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A Project report on

Strategic Management Cycle of Bajaj Auto Ltd.

Submitted By:

In partial fulfillment of the requirements for the subject Strategic Management for the award of the degree of MBA

Submitted to: Prof. Dr. Jignasa Savalia

Declaration

The project report entitled “Strategic Management Cycle of Bajaj Auto Ltd. ” has been submitted to Gujarat Technological University, Ahmedabad in partial fulfillment for the award of degree of Master of Business Administration. I the undersigned hereby declare that this report has been completed by me under the guidance of Prof. Jignasha mam” (Faculty Member, Shayona Institute of Business Management, Ahmedabad)

The report is entirely the result of my own efforts and has not been submitted either in part or whole to any other institute or university for any degree.

Date:

Place: Ahmedabad

PREFACE
As it is always said that if you give some-one theory knowledge it will make person understandwell.But if you give some-one theory as well as practical knowledge then it will help the person to understand and remember that always. In the same way to get practical knowledge,the report which we prepare not only make us understand the various functions but also gives us different vision regarding them and along with it gives us experience of practical assignment and manager‘s work. By preparing report on Analytical Study on Strategic Management Cycle of Bajaj Auto Ltd. we have tried to develop skill to understand well and also how to implement theoretical knowledge work. For this we are thankful to Gujarat Technological University for including such a project as practical studies in the syllabus of M.B.A.

Acknowledgement

The succession completion of this report would not have been possible without co-operation and support of our professor , friends and our institute. We forward gratitude to respected director of our institute. We are heartily thankful to the management for providing us the opportunity to make a study to practical in their organization. We express our sincere thanks to the company who have given us all the information on-line. We are also thankful our professor out with whose help, this becomes possible and who provided full guidance, co-operation and valuable suggestion about company report. We are also thankful to our college friends and all those who have helped us directly or indirectly in the preparation of this report.

.Executive Summary In our project we have conducted a research on how bajaj auto ltd works By using stretegic management & their different moves. Hence on the basis of the Information we have found out our finding and have done an in-depth analysis on Strategic Management Cycle of Bajaj Auto Ltd. It is followed by recommendations and conclusion.. .

Vision ii. Strategic Thinking i. Business Partners. Public Activities. 3. 4. innovation. Strategic Evaluation i . the environment. ii. Action plan by ABC Co. History of ABC Co. Law. Corporate Purpose iv.Michael Porters 5 Forces analysis v. Mission iii. business integrity etc. iii . Values: (Standard of Conduct. Strategic Implementation i. Community Involvement. PEST Analysis viiiBCG MATRIX 6.TABLE OF CONTENTS 1. vii. Introduction of ABC Co.Balance Scorecar . Consumers. SWOT Analysis of ABC Co. Strategy adopted by ABC Co. Resource Allocation 7. competition. Employees. – CSR (Internal as well as External) iv .Responsibilities of ABC Co.) 5. Shareholders. Objective of SM 2. McKinsey‘s7S Model vi. Strategic Planning i.Analysis of Strategies of ABC Co 7.

simply because there is no way of determining whether it is helping the organization to move toward the organization‘s mission and vision.1. on the other hand. they help to provide guidance on how the organization can fulfill or move toward the ―high goals‖ in the goal hierarchy-the mission and vision. OBJECTIVE OF SM : Statements of vision tend to be quite broad and can be described as a goal that represents an inspiring. As a result. That is. overarching. tend to be more specific and address questions concerning the organization‘s reason for being and the basis of its intended competitive advantage in the marketplace. Mission statements. Mission statements. . they tend to be more specific and cover a more well-defined time frame. Statements of vision tend to be quite broad and can be described as a goal that represents an inspiring. If an objective lacks specificity or measurability. overarching. As a result. and emotionally driven destination. they tend to be more specific and cover a more well-defined time frame. they help to provide guidance on how the organization can fulfill or move toward the ―high goals‖ in the goal hierarchy-the mission and vision. on the other hand. Strategic objectives are used to operationalize the mission statement. and emotionally driven destination. tend to be more specific and address questions concerning the organization‘s reason for being and the basis of its intended competitive advantage in the marketplace. That is. Setting objectives demands a yardstick to measure the fulfillment of the objectives. Strategic objectives are used to operationalize the mission statement. . it is not very useful.

wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America. The group's flagship company. travel and finance.72 million to INR. Its footprint stretches over a wide range of industries. The integrity. Rahul Bajaj. the group has an illustrious history. lighting. Under his leadership. spanning automobiles (two-wheelers and three-wheelers). the turnover of the Bajaj Auto the flagship company has gone up from INR. Kamalnayan Bajaj not only consolidated the group. took over the reigns of business in 1942. Gandhiji had adopted him as his son. are often traced back to its birth during those days of relentless devotion to a common cause. Africa. Jamnalal Bajaj.2. home appliances. He too was close to Gandhiji and it was only after Independence in 1947. Bajaj Auto. dedication. Kamalnayan Bajaj. Middle East. He is one of India‘s most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit. that he was able to give his full attention to the business. South and South East Asia. at the height of India's movement for independence from the British. but also diversified into various manufacturing activities. its product portfolio has expanded and the brand has found a global market. insurance. then 27. Founded in 1926. INTRODUCTION OF BAJAJ GROUP : The Bajaj Group is amongst the top 10 business houses in India. 120 billion. In fact. was a close confidant and disciple of Mahatma Gandhi. resourcefulness and determination to succeed which are characteristic of the group today. founder of the group. His son. . took charge of the business in 1965. iron and steel. The present Chairman of the group.and three. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture. is ranked as the world's fourth largest two.

and three-wheelers.It has total 3750 rural outlets in rural areas. Caliber. Navi Mumbai. It has technical tie up with Kawasaki Heavy Industries of Japan to manufacture latest models in the two-wheeler space.Bajaj Auto obtained the licence from the Government of India to manufacture two. The company has opened 11 retail stores for bikes across the country.and three-wheelers. It has opened these stores under the name ?óÔé¼?ôBajaj Probiking?óÔé¼?Ø in cities like Pune. It has a distribution network in 50 countries with a dominant presence in Sri Lanka. Central America. 1972.The company introduced its three-wheeler goods carrier. Chennai. exclusive for high-end and performance bikes.Bajaj range of motorcycles Pant Nagar . Colombia.The company introduced Bajaj Chetak. Pulsar and many more. In India.3. It has also launched India's first real cruiser bike. The company is into manufacturing of motorcycles. It is world?óÔé¼Ôäós fourth largest two. Bajaj Auto has three plants in all. western India. two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttaranchal. Chandigarh. Hyderabad. two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttranchal.and three-wheeler manufacturer.000th vehicle. Kolkata.The company commenced sales in India by importing two. It has 171 exclusive dealers for the three-wheeler segment . Kawasaki Bajaj Eliminator. 1970. .Bajaj Auto rolled out its 100.On November 29 Bajaj Auto came into existence as Bachraj Trading Corporation Private Limited. Bajaj Auto has a distribution network of 485 dealers and over 1. Ahmedabad.HISTORY OF BAJAJ AUTO LTD Bajaj Auto is a $2. New Delhi. Peru and Egypt. scooters and three-wheelers. The Bajaj brand is well-known across several countries in Latin America. South and South East Asia. Middle East.The company became a public limited company and conducted Bhoomi Poojan of the Akurdi Plant.Bajaj range of motorcycles Achievement        1945. 1959. 1960.    Waluj . Wind125. 1948. Bangladesh. Faridabad and Mangalore. Bajaj Auto's has in all three plants. Mexico.600 authorised services centres. Bajaj Auto has launched brands like Boxer.3 billion company founded in 1926. Africa.Bajaj range of motorcycles and three-wheelers Chakan . Nashik. 1971.

