Strategy Management - 10P003 - 10P004

Introduction
• Team Details
– Abhishek Arora
• 10P003
• pg10abhishek_a@mandevian.com

– Abhishek Singh
• 10P004
• pg10abhishek_singh@mandevian.com

• Industry Chosen: 2 wheelers


• Top 4 Companies:
– Hero Honda
– Bajaj Auto
– TVS Motors
– Yamaha Ltd

• Efforts spent in whole exercise: Two Weeks

Competition
Industry Overview
Porter’s 5 force Analysis
Customers Context
Social Trends
Market Needs
Economic Trends
Market Issues
Political / Regulatory Trends
Market Segments
Cultural Trends
Market Players and Share
Technological Trends
Company
Company Overview
Evolution Graph
Value Chain Analysis
SWOT Analysis
Business Model Framework
Business Model Environment – Assignment Framework

• The Indian two-wheeler industry is the second largest in the world.
• The market stood at 10.5 million units in FY10, registering a y-o-y growth of 10 percent during the five
year period FY05 – FY10.
• The industry can be further segmented into four major segments:
– Motorcycles
– Scooters
– Mopeds
– Electric Two wheelers
• The motorcycle segment constituted 80.33 percent of the total sales.
• The scooter segment is in a re-growth phase, after seeing maturity in 90s and decline in early 00s.
This can be attributed to increasing use of gearless scooters in urban areas.
• The electric two-wheeler segment is in investment phase with just around 0.02 percent sales
contribution.
• The graphs below shows Two-wheeler production in India during the period 2004-05 to 2009-10.
Competition: Industry Overview 3

Sources: On last slide
Maturity Phase: Industry life cycle assessment

Growth Stage : Decline Stage :

Motorcycles Geared Scooters
Gearless Scooters
Sales
Introduction Stage : Maturity Stage :

Electric Scooters Mopeds
Time
Key Players: Market Share (Motorcycles)
•Hero Honda, the largest manufacturer in the
industry is also the largest globally.
•Some foreign players such as BMW, Harley
Davidson and Ducati have entered the Indian
market with high end motorcycles and niche
focus.
•Yamaha has increased its presence significantly in
past couple of years by aggressive new
launches and focused marketing. It is now a
significant contributor in 150cc+ motorcycle
sales of the industry
•Hero Honda maintains its dominance in the fuel
efficient 100cc motorcycle segment
Competition: Industry Overview (Contd.) 4

•
 To analyse the market structure present in the two wheeler industry (motorcycles), a concentration
test is done by calculating the annual Herfindahl Index for the firms
 A Herfindahl Index value above 0.2 indicates a high concentration
 Herfindahl Index for the motor cycle industry varied from .29 to 0.40 with ascending trend leading to
the inference that the industry is oligopolistic in nature
 The two wheeler motorcycle segment has a very few market players who dominate the market by
exploiting huge economies of scale
 Product differentiation is a very decisive variable in this industry.
• Major players being Hero Honda, Bajaj, Kinetic, TVS, Yamaha etc
• Sales volume data of the firms has been retrieved from the Emerging Markets Information Service.
•
Herfindahl Index
Herfindahl Index
0.39 0.41
0.32 0.36 0.36 0.35
0.29 0.30 0.32 0.30
1988 -90 1991-93 1994 -99 2002-03 2003-04 2004 -05 2005-06 2006 -07 2007-08 2008 -09
Competition: Industry Overview (Contd.)

Growth Drivers
 Key Trends
•The industry is expected to grow both in high end
and fuel efficient segment.
•Whereas growth in high end segment is propelled
by an increase in disposable income, fuel
efficient vehicles are driven by need to
commute at reasonable cost
•The regulatory policies have been favorable for
both domestic as well as foreign players
•More and more companies are attempting to
differentiate their products by offering variations
in quality, styling or fuel efficiency.
•Focus on R&D has increased in recent years, due
to increased competition in the industry.
•Apart from satisfying the domestic demand, the
industry also exports around 10 percent of its
production, and major players, especially Bajaj
Auto, have shown keen attempts to increase
their global presence. This trend is expected to
continue.
•Growth in 100cc motorcycle segment is fuelled by
rural demand, whereas demand for gearless
scooters is driven by urban demand.
Competition: Industry Overview 6

Barriers to Entry
1.
Brand plays an important role as product differentiation is a key in oligopolistic market
Industry is highly capital intensive with only existing big auto players entering in market
Industry knowhow is almost same as Indian majors reliy on japanese and european counterparts for knowledge transfer
HIGH
Bargaining power of Buyers Inter-Organization Rivalry Bargaining power of Suppliers

1.
less, but the wide range of models give high bargainingpower
Suppliers
1.The industry is oligopolistic intonature
buyers
of auto components are fragmented
Supplier management extremely critical for this industry since most of the comp
2.Dominated by large players offering wide range of products
ue to government policy But due to big customers, suppliers are always under pressure
3.Competition based on differentiation and total cost of ownership
MODERATE
HIGH MEDIUM
Threat of Substitutes
here is no perfect substitute to this industry. Though, the trend of low cost cars like TATA NANO may change the industry scenario.
LOW
Competition: Porter’s Five Force Analysis

