Sri Lanka, further, they are commanding 50% market share in Central America. BAL has highly experienced management besides its product design and development capabilities. It has extensive R & D focus and widespread distribution network.BAL has launched high performance products across all categories and high economies of production scale. Bal hasn't employed the excess cash for long time. It is not a global player in spite of huge volumes it manufacturers in world class facilities. It still has no established brand to match Hero Honda's Splendor in commuter segment. And it is not a globally recognizable brand (unlike the JV partner Kawasaki) Two wheeler market has seen double-digit growth in India for last three years. Yamaha Motor India is all set to give Bajaj a run for its money. With a series of launches lined up from the Yamaha stable by April 2007, Bajaj Auto may too have to gear up for competition. The 100 per cent Indian subsidiary of Yamaha Motors, Japan, has been reportedly firming up launch of a 150cc and a 180cc bike next year. To be priced at around Rs 60,000, the Yamaha machines would pose a challenge to Bajaj Pulsars dream run. Indias manufacturer Mahindra & Mahindra (M&M) is in talks with two Chinese firms Lifan and Loncin to set up parallel ventures, marking its foray into motorcycles. Chinese car maker Chery Automobiles manufacturer of QQ (General Motors sued Chery for copying Chevrolet Spark) is likely to partner Indias International Cars & Motors Ltd (ICML) to roll out its small car in India next year. ICML is planning to launch a premium hatchback in the 300,000-400,000 rupees price range, which is the fastest-growing car segment in India. ICML currently offers Rhino a Sports Utility Vehicle. Electric bicycles and electric scooters have seen substantial growth in sales around the world in recent years, while outside China, the electric motorcycle market remains in the early adopter stage. Chinas market for e-bikes and emotorcycles dwarfs demand from all other regions combined, and consists of 98% of the global market

Bajaj Auto, which saw a 27% year on year growth in exports in the third quarter of 2009, plans to tap the Chinese and Brazilian markets in 2-3 years. It may also consider setting up an assembly line there to avoid the duty barrier. In Egypt, the Alexandria Carbon Black Company SAE and the Alexandria Fibre Company SAE, its website shows. "Bajaj Auto is studying the possibility of putting up a plant in Egypt,"