2008. 1997.The company commenced production at Chakan plant.The Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles were introduced. logo and brandline.000 vehicles in a single financial year.Bajaj Platina was launched. The company commenced production at Waluj.On November 29.000 vehicles in a single financial year. Aurangabad. 1977. Bajaj Auto turned into a 50-year old company. 1991. 1984. Bajaj XCD 125 DTS-Si. 2005. Bajaj unveiled new brand identity. The company produced and sold 500. .000 sales in record time of 12 months. It rolled out Kawasaki Bajaj Caliber from its Waluj plant. Aurangabad in a record time of 16 months. new Bajaj Chetak 4-stroke with wonder gear and Bajaj CT100 were launched. 200 cc Pulsar DTS-I and Bajaj Kristal DTS-i were launched. 1998. The Bajaj Super Excel is introduced while Bajaj celebrated its ten millionth vehicle.Bajaj Discover.On January 19. 2001. The same year one million vehicles were produced and sold by company in that financial year. It launched its Caliber115 'Hoodibabaa!' in the executive motorcycle segment. The company launched Bajaj Wind 125. 1999. the foundation stone laid for the new plant at Waluj. The company sold 107. Giani Zail Singh. Bajaj Auto launched Legend.115 motorcycles in a month.The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw are introduced. new symbol.Bajaj Auto launched Bajaj M-50. India's first four-stroke scooter from Akurdi plant. 2003.Bajaj Discover DTS-I.Bajaj Pulsar DTS-i was launched.The company launched Bajaj Saffire.Caliber motorcycle notched up 100. 2000. It signed agreements with Kubota of Japan for the development of diesel engines for three-wheelers and with Tokyo R&D for ungeared scooter and moped development. The company also underwent through revamping of its organisational structure.Bajaj Platina 125 DTS-Si was launched. 1985.The company introduced Bajaj Super. The same year Spirit was launched.The company introduced Kawasaki Bajaj 4S Champion.It launched Bajaj Classic.On November 5. 1976. 1995. 1986. 2007.Bajaj Auto & Maharashtra Scooters entered into a joint venture. 2004.RE GDi autorickshaw. 2006. 1981.Bajaj Auto introduced rear engine autorickshaw and achieved production and sales of 100.                      1975. Bajaj Pulsar 220 DTS-Fi. the Waluj plant inaugurated by the erstwhile President of India. The World Bike in India. Bajaj Avenger DTS-I and Bajaj Wave DTS-I were introduced.Bajaj Auto launched its latest offering in the premium bike segment 'Pulsar'. The same year Eliminator was launched. 1994. 1990.The Bajaj Sunny was introduced.

Bajaj was appointed by the Government of India the Chairman (198689) of the Government owned domestic carrier.April. notable being the award of 'Padma Bhushan' by the Government of India in 2001. He was elected to the Upper House of Parliament (Rajya Sabha 2006 . Mr. special alloy and stainless steel. Bajaj Auto Limited.Bajaj Pulsar 150 & 180 upgrade and Bajaj XCD 135 DTS-Si were launched 2011. consumer finance & asset management. Mr. Bajaj was the President of Confederation of Indian Industry (CII 1979-80/1999-2000). Industry And Agriculture (MCCIA) and Chairman of the Development Council for Automobiles and Allied Industries. Mr. Mr. infrastructure development.  2009. Bombay during 2003-06. material handling equipment. Bajaj is the Chairman of the Board of many companies. wind energy. home appliances. June 10. a degree in Law from Bombay University and an MBA from Harvard Business School. Bajaj was nominated by the President of India the Chairman of the Board of Governors of the Indian Institute of Technology. forgings. cranes. Bajaj (b. travel. general and life insurance and investment. The Project Report On Strategic Leaders Page 4 Mr. Bajaj was appointed Knight in the Order of the Legion of Honour by the President of the French Republic. Bajaj Records its best year ever of 2010. Mr. Indian Airlines. He was President of Society of Indian Automobile Manufacturers (SIAM) and Mahratta Chamber of Commerce. Mr.2010). Mr. Bajaj has been conferred Honorary Doctorates by 7 Universities including IIT Roorkee. Ernst & Young and CNBC TV18. Bajaj has received many prestigious awards and recognitions. Geneva and a Member of Harvard . Mr. electric lamps. Mr. Alumni Achievement Award by the Harvard Business School and Life Time Achievement Awards from Economic Times. Bajaj holds an Honours Degree in Economics from Delhi University. HISTORY OF RAHUL BAJAJ Rahul Bajaj Chairman. He heads the Bajaj Group of Companies which is a leader in a variety of manufactured products and financial services in India and abroad including motorized 2 and 3-wheelers. Bajaj is a Member & former Chairman of the International Business Council of the World Economic Forum. 38) is recognized as one of the most successful business leaders of India.