Sources: on last slide
Social Trends
•Burgeoning middle class with increased

disposable income driving sales

•Men dominated the customers of both
Bikes as well as scooter segment
o be granted to foreign equity investment up to 100% for manufacture of automobiles and components
l such that they facilitate the development of manufacturing capabilities as opposed to mere assembly.
Economic
estic policy with the international practice of imposing higher Trends
road tax on old vehicles so as to discourage their use.
Cultural
•The domestic Trends
demand for two wheeler
vehicles will be spurred by robust consumer demand backed by rising income levels, increased rural penetratio
• •Big purchases on festivals like Diwali and
•ExportsIdofand
motorcycles are
other major also on growth
festivals
track.
Emphasis on value for money
Trends
an important role in differentiation and reducing total cost of ownership for consumer, hence plays an important role
gely imported from European and Japanese manufacturers
hnology/technological up gradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic r
Context: Environmental Trends

Market Needs Market Issues
Key Demand Drivers
 Different market needs and current offerings to fulfill and gaps Increased availability of cheap consumer financing in the past 3-4
etc years
Inadequate public transportation system, especially in
Increasing availability of fuel-efficient and low-maintenance
the semi-urban and rural areas models

. Penetration of two–wheelers is quite low in India at around 30
Increasing urbanisation, which creates a need for personal
vehicles per 1,000 persons, as compared to 220 in Thailand and transportation

250 vehicles per 1,000 persons in Malaysia. Changes in the demographic profile & increasing youth population

Market Segments Markets Players and Share

 Market segmented based on engine capacity Market Share(Domestic)
Hero Honda : 42%
Bajaj Ltd : 27%

75-124 cc Sales :30%
TVS Motors : 19 %
125-249 cc Sales : 9.9%
Honda Motors : 9%
Greater than 250 cc Sales : 24.1%
 Market Share(Exports)
Bajaj Auto : 46 %
Total sales Volume : 84,44,243

TVS Motors : 16%
Hero Honda : 15 %
Yamaha : 10 %
Customers: Possible Needs, Motivations, Segments

Hero Honda Bajaj Auto Ltd.
 Year of Inception : 1984
 Market Share : 42%  Year of Inception : 1945
 Product / Service Portfolio : Motorcycles ,  Market Share : 27 %
Scooters, Spares  Product / Service Portfolio : Motorcycles ,
 Growth Rate(Revenue) :23.91% (2009 to 2010) Scooters, 3 wheelers,Spares
 Revenue(2010): 16,780.62 cr  Growth Rate(Revenue) :33.91(2009-2010)
 Profits(2010) : 2,231.83 cr  Revenue : 12,118.08 cr
 Branches: namely Dharuhera, Gurgaon at Haryana  Profits : 1,700.11 cr
and Haridwar at Uttarakhand  Branches :Pantnagar, Akurdi,Chakan
 Capacity : 5200000 units  Capacity :2250000 units
 High Royalty Cost (2.5 – 5% of sales) Low Royalty cost ( 1.4% of sales)
TVS Motors Yamaha Motors India

 Year of Inception : 1978  Year of Inception : 1964
 Market Share : 19%  Market Share : 10%
 Product / Service Portfolio : Automobiles(2 wheelers),  Product / Service Portfolio : Two wheelers
Spares  Growth Rate : 23.6% (in Units)
 Growth Rate(Revenue): 18% (2009-2010)  Revenue : NA
 Revenue : 4,363.11 cr  Profits : NA
 Profits: 88.0 cr Capacity : 800000
 Branches : Hosur, Mysore,Solan

 Low Royalty Cost (2.3% of sales)
Companies: Summary Fact Sheet

 Vision : A mobile and an empowered India, powered by Hero Honda

 Mission : Hero Honda’s mission is to strive for synergy between technology, systems and human resources,
to produce products and services that meet the quality, performance and price aspirations of its customers. At the
same time maintain the highest standards of ethics and social responsibilities

 Portfolio : Automobiles(2 wheelers), spares


 Main highlights

• Hero Honda Motors Ltd is the World's single largest two-wheeler motorcycle company

• The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's
single largest two wheeler company but also one of the most successful joint ventures worldwide
•
• In the year 1985, the company commenced their commercial production at Dharuhera plant in Haryana and introduced
their first motorcycle, CD 100 in the market.
•
• Current Models include : Passion Pro (100 cubic capacity-4 Stroke), CBZ-Extreme (150 cubic capacity - 4 Stroke),
Pleasure New Aesthetics, Splendor NXG (Self Start), CD Deluxe (Self Start), Glamour FI, Glamour (Carb) and
HUNK Special Edition. Also, they launched new motorcycle model, Karizma - ZMR
•
• Active Sponsor of sports in country, namely Cricket and Hockey
Hero Honda: Overview

ced their extraordinary product, Splendor in the market.
ugurated their second manufacturing facility at Gurgaon in Haryana. Also, they introduced new motorcycle model, Street in the
•2007: Commissioned t third plant at Haridwar

