BPSM Project on

Submitted To: Prof. Govinda Sharma

Submitted By: INDRA SWETABH MANI (11022) GUNDA V RAJYALAKSHMI (11079) MANNE RAMYA RAVALI (11089) GIRISH S D (11137) HANIYA ERAM (11139) KANISHKA SHARMA (11144)

Agenda
Industry Overview Company Overview CPM Porters Five Forces SWOT SPACE Matrix Quantitative Strategy Planning Matrix

Industry Overview

About Company
Year 1948 Historical Significance Birth of Ashok Motors

1949 1950
1954 1955 1967 1970 1974 1982 1987 1993 1997 2006 2007-2008

First A40 Assembled Ashok Motors and Leyland (UK) collaboration

Govt. approval for manufacture of commercial vehicles Ashok Motors becomes Ashok Leyland Nations first Double decker bus (Titan) rolls out from AL Special purpose Tipper vehicle (1,000 Nos.) delivered to Indian Army Rs. 1,000 million Turnover Nations first articulated bus introduced in Bangalore The Hinduja Group acquired Ashok Leyland First Indian Auto company to receive ISO 9002 (QA in PIS) Certification All-Terrain logistic vehicle Stallion for Indian Army (Adv. during Kargil war) Acquisition of AVIA Joint venture with Nissan, Continental AG, Alteams, John Deere

2010 - 2012

Hybrid CNG, U truck platform, controlling stake in Optare, DOST, Jan Bus

Hinduja Group
Ashok Leyland Ashok Leyland Defense Gulf Oil (Commercial explosives, Lubricants, Mining, Specialty chemicals IndusInd Bank(Switzerland) Hinduja Global Solutions (formerly named HTMT Global Solutions) P. D. Hinduja National Hospital and Medical Research Centre Hinduja Realty Ventures Limited Impeccable Imagination (Design related Infrastructure) IndusInd Media and Communications Ltd. Hinduja Foundries (Education, Arts & Culture, Social Welfare, Sports) Defiance Technologies Limited British Metal Corporation (India) Pvt Ltd.

Products
1. 2. 3. 4. Buses (City, Sub-Urban, Inter-City, School, Special) Trucks (Long haul, Mining & Construction, Distribution) Light Vehicles (Dost) Defense
1. Logistical (Fox, Stallion, Rhino) 2. Tactical(MPV) 3. Special Purpose vehicles (Buses)

5. Power Solutions
1. 2. 3. 4. 5. Leypower (Diesel Generating Sets) Leymarine (Marine Engines and Aggregates) Special Engines (Engines for Crane, Sprinkler) Leygas (Generating sets running on Natural Gas) Leyfire (Engines for Fire Fighting applications)

CPM
Critical Success Factors Weights Ashok Leyland Rating Weighted Score 0.7 Tata Motors Rating Weighted Score 0.8 Eicher Motors Rating Weighted Score 0.5

Distribution channel

0.2

3.5

2.5

After Sales Service Financial Position Product Quality Brand Value Market Share Price Competitiveness

0.2 0.15

2.5 3

0.5 0.45

3.5 2

0.7 0.3

2 4

0.4 0.6

0.13 0.12 0.1 0.1

3.5 3.5 3 3

0.455 0.42 0.3 0.3

3 4 4 3

0.39 0.48 0.4 0.3

2 2 1 4

0.26 0.24 0.1 0.4

Total

3.125

3.37

2.5

CPM Contd..
Distribution Channel
TATA:
1. 19 Distributors and approximately 1200 authorized retail outlets 2. Distribution agreement with Apex Greatest Industrial Co Ltd (AGI), Myanmar to sell Commercial Vehicles 3. Integrated CRM-DMS, linking more than 1,200 dealers and tracking 25,000 customers

Ashok Leyland:
1. 220 dealer outlets and 410 service centers across the country

Eicher:
1. 381 dealers across the country 2. Presence in 40 countries

CPM Contd..
After Sales Service
Tata Motors 1. Breakdown assistance in association with MyTVS (Repair and Towing service). 2. Response time within city limits 60 Mins, State/National Highways 90 Mins, Ghat roads 120 Mins Ashok Leyland 1. Every major highway has a service centre every 75 Kms, reaching within 4 hours and restoration of vehicle within 48 hours. 2. 19,000 mechanics and 5,800 retailers

customer

Eicher Motors 1. Repairs within 48 hours in North-South and East-West corridors 2. Breakdown compensation if it fails to attend 3. Mobile service vans at all dealerships, to support running repairs