Bajaj Auto Finance Ltd. Hind Lamps Ltd. . Bajaj Sevashram Pvt. The companies in the group are: Bajaj Auto Ltd. Mukand International Ltd. Mukand Ltd. P T Bajaj Auto Indonesia (PTBAI) Bajaj Auto International Holdings BV Bajaj Electricals Ltd. Bajaj Allianz Life Insurance Co. a large hospital in Pune as their Chairman. Ltd. Hercules Hoists Ltd. Ltd. Bajaj spear-heads the CSR initiatives of the Bajaj Group which include Jamnalal Bajaj Foundation and Shiksha Mandal and a number of social organizations including Bharatiya Yuva Shakti Trust and Ruby Hall Clinic. Mr. Ltd. Bajaj Finserv Ltd.Business School's Global Advisory Board. The Project Report On Strategic Leaders Page 6 Rahul Securities Pvt Ltd Shekhar Holdings Pvt Ltd Madhur Securities Pvt Ltd Niraj Holdings Pvt Ltd Shishir Holdings Pvt Ltd Kamalnayan Investments & Trading Pvt Ltd Sanraj Nayan Investments Pvt. The group comprises of 34 companies and was founded in the year 1926. BAJAJ GROUP OF COMPANIES Bajaj Auto is the flagship of the Bajaj group of companies. Ltd. Ltd. Bajaj International Pvt. Bajaj Ventures Ltd. Bajaj Holdings & Investment Ltd. Washington DC and a Member of the Executive Board of Indian School of Business. Bajaj Allianz Financial Distributors Ltd. Mukand Engineers Ltd. Bajaj Auto Holdings Ltd. Jamnalal Sons Pvt. He is also a Member of the International Advisory Council of the Brookings Institution. Ltd. Bajaj Allianz General Insurance Company Ltd. Bachhraj Factories Pvt. Hind Musafir Agency Pvt. Ltd Bajaj Financial Solutions Ltd.

The Bajaj group focus the people demand and launch the product so they are easy to fulfil the local demand as well as the international people . Bachhraj & Co Pvt Ltd The Hindustan Housing Co. Hospet Steels Ltd 4. STRATEGIC THINKING : MISSION AND VISION : Bajaj doesn't have a straight vision or mission statement. EXPLATIONAL THE STATEMENT : As per the mission and vision statement the Bajaj group try to focus its brand identity and try to improve the brand in national and international level. Ltd. They define it in terms of brand identity. Ltd.Baroda Industries Pvt. brand essence (derived from mission) and brand values. Jeevan Ltd.

. and decisive actions. I n 1960. Brand Essence : Brand Essence is the soul of our brand. It is the singular representation of our terms of endearment with our customers. Perfection. Learning : Learning is how we ensure proactivity. our Brand Identity is shaped as much by their belief in Bajaj as it is by our own vision. Blending together youthful creativity and competitive technology to exceed the spokenand the implicit expectations of our customers. Brand Identity : Brand is the visual expression of our thoughts and actions. Our Brand Essence is Excitement. It provides the basis on which we grow profitably in the market. Speed and Transparency. Indeed. Our customers are the primary audience for our brand. It is a value that provokes us to reach beyond the obvious in pursuit of that which exceeds the ordinary. Bajaj Auto Limited was one of the first companies to introduce two wheelers in India.Bajaj will constantly inspire confidence through excitement engineering. By exploring the unknown and thereby stretching ourselvestowards tomorrow. It is a value that embraces knowledge as the platform for building well informed.demand. Innovation. It conveys to everyone our intention to constantly inspire confidence. Everything we do must always reinforce the distinctiveness and the power of our brand. Bajaj strives to inspire confidence through excitement engineering. today. Brand Values : We live our brand by its values of Learning. Innovation : Innovation is how we create the future. when bicycle was still the primary means of transport in india . We can do this by living our brand essence and by continuously seeking to enhance our customers‘ experience. By challenging the given. In doing so. reasoned. brand essence encapsulates our mission at Bajaj. we ensure a special place for ourselves in the hearts and the minds of our customers.

SNS with unmatched industry performance. of trust through sensitivity and of lo yalty through interdependence. mirroring our commitment towards our goals and processes. To aim to become market leaders in whatever we take up for marketing – whether in restricted areas for certain products or on an All-India basis for others. marketing and administrative functions. Fast forward to 2012 and Bajaj is a two wheelers giant with presence in more than 40 countries and boasting revolutionary technologies like DTSi. Perfection : Perfection is how we set new standards. To know more about the different technologies. exhaustec. It is a value that keeps us sharply responsive. To be sensitive and responsive to changing customer needs right from product development stage to after-sales-service. Transparency Transparency is how we characterise ourselves. glance through the different sections. PRICE COMPETITIVENESS To improve our competitiveness by constantly enhancing the performance of our manufacturing. MARKET LEADERSHIP : To provide quality. . We would like to improve our profits by higher market share rather than by higher margin. Speed Speed is how we convey clear conviction. development. It is a value that makes us worthyof credibility through integrity. It is a value that exhibits our determination toexcel by endeavoring to establish new benchmarks all the time. reliability and good value in the products we sell and services we offer.Forward to the 1980s and again Bajaj becomes one of the first companies to introduce motorcycles in India. LONG TERM GOALS.