•increased the installed capacity of Motorised 2 wheelers upto 350CC engine
•2010 :Buyed out 26%2007-2010
share of Honda
1999-2004
ched the new motorcycle model, Sleek in the market and in the year 1991, they introduced new motorcycle model, CD 100 SS in the ma
1997-97
. Year 1999,: Launch of Hero Honda CBZ, the India’s first 150cc motorcycle
 Year 2001 : Launch of Passion and Joy in the market, Dawn and Ambition in the
Year 2003,: launched CD Dawn, Splendor+ and Passion Plusand ,Karizma, the
motorcycle.
Year 2004, Launched, Ambition 135 and CBZ* in the market.
Renewed the joint technical agreement with the Honda Motors Company, Japan
1985
•
as established as a joint venture company between Honda Motor Company of Japan and Hero Group. In the year 1983, they signed a jo
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8
3
Company A: Evolutionary Trends

Firm Infrastructure: Financing, Planning, Land, Machinery, Technology, Investor Relations
Support Activities
HRM: Recruiting, Training, Compensation
Technology Development: Product and Process Design, Testing, SAP, R&D,

Technology Transfer, Patent, Collaboration
Procurement: Material, Support Services, Advertising, Contracts
Marketing
Inbound Outbound
Operations and Services
Logistics Logistics
Primary Activities
Sales
m
Production
sheets,paints,parts
Setup Plan,Manufacturing,Welding,Assembling,Subassembling
,spares,machine tools, Maintain
MostlyShiiping,Transportation
Showrooms,
Inventory, Manage
Retail consumers,
shipment,
Technical
,Recall ofbrand
Testing,
Automobiles,
promotions,
RoadSpares
Testing
advertising,
etc Retailer
Collections,
Management,
Bulk Consumers(Pizza
Staff Development
Hut, Dominoe
cifications (Type & Volumes)
Value Chain Analysis

Category of Activity Distinctive Aspects Comments
Firm Infrastructure Best in class prototyping facilities  Hero Honda Manufacturing setup in India in
compliance with global standards
It strictly adheres to the standards of ISO 9001
for quality and ISO 14001 for environmental

standards
HRM Vast pool of technically competent engineers and Follow intensive training and development
managers. program for developing skills

Compensation along with industry average
Technology Development Access to latest technical developments and upgrades Lacks In-house Indian RnD capabilities, but
from Japanese Counterparts compensates it with Technology import from

Procurement Global Sourcing Team – China , a key destination for Honda,Japan
Centralized Strategic Sourcing for key
sourcing essential items like tires, power steering units components
etc
Inbound Logistics Long term contract with service provider’s – --
transporters and agents.
Personnel at regional offices for over seeing the
Operations Kaizen & TPM team – continuous drive to improve
smooth transit of goods

efficiencies.
Automated manufacturing processes
Maintenance – technical competence.
Hero Honda: Distinctive Activities from Value Chain Analysis

Outbound Logistics Regional Sales Office and Vehicle Dispatch Section --
linked through SAP.
Efficient security system for prevention of any kind of
Marketing and Sales Institutional Clients and OLM Strong brand image with high brand recall.
pilferage Largest dealership in a mass market
Services Maintenance Warranty, Product Recall capabilities --

developed at dealership level for flexibility
Hero Honda: Distinctive Activities from Value Chain Analysis

Strengths Weaknesses
.
 Pioneers of First stroke bike in the Indian market, hence enjoy a  Plant running close to capacity, may face delay in orders
great brand image synonym with high performing bikes
 High Dependence on Japanese counterpart for
Access to Japanese technology has given it leadership in fuel

technology know how and research capabilities
efficient bikes, one of its USP
Its market share is reducing in wake of competition ,though the
Huge sale network (3500 Dealers)

absolute numbers are increasing from last few years.


Better sale service


It has the highest share in automobile sector.


Low Debt company(Debt Equity ratio is 0.1)


Opportunities Threats
 Huge export potential, CD Dawn is the most popular  Big uncertainty in minds of investor about drop in
brand of motorcycle in Columbia quality of technical knowhow after recent buyout
 Under presence in scooter market can be improved  Increased competition especially from Bajaj Auto
for higher sales eating into market share
 Increased opportunity in heavy motorcycle market  Increasing cost of supplies especially aluminum
reducing the profitability of company
Hero Honda: SWOT Analysis

Refer to the attachment: Hero Honda.xls
Hero Honda: Business Model Framework

 Vision : Mobilising,globalising,financing and de-risking India through its operations

 Mission :Rapidly enhancing production ,exports and international facilities to become among the top three
largest 2 wheelers makers in the world

 Portfolio : Automobiles(2 wheelers), spares


 Main highlights

• .The company is well known for their R&D, product development, process engineering and low-cost manufacturing
skills

• The company is the largest exported of two and three-wheelers in the country with exports forming 18% of its total
sales.