CPM Contd..
Financial Position
Terms Ashok Leyland Tata Motors Eicher

2011 PBIT 990.73

2010

2009

2011

2010

2009

2011

2010

2009

646.63

365.75

3686.48

4219.82

1769.85

144.07

89.06

47.1

Invested capital
6621.15 5936.75 5435.87 35912.05 31429.69 25559.83 557.1 474.14 413.3

ROIC 0.1496 ROIC % 14.96 0.1089 10.89 0.0672 6.72 0.1026 10.26 0.1342 13.42 0.0692 6.92 0.2586 25.86 0.1878 18.78 0.1139 11.39

CPM Contd..
Market Share
Company 2006 2007 2008 2009 2010 2011 Tata motors 62%

62.9%

60.5%

61.9%

63.3%

60.1%

Ashok Leyland

27%

27.9%

27.5%

25.7%

23.3%

25.5%

Eicher motors

7.4%

6.8%

8.2%

7.4%

8.6%

9.3%

Others

3.5%

2.4%

3.9%

5%

4.7%

5.15%

Porters 5 Forces Model

Threat of Substitute Products 1. Railway and Aviation form the substitutes 2. Railway connectivity is still poor, though the freight cost might be low. 3. Air cargo has a CAGR of 10.9% (international cargo is 67%). Complexities in expanding network. Threat of new Entrants 1. Bharat Benz, SML Isuzu, Kamaz Vectra, Man Se, Volvo, and Scania AB 2. Capital requirements to start the business are huge 3. Customers cannot easily switch loyalty 4. Developing technology suited to Indian conditions takes time 5. Developing sales and service channel takes time Industry Rivalry 1. CV Industry expected to grow with a CAGR of 15%, every competitor wants a share of the pie 2. Ashok Leyland JV with John Deere to distribute and market construction equipment in India landed in court due to Telcon (TATA Subsidiary) 3. Exit barriers are high, hence competitors will stay Bargaining Power of Supplier 1. Number of dedicated suppliers 2. Supplier an equal partner in the process 3. Support to improvise the supplier process Bargaining Power of Customers 1. 1st level - Fleet owners (bulk buy) 2. 2nd level State Road Transport corporations (Price conscious) 3. No drastic product differentiation with competitor products 4. Cost of switching is low 5. Too many competitors, hence customer has the final say

SWOT

STRENGTHS 1. Strong Brand Name 2. Standard, innovative, unique quality Products 3. Extensive Dealer Network 400 full service outlets in the country 4. Better supplier understanding 5. Long term relationship with customers 6. Own comprehensive R&D base - 1000 membered product management team OPPURTUNITIES 1. Projects like JNURM are expected to boost the urban infrastructure which in turn is expected to drive demand 2. Expansion to Global Markets 3. Commercial vehicle Industry is expected to grow with a compound annual growth rate of 15% by FY 2016-2017 (Young) 4. Delhi Mumbai Industrial Corridor is expected to drive the demand. 5. Proposed 51% in FDI Retail is expected to improve the supply chain system creating demand for commercial vehicles. Indian Army needs: o 1,500 light bullet-proof vehicles o 4,500 light specialist vehicles o 16,000 infantry combat vehicles o 4,000 light armoured vehicles o Heavier vehicles needed to tow Howitzers (Telegraph)

WEAKNESS 1. Late entrant in LCV segment 2. Too much dependency on state road transport corporations 3. Failure to capitalize on new emerging African and Asian markets 4. Undifferentiated Product

THREATS 1. Entry of new global competitors 2. Weak Index of Industrial production 3. Tight monetary policy viz., Higher lending rate 4. Suspension of mining activities in many parts of the country 5. Deferment of capacity addition by fleet owners 6. Higher inflation Higher raw material costs 7. LCV demand from the rural sector dependent on monsoon success.