To see that the fruits of prosperity are shared by those who have contributed in the prosperity of the company. ETHICAL DEALINGS To conduct the company‘s affairs with honesty and integrity. We are committed to five groups of people and we cannot reduce the emphasis of obligations and responsibilities on any of them. We have already established a consumer cell to take care of consumer complaints as also desired by the council for FAIR Business Practices. so that the customer‘s needs are met simply and effectively. . Services should not just be a slogan. We have to see that they earn reasonable profits from dealings with us.CONSUMER SATISFACTION To develop the right relationship between the Company and all its customers. The Project Report On Strategic Leaders Page 11 SOCIAL RESPONSIBILITY To discharge our responsibility to people. SUPPLIERS They are our backbone. To create an atmosphere that will encourage best of talent talent to join our company. We should also assure them satisfactory growth so that they also prosper with the prosperity of the company. DEALERS To motivate them by offering quality products at reasonable prices. it should be our ‗Dharma‘. We must create conditions for them in which they would like to establish long term relationship with us. PEOPLE To offer growth and encourage promotion from within by proper training and motivation. People at every level will be expected to adhere to high standards of business ethics. We must make such policies that will improve the profits of our dealers.

ACTION ORIENTATION To be on our toes and always dynamic whether markets are good or bad. There should be no place for demoralization and frustration if the markets are bad or for complacency or lethargy when they are good. We should not The Project Report On Strategic Leaders Page 13 be satisfied with our past achievement but strive for higher and better performance like a real ―Karma yogi‖. . Awareness to profit has to be strengthened and percolated at all levels. TECHNICAL SUPERIORITY To develop our Company in technical orientation so that we sell our products on the basis of technical superiority. The emphasis on quality is not to be restricted to our products and our services only. People at all levels-whether they are employees or vendors. or dealers – should be made to consider ―quality as a way of life‖. QUALITY CONSCIOUSNESS To perpetually strive to improve the quality where there is to be no compromise. CONSUMERS To ensure that our customers are kept satisfied through good quality products at reasonable price and proper after-sales-services. PROFIT AWARENESS To earn reasonable profit is extremely essential for discharging our obligation to any of the above five groups of people. but to all spheres of our activities. since each person is expected to and must contribute to increasing the profitability of the Company.SHAREHOLDERS To assure them proper growth and return for their trust in us by investing their money in our company.

where each person is motivated and assisted to give out his best. .EXCELLENCE CULTURE To develop a culture where mediocrity is neither accepted nor tolerated. To create conditions where each person is striving to surpass his earlier best.

. Not a globally recognizable brand (unlike the JV partner Kawasaki) Threats:     The competition catches-up any new innovation in no time. Product design and development capabilities. High export to domestic sales ratio. Great financial support network (For financing the automobile) High economies of scale. threats and opportunities available. evaluating its strengths. Strengths:          Highly experienced management. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes.5. High economies of scope. Widespread distribution network. Threat of cheap imported motorcycles from China Margins getting squeezed from both the directions (Price as well as Cost) TATA Ace is a serious competition for the three-wheeler cargo segment. Weaknesses:      Hasn't employed the excess cash for long. High performance products across all categories. Extensive R & D focus.STRATEGIC PALNNING : SWOT Analysis: Let's analyze the position of Bajaj in the current market set-up.weaknesses.

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 markets.

Buyer's Bargaining Power: Buyers in automobile market have more choice to choosefrom and the increasing competition is driving the bargaining power of customers uphill. the mark et forces haveempowered the buyers to a large extent.With more models to choose from in almost all categories. Proper supply chain management is a costly yet critical need. .PORTER’S FIVE FORCES ANALYSIS: Supplier Bargaining Power: Suppliers of auto components arefragmented and are extremely critical for this industry since most of the component work isoutsourced.