• The company has two subsidiaries, namely Bajaj Auto International Holdings BV and PT Bajaj Indonesia
•
• Current Models include : ›Bajaj Pulsar 135 LS,Bajaj Pulsar DTSi, Bajaj Pulsar 200CC,Bajaj Avenger,Bajaj Pulsar DTS-
Fi 220 CC, Baja jDiscover DTS-Si 100cc, Bajaj Pulsar 220 S
•
•
• Operations in more than 60 countries
Bajaj Auto: Overview

g at Waluj near Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single financial year
•The company was incorporated on April 30, 2007 as a wholly owned subsidiary of erstwhile Ba
•2007, the company inaugurated their green field plant at Pantnagar in Uttarakhand.
•Bajaj Auto International Holdings BV, a2001-2010
wholly owned subsidiary company acquired 14.51% eq
e. In 1977, it managed to produce and sell 100,000 vehicles in a single 1991-2000

financial year
1981-90
1970-80
d two- and three-wheelers in India. In 1959, it obtained license from the Government of India to manufacture two- and three-wheelers an
In 1995, it rolled out its ten millionth vehicle and produced and sold 1 million ve
This decade also saw the launch of popular models like Boxer, Calibe
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Bajaj Auto: Evolutionary Trends

Firm Infrastructure: Financing, Planning, Plants, Machinery, Technology, Investor Relations
Support Activities
HRM: Recruiting, Training, Compensation
Technology Development: MIS capabilities, Product and Process Design, Testing, SAP, R&D,
Technology Transfer, Patent, Collaboration
Marketing
Inbound Outbound
Logistics Logistics
Sales
Primary Activities
m sheets,paints,parts
Two Wheeler
Working
,spares,
Business
with
machine
Subsidaries,Exports
Unit,tools,
and Maintain
Commercial
Department
Inventory,
Vehicles
Retail consumers,
Manage
for
Business
geographies,
shipment,
Unit &Shiiping,Transportation ,Recall Retailer
of Automobiles,
Management,
SparesStaff
etc, Development
cifications (Type
International
& Volumes)
Business Unit for manufacturing, Niche
assembling
Customers,
and maintenance shops
Showrooms ,brand promotions, advertising, Collections, Bulk Consumers(Pizza Hut, Dominoes etc)
Bajaj Auto :Value Chain Analysis

Firm Infrastructure Bajaj invested hugely in infrastructure while Banking on improved infrastructure, Bajaj had
simultaneously developing product design and innovation impressive performance growing at a rate of 20%
capabilities, which is the prime reason behind the Won BBC World Wheels, Business Standard
energetic Bajaj of 21st century Motoring awards 2004 etc for Baja Pulsar
HRM The Company affirms that its competitiveness is The Company has a partnership programme with
interlinked with talent management, hence view HR as educational
Strategic role in its growth institution/s for training and development
In case of equal business offers, the Company
will select a business partner belonging to a

socially disadvantaged section of society.
Technology Development Bajaj has been investing Bajaj Auto R&D also enjoys access to the
heavily in the latest, sophisticated technologies to scale specialized expertise of leading
down product development lifecycles and enhance testing international design and automobile engineering
capabilities. companies working in specific
area
Procurement Global Sourcing Team – China , a key destination for Centralized Strategic Sourcing for key
sourcing essential items like tires, power steering units etc components
Inbound Logistics Long term contract with service provider’s – transporters --

and agents.
Personnel at regional offices for over seeing the smooth
transit of goods
Operations Kaizen & TPM team – continuous drive to improve

efficiencies.
Automated manufacturing processes
Maintenance – technical competence.
Bajaj Auto: Distinctive Activities from Value Chain Analysis

Outbound Logistics Based on their own brand of globalization, they have Ales network involves separate dealer networks
built their distribution network over 60 countries catering to the
Marketing and Sales worldwide
Large market are USA, Argentina, urban and
Latest rural from
offering markets as well
Pulsar as its three-
and Avenger stable
Company will set-up separate sales channels for every wheeler and premium bikes
Colombia, Peru, Bangladesh, Sri Lanka, Italy, has given Bajaj Brand an aspirational value
segment
Sweden, of its business
Germany, Iran and
andconsumers
Egypt. segments. Bajajwas
globally which Auto also plans
missing to set-up an
earlier
Bajaj leads Colombia with 65% of the scooter market, independent network of dealers
in Uruguay with 30% for the rural area
Services Bajaj has a robust afterofsales service and spares Sales and service network reach have been
the motorcycle
network in many market and in Bangladesh with 95% of expanded substantially covering the major cities
countries
the three-wheeler of Jawa, Sumatara, Bali
market. and Sulawesi islands. Total showroom strength
stands at around 63 numbers,
covering 46 cities of Indonesia.--
Bajaj Auto: Distinctive Activities from Value Chain Analysis

Highly experienced management Hasn't employed the excess cash for long

Product design and development capabilities

Extensive R & D focus Still has no established brand to match Hero Honda's

Widespread distribution network. Splendor in commuter segment

High performance products across all categories.
High export to domestic sales ratio Not a global player in spite of huge volumes

Great financial support network (For financing the automobile) 
High economies of scale.  Not a globally recognizable brand (unlike the JV partner
High economies of scope Kawasaki
Double-digit growth in two-wheeler market The competition catches-up any new innovation in no time.
Untapped market above 180 cc in motorcycles Threat of cheap imported motorcycles from China
More maturity and movement towards higher-end motorcycles Margins getting squeezed from both the directions (Price as well as
The growing gearless trendy scooters and scooterette market Cost)

Growing world demand for entry-level motorcycles especially in TATA Nano is a serious substitute for the motorcycle segment
emerging markets
Bajaj Auto: SWOT Analysis

Refer to the attachment: Bajajauto.xls
Bajaj Auto: Business Model Framework


 Vision : TVS Motor will be responsive to customer requirements consonant with its core competence and profitability.
TVS Motor will provide total customer satisfaction by giving the customer the right product, at the right price, at the
right time.