SPACE Matrix
Environmental stability Criteria Remarks Score -2 -2 Overall economic condition 100% dividend in the year ended March 2012 GDP growth India is the 4th biggest commercial vehicle market in the world.30% Average 24% Y-o-Y growth over last 3 fiscals High Inflation and Political Issues Demand is price Inelastic in long run Headquartered in Chennai (Detroit of South India).Automobile hub of India.1000 membered product management team Now, manufacturers from China, India, and perhaps other emerging nations will be significant sources of supply, and customers around the world will demand new vehicles at ever-decreasing prices. -4

Inflation Price elasticity Technology

-4 -2 -1

Competitive pressures

Average

-2.5

SPACE Matrix
Industry Strength (PR Web) Criteria Industry growth potential Remarks India is expected to have the fastest-growing auto sales. since end of the License Raj era gave local VMs time to develop, India has capable manufacturers and suppliers, which provide talented partners for foreign companies The barriers to enter the automotive industry are substantial. Although the barriers to new companies are substantial, established companies are entering new markets through strategic partnerships or through buying out or merging with other companies Asia-Pacific is forecast to emerge into the fastest growing market, great future growth opportunities in African countries (Sub-Saharan Africa Transport Policy Program, SSATP) Score 6

Barriers to entry

Global Market Development Average

5.3

SPACE Matrix
Financial strength (Capitaline) Criteria Return on assets Leverage Ratio Profitability Remarks Ashok Leyland ROA is 10.52% and Industry average is 6.30% Ashok Leyland leverage ratio is 0.59 higher the industry's 0.52 Profit over sales for Ashok Leyland is is 5.53% that is higher than industry average of 3.93% Score 6 3 5

Average

4.67

SPACE Matrix
Competitive Advantage Criteria Market Share Remarks Ashok Leyland hold 25.50% market share which has increased by 9.44% over the year, Still far behind Tata Motors which hold 60.10% Ashok Leyland is exporting pessenger vehicles to 30 countries. Targeting Emerging markets of Asian and African Countries. Score -2

Global Presence

-2

Average

-2

SPACE Matrix
Point on X-axis (3.3)
Industry Strength (5.3) + Competitive Advantage (-2)

Point on Y-axis (2.17)

Financial Strength (4.67) + Environmental stability (-2.5)

The Coordinate of X-axis and Y-axis will fall on 1st Quarter

QSPM
Strategy 1 Product Line extension of Bus segment to provide luxury Intercity Coach (Bus) Attractive Score Total A Score Strategy 2 Marine engine product line extension to provide sales and service to vessel owners Attractive Score Total A Score

Key Internal Factors Strengths 1. Strong Brand Name 2. Better supplier understanding 3. Long term relationship with customers 4. Unique Product 5. Own comprehensive R&D base Weakness Sensitive to globalization Undifferentiated Product Marketing Service & Support Sub Total

Weight

0.12 0.1 0.12 0.08 0.1

4 3 4 2 3

0.48 0.3 0.48 0.16 0.3

3 2 2 4 4

0.36 0.2 0.14 0.32 0.4

0.14 0.13 0.08 0.13 1.0

2 2 2 2

0.18 0.3 0.16 0.16 2.52

3 3 1 3

0.42 0.45 0.08 0.19 2.56

QSPM Contd..
Strategy 1 Product Line extension of Bus segment to provide luxury Intercity Coach (Bus) Attractive Score Total A Score Strategy 2 Marine engine product line extension to provide sales and service to vessel owners Attractive Score Total A Score

Key Internal Factors

Weight

Opportunities Growth of market Global alliance Corridors between cities Threats Inc. market competition Govt. Policy and Taxes Economy fluctuations Dependency on Customer Sub Total

0.15 0.15 0.15

3 3 3

0.45 0.45 0.45

2 4 2

0.3 0.6 0.3

0.1 0.15 0.15 0.15 1.0

2 3 2 2

0.2 0.45 0.6 0.3 2.9 5.42

4 1 3 3

0.4 0.15 0.45 0.45 2.65 5.21

Sum Total Attractiveness

Pointers on Strategy 1