The three CEO‘s will be responsible for Top line. VP. who was VP-Engineering prior to restructuring. Pradeep Srivastava. will now be President. RC Maheshwari has joined Bajaj Auto as CEO Commercial Vehicles. As per the reorganized structure the company will have three CEO‘s. Sridhar. The company is in the process of identifying a CEO for its International Business. . Substitutes: There is no perfect substitute to this industry. Business Growth & profitability of their respective businesses. currently. Abraham Josephwill continue to lead Research & Development. The five pillars of this new structure (Strategic units) are R&D. Managerial Style: Off late Bajaj Auto Limited. has emphasiseda lot on organizational restructuring for the Auto business. HR. Cars. which again are a mode of transport. MIS. .cycles donever even compete with the low entry level moped for even this choice comes at acomparatively higher economic potential. With thisrestructuring. These pillars will be supported by functions of Finance. Also. and Commercial Vehicles Business Unit & International Business Unit. S.Engineering. . Two Wheeler Business Unit. Mktg. Engineering. do never directly compete or come in consideration while selecting two-wheeler . & Sales Two-Wheelers. will now head the Two Wheeler Business Unit as CEO with manufacturing operations at Waluj and Akurdi also reporting to him. Bajaj has presence in it.the existing business roles and responsibilities at the compay has beenstrengthened and enhanced to ensure greater operational empowerment and effective management. Business Development and Commercial. India‘s premier automotive company. if there is any substitute to a two-wheeler.Industry Rivalry: The industry rivalry is extremely high with any product being matchedin a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players.

Its customers liked the durability of the product and the ready availability of maintenance. Bajaj Auto had built up several advantages in the previous decades. the Kawasaki Bajaj 4S Champion . Afterward. companies like rival Lohia Machines had difficulty meeting demand. The Bajaj group try to focus lower class people and produced product.Although some boasted superior technology and flashier brands. West Germany. Rahul Kamalnayan Bajaj. the company's distributors permeated the country. The new fuel-efficient. BUSINESS LEVEL STRETEGYEND OF LICENSE RAJ The Bajaj Sunny was launched in 1990. Bajaj Auto's advance orders for one of its newminimotorcycles amounted to $57 million. Aura ngabadcommenced in January 1984. The Bajaj M-50 debuted in 1981. Work on a new plant at Waluj.000 vehicles a year at this point.000 in 1982. and the company aimed to be able to make 60.Honda has overtaken Bajaj as India's No.maker of the Vespa brand of scooters. United Kingdom. Bajaj's scooter exports plummeted from Rs 133. Bajaj Auto is facing increased competition from Honda and Piaggio. 66.000 vehicles in 1976 to 600. and Hong Kong. In 1987 his attempt to buy control of Ahsok Leyland failed.although total revenues rose five percent to Rs 1.BAJAJ GROUP STRETEGY : The Bajaj Group is one of best and oldest group of India. The company was making 500. he did attempt to diversify into tractor-trailers. filed patent infringement suits to block Bajaj scooter salesin the United States.2 million in 1980-81 to Rs 52 million ($5. New Competition in the 1980s : Japanese and Italian scooter companies began entering the Indian market in the early 1980s. to Rs63 million. Rajiv. So as per this detail the Bajah adopt because it deals with product market.The 1986-87 fiscal year saw the introduction of the Bajaj M-80 and the Kawasaki Bajaj KB100motorcycles. 50cc motorcycle was immediately successful.4 million) in 1981-82. Although the country's total production rose from 262. Piaggio. Rahul Bajaj will continue as the chairman of the Bajaj conglomerate. Capacity was the most important constraint for the Indian motorcycle industry.1 scooter maker in the past two years.000 of them a year by 1985.16 billion. Although Rahul Bajaj credited much of his company's success with its focus on one type of product. The technical collaboration agreement with Piaggio of Italy expired in 1977. has stepped down as managing director of Bajaj Auto passing onthe mantle of the company to his eldest son. Pretax profits were cut in half.

The company spent Rs 7. was slowly slipping. The company was theworld's fourth largest manufacturer of twowheelers. which then amounted to just five percent of sales.By 1994. and West Asia. but my net profit is still more than the next four biggest companies combined. Bajaj began installing Rs 800 catalytic converters to its two-stroke scooter models beginning in 1999. barely less than 50 percent. The company invested in its new Pune plant in order to introduce new models more quickly. New models included the Bajaj Classic and the Bajaj Super Excel. The Caliber sold 100. It was hoping to increase its exports.Although its domestic market share continued to slip. and the Legend. Latin America.' stated the company's marketing slogan.000. Itsdomestic market share. doing away with the old 'license raj' system. Bajaj also was contemplating high-volume. which was being rapidly