 Mission : TVS is committed to being a highly profitable, socially responsible, and leading manufacturer of
high value for money, environmentally friendly, lifetime personal transportation products under the TVS brand

 Portfolio : Automobiles(2 wheelers),Three Wheelers, Spares


 Main highlights

• . TVS Motor Company is the third largest two-wheeler manufacturer in India and one among the top ten in the world,
with annual turnover of more than USD 1 billion i

• TVS Motor currently manufactures a wide range of two-wheelers from mopeds to racing inspired motorcycles.
Motorcycles (Apache RTR 180, Flame DS 125, Flame, TVS Jive, StaR City, Sports)
Variomatic Scooters (TVS Wego, Scooty Streak, Scooty Pep+, Scooty Teenz)
Mopeds (TVS XL Super, TVS XL Heavy Duty)
•
• The company has 4 plants - located at Hosur and Mysore in South India, in Himachal Pradesh, North India and one at
Indonesia. The company has a production capacity of 2.5 million units a year.

TVS Motors: Overview

•The TVS group and Suzuki Motor Corporation parted ways from their 15-year-old joint v
•In June 2008, the company entered into a contract manufacturing arrangement with Ma
of Japan and in the year 1985, they incorporated•The
a new companyintroduced
company Lakshmi Auto 2001-2010
four Components
stroke versionPvt Ltd for LPG
in Petrol, the manufacture of critical
and CNG fuels engin
for domestic
1991-2000
1980-90
In year 1993, they launched TVS Scooty.

During 1999-2000, TVS Suzuki Ltd was amalgamated with Sundaram Auto Engineers Ltd, an unlisted
In the year 1979, Sundaram-Clayton
1992 Ltd started Moped Division at Hosur to manufacture TVS 50 mopeds
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TVS Auto: Evolutionary Trends

Support Activities
HRM: Total Employee Involvement ProgrammeRecruiting, Training, Compensation
Technology Development: Highly dedicated RnD Team, Production, Testing, SAP,

Technology Procurement Patent, Collaboration
Marketing
Inbound Outbound
Logistics Logistics
Sales
Primary Activities
m sheets,paints,partsWorking
,spares,
with
machine
Subsidaries,Exports
tools,
Assembly
MaintainDepartment
Inventory,
Retail consumers,
Manage
for geographies,
shipment,Shiiping,Transportation ,Recall Retailer
of Automobiles,
Management,
SparesStaff
etc, Development
cifications (Type & Volumes) Forging Niche Customers,
Welding Showrooms ,brand promotions, advertising, Collections, Bulk Consumers(Pizza Hut, Dominoes etc)
Testing,
Electroplating
Chassis forming
Heat Treatment
Painting, Machining,
Road Testing
TVS Motors:Value Chain Analysis

Firm Infrastructure TVS Motors company ,along with other subsidiaries of TVS was the first two wheeler company in the
Sundaram Clayton group has a large end to end world to win a Deming Prize for quality in year
infrastructure to support its automobile business 2002
HRM Company follows Total Employee Involvement and TEI ensures sharing of responsibility across value

Daily Work Management Programmes to improve chain for company’s performance

employee efficiency 
Technology Development Actively pursuing Research and development to Was able to launch seven models on a single day,
constantly improve performance,styling,efficiency and f first time in automobile history

alternate fuels
Procurement Extends its core values to all its vendors through

 TVS has been able to connect to its 72% of its
continuous training programs like Total Productivity vendors in real time to ensure seamless flow of
Maintenance .Follows reverse auction process information about products and components
Inbound Logistics TVS follows following systems for efficient inbound TVS has been able to automate its process to
logistics ensure supply frequency optimization via SCM
Kanban Systems
Direct delivery to usage and web based ERP
Operations TVS uses state of art technology as well as modern Company possess prestigious certifications like
operationalpractices like JIT , Online Design ISO 9000,QS 9000 and TS16949
Collaboration, Reverse Auction Process and TPM
TVS Motors: Distinctive Activities from Value Chain Analysis

Outbound Logistics TVS possess capabilities in outbound logistics, Services of its subsidiaries are sleeked by other
warehousing and value added services like line manufacturing companies like M&M and
Marketing and Sales feeding,
Riding onhigh sub-assemblies
their andeffectiveness
quality and cost SCM consultation General
TVS isa TVS sawMotors
a rise of 25 % exports in exports in past
big exporter with 25 % of its distribution from two years
SAARC countries,Africa,Argentina and Mexico
Services TVS has a good after sales service and spares network
but is much smaller than its bigger competitors
TVS Motors: Distinctive Activities from Value Chain Analysis

Huge sale network (3500 Dealers)

Apart from Apache, other models have limited popularity and

aspirational value
•Better sale service
Increasing price of supplies
•Highly competitive in export markets
Not a global player in spite of huge volumes
•It has a good brand image 
 Not a globally recognizable brand

•Known for quality service.
•Debt equity ratio is only 0.1.
Improvise the fuel
 Threat of cheap imported motorcycles from China
efficiency of offering in Scooter and Scooterette market
Make its product as competent as Honda Margins getting squeezed from both the directions (Price as well as

Cost)
Green Vehicles like electric scooty can be a big opportunity in near

future Inflation may hamper the sales
Credit squeeze due RBI policy will make expansion expensive

•Growing world demand for entry-
level motorcycles especially in emerging
markets
TVS Motors: SWOT Analysis

Refer to the attachment: TVS Motors.xls
TVS Motors: Business Model Framework


 Vision : To establish YAMAHA as the "exclusive & trusted brand" of customers by "creating Kando" (touching their
hearts) - the first time and every time with world class products & services delivered by people having "passion for
customers".

 Mission : Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of YAMAHA
products, focusing on serving our customer where we can build long term relationships by raising their lifestyle through
performance excellence, proactive design & innovative technology
 Build the Winning Team with capabilities for success, thriving in a climate for action and delivering results

 Portfolio : Automobiles(2 wheelers), Spares


 Main highlights

• . Yamaha Motors India was incorporated in August 2001 as a 100'% subsidiary of YMC, Japan

• YMI two State-of-art manufacturing plants in India i.e Faridabad and Surajpur a wide range of motorcycles that meet
International technology standards are manufactured.These cater to domesric as well as international markets.

• An agreement has recently been reached between Yamaha Motor Co., Ltd. (YMC) and its joint venture partner in
India, Escorts Limited under which YMC will acquire all of the 26% of the stock presently held by Escorts Limited
• Launched highly successful models Yamaha FZ and YZF R1
Yamaha Motors: Overview

1990-2010
•In3780900
jpur with an area of 2008, Mitsui
sq &ft Co.,
withLtd. entered
bikes into an
Yamaha agreement
Crux with YMC to become a joint-investor in the motorcycle manuf
and RX100
•introduction of FZ-16, FZ-S, Fazer, and R15 they have made an impression on the mid range bike market in India
•
1985-1990
1
Established first plant at Faridabad in 1964 with part manufacturing capabilities
9
6
4
Yamaha Motors: Evolutionary Trends

Support Activities
HRM: finding, screening, recruiting and training job applicants, Appraisal,as well as administering
employee-benefit programs.
Technology Development: Highly dedicated RnD Team, Production, Testing, SAP,

Technology Procurement Patent, Collaboration
Marketing
Inbound Outbound
Logistics Logistics
Sales
Primary Activities
m sheets,paints,parts
Two Wheeler
Working
,spares,machine
Business
with Subsidaries,Exports
Unit,
tools,
and Maintain
Commercial
Department
Inventory,
Mostly
Vehicles
Manage
Showrooms,
for
Business
geographies,
shipment,
Unit
Retail
&Shiiping,Transportation
consumers, brand promotions,
,Recall Retailer
ofadvertising,
Automobiles,
Management,
Collections,
SparesStaff
etc,
Bulk
Development
Consumers(
cifications (Type
International
& Volumes)
Business Unit for manufacturing, assembling and maintenance shops
Yamaha Motors:Value Chain Analysis

Firm Infrastructure TVS Motors company ,along with other subsidiaries of TVS was the first two wheeler company in the
Sundaram Clayton group has a large end to end world to win a Deming Prize for quality in year
infrastructure to support its automobile business 2002
HRM Transparent & Team-Based Organisation Human Resources Development Division consists
Focused & Target Oriented (MBO Driven) of the Personnel Department, Employee Relation
working Department, Human Resources Development
Developing New Work-Culture (Yamaha Department, Health & Safety Department
Identity)
Technology Development Engine and FRP technology were used as a base to Access to Research and Development

actively diversify and globalize the area of business Capabilities through parent company in Japan
Procurement Vendors based in Delhi Suburban areas to reduce cost TVS has been able to connect to its 72% of its

of transportation vendors in real time to ensure seamless flow of

information about products and components
Inbound Logistics Possess inhouse IT capabilities under Yamaha

InfoTech, a wholly owned subsidiary of Yamaha India
to provide IT capabilities for Inbound Logistics
Operations Yamaha was the early adapter of comprehensive Company meet standards like ISO 14001,QS
quality control systems and quick to put in place a 9000 and
TPM (Total Productive Management) program
Yamaha Motors: Distinctive Activities from Value Chain Analysis

Outbound Logistics Dealer network works on the "3S" fundamentals of Yamaha posses a strongly dedicated team of
-SALES SERVICE and SPARE PARTS under one Sales and Service engineers constantly trained by
Marketing and Sales roof..
Recent initiatives have been launched by Yamaha in Strong parent companies
brand image with high brand recall.
the field of business-to-business as well as business- Largest dealership in a mass market
to-consumer cooperation with Dealers. The new
showrooms based on YAMAHA VISUAL IDENTITY
Services are
TVSonehasofa the many
good aftersteps
salesinservice
this direction.
and spares network
but is much smaller than its bigger competitors
Yamaha Motors: Distinctive Activities from Value Chain Analysis

Access to Japanese technology has given it competitive edge with High Dependence on Japanese counterpart for

respect to Indian counterparts technology know how and research capabilities


Possess strong brand name synonym with quality

 Losing grip on lower price range motorcycles which had
 traditionally been its bread and butter in India
Competitive edge in producing motorcycle for mass markets

Sales not a true reflection of capability


 Not a globally recognizable brand
 Recent success in >150 cc category augments more emphasis in Threat of cheap imported motorcycles from China

that direction with more models like FZ and R1 
Increased competition especially from Bajaj Auto
Increasing consumer disposable income with preference for styling may eat into market share
and quality gives a huge opportunity to Yamaha
Technology imports from Japan hampers domestic research and
No Presence in Scooters market yet which could be tapped in development process
future
 Inflation may hamper the sales
 
Yamaha Motors: SWOT Analysis

Refer to the attachment: Yamaha.xls
Yamaha: Business Model Framework

Business Model Comparison
(Economic Value, Social Value, Organization Framework)
Business Model Hero Honda Bajaj Auto TVS Motors Yamaha
Components
*Low cost quality products suited to 8High value for money by offering * Low cost competitive products * Differentiated products
Value Proposition withstand tough Indian conditions improved style at a competitive * Superior quality high end Superior quality products
* Niche products for high end customers cost products *Sports segment ,premium bikes
*World class manufacturing of almost all World class manufacturing in all * Manufacturing in different Manufacturing in different
Key Activities segment in the Indian Motorcycle segment in the Indian Motorcycle segments in India segments in India
segment segment * Assembling in international * Importing high end motorcycles
* Partnerships with sports events such * Innovative products aimed at markets which assemble CKD kits for sale in India
as Cricket and Hockey youth *Latest niche products
*Manufacturing facility at three units for Pro-Bikers
*3 plants at Waluj ,Chakan and at * Extensive R&D focus * Extensive R&D focus
Key Resources * Strong R&D from the Japanese Pant Nagar * Extensive distribution network * Qualified engineers and
counterpart Extensive R&D focus * Highly diversified business, managers *Technology support by
* Vast pool of technically competent * Huge distribution network apartf rom two-wheeler Yamaha
engineers and managers * Highly competent management manufacturing
* A JV between India's Hero Group and 14.51% equity stake in KTM * Partners in international markets * JV with mitsii
Key Partners Japan's Honda Group (to be terminated Power Sports AG of Austria to assemble CKD kits for sales * Originally a JV with Escorts
in 2014) * *International Logistics * Partners in Indian markets to
Minami-aoyama Minoto-ku for Technical Partners :Maersk Sealand, P&O boost its auto spares business
collaboration Nedloydand APL * Key *Only company of this size not
*PUC certification support Suppliers
Robust sales service not only in *having a major
Robust sales international
and service * Robust sales and service
Customer Relationships :JBM,MRFReinder,Makino
*Warranty on proprietary items handled India, and it
but most of the countries technology
network. supplier like hero
*Online network
by OEM Endurance
operates in * Online Honda
buying,maintainence scheduling *Follows 3S philosophy
*Recall capabilities developed at capabilities for service, spares available *MoU with SBI for fundamentals of -SALES SERVICE
dealership level ,test ride and financing Financial Loans and SPARE PARTS under one
roof.
* Individual customers * Mileage and cost conscious * Cost conciouscustomers *Quality focus customer *Cost
Customer Segments * Bulk customers such as pizza hut customers (100cc, 125cc) *TVSM continues to hold a focus customer *Premium
* Mileage and cost conscious customers* Style conscious customers monopoly position in the moped bikes customers
(100cc, 125cc) (150cc-200 segment) * segment with 100% market share
* Style conscious customers (150cc+ Pro Bikers(More than 200 cc) * Quality concious customers
segment)
Metrics Salesof different product segments Geographical distributonof sales Average service cost per *Ability to exceed consumer
* Average maintenance cost per year motorcycle expectations
*Different * No. of innovative features * No. of innovative features
needs for different customers compared to its rivals compared to its rivals
40
Business Model Hero Honda Bajaj Auto TVS Yamaha
Components Network of 550 dealers and 3,500 *498 dealers and over 1,500 Sales are done through the
 Sales are done through the
Channels service centres * rural channel partners authorised service showroom route in India *Large showroom route in India
work on the rural vertical through the * For other countries, has presence with 3500 dealers *Relatively lower presence of
‘Har Gaon Har Aangan’ established its own sales network * Factory sales for bulk clients service stations and dealerships
Revenue Streams * Majority of revenues from fuel efficient * The company’s growth is The scooterettebusiness is an * Recent focus has shifted towards
program
100 cc segment, focusing on individual primarily driven by the domestic established one and has a strong 150cc+ segment
customers market, with sales rising by 23% brand recall *However , 68 % of *Entry level bikes such as Crux
*Hero Honda’s revenue come from motorcycles also showing good growth owing to
Profit Formula market share has improved to 45%in * Product mix *12% of the rural demsnd
entry segment bikes *Only 4.7% ofis tilting more towards premium revenues come from scooterette
revenue from spare parts with 50% market share *125 cc segment
Organization Form * A Vertical organisation structure * 20 % revenue through mopeds relatively underperforming
* Strong management team with * Innovation focussed leadership *Innovation focused leadership
involves key personnel from boh Hero top positions held by bajaj family * IndependeentResearch facilities * Functional hierarchy
and Honda * Divided intothree broad apart from vertical structure
* Functional hierarchy *Joint Managing business vericals of Executive
Director Toshiaki Nakagawa Search, Business Development *Chairman & Managing Director
Leadership Style and Expansion Driven, Hierarchal
Chairman Brijmohan Lall Munjal Hierarchal andInnovation
and Client Retention and Driven Participative and Quality
Venu Srinivasan - Driven Participative, Quality and
Attributes Managing Director & CEO Pawan Relations *Chairman Rahul Bajaj Director H Lakshmanan Consumer Oriented
Munjal Vice Chairman Madhur Bajaj Director T Kannan
Others Director Shobhanan Bhartia Managing Director Rajiv Bajaj Director C R Dua
Director (Technical) Sumihisa Fukuda Executive Director Sanjiv Bajaj
Company A, B, C, D: Business Model Comparison

41
(Economic Value, Social Value, Organization Framework)
Sources:Company Annual Reports, CMIE Industry Report (2009), business article name and web link etc

References:

• http://www.ibef.org/download/Automotives_270111.pdf
• Dept. of Heavy Industry India
 http://www.dhi.nic.in/autopolicy.htm
• Society of Indian Automobile Manufacturers
 http://www.siamindia.com/scripts/market-share.aspx
• EMIS Emerging Markets
 http://site.securities.com/
• Federation of Automobile Dealers Associations
 http://www.fadaweb.com/two_wheeler_industry.htm
 http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/automobile.htm
• CMIE data base for November 2010
• World Bank Data
 http://data.worldbank.org/country/india
 http://india-reports.in/transitions/two-wheeler-segment-in-india/
 http://www.parsoli.com/budget_highlights_parsoli.pdf

• The Evolution and Structure of the Two-wheeler Industry in India

 By Sunila George, RaghbendraJha, Hari K. Nagarajan
• http://www.yamaha-motor-india.com/
• http://www.herohonda.com/
• http://www.tvsmotor.in/
• http://www.bajajauto.com/
•
 References

Strategy Management - 10P003 - 10P004

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Introduction

• Industry Chosen: 2 wheelers

• Efforts spent in whole exercise: Two Weeks

Business Model Environment – Assignment Framework

Competition: Industry Overview 3

Growth Stage : Decline Stage :

Introduction Stage : Maturity Stage :

Competition: Industry Overview (Contd.) 4

Competition: Industry Overview (Contd.)

Competition: Industry Overview 6

Bargaining power of Buyers Inter-Organization Rivalry Bargaining power of Suppliers

Competition: Porter’s Five Force Analysis

•Burgeoning middle class with increased

Context: Environmental Trends

the semi-urban and rural areas models

vehicles per 1,000 persons, as compared to 220 in Thailand and transportation

Market Segments Markets Players and Share

Bajaj Ltd : 27%

Customers: Possible Needs, Motivations, Segments

TVS Motors Yamaha Motors India

 Branches : Hosur, Mysore,Solan

Companies: Summary Fact Sheet

 Portfolio : Automobiles(2 wheelers), spares

Hero Honda: Overview

•2007: Commissioned t third plant at Haridwar

Company A: Evolutionary Trends

Technology Development: Product and Process Design, Testing, SAP, R&D,

Procurement: Material, Support Services, Advertising, Contracts

Value Chain Analysis

Sources: on last slide

for quality and ISO 14001 for environmental

managers. program for developing skills

from Japanese Counterparts compensates it with Technology import from

smooth transit of goods

Maintenance – technical competence.

Hero Honda: Distinctive Activities from Value Chain Analysis

Services Maintenance Warranty, Product Recall capabilities --

Hero Honda: Distinctive Activities from Value Chain Analysis

Better sale service

It has the highest share in automobile sector.

Low Debt company(Debt Equity ratio is 0.1)

Hero Honda: SWOT Analysis

Hero Honda: Business Model Framework

 Portfolio : Automobiles(2 wheelers), spares

Bajaj Auto: Overview

e. In 1977, it managed to produce and sell 100,000 vehicles in a single 1991-2000

Bajaj Auto: Evolutionary Trends

Procurement: Material, Support Services, Advertising, Contracts

Bajaj Auto :Value Chain Analysis

Sources: on last slide

will select a business partner belonging to a

Inbound Logistics Long term contract with service provider’s – transporters --

Operations Kaizen & TPM team – continuous drive to improve

Maintenance – technical competence.

Bajaj Auto: Distinctive Activities from Value Chain Analysis

Bajaj Auto: Distinctive Activities from Value Chain Analysis

Product design and development capabilities

Widespread distribution network. Splendor in commuter segment

Great financial support network (For financing the automobile) 

The growing gearless trendy scooters and scooterette market Cost)

Bajaj Auto: SWOT Analysis

Bajaj Auto: Business Model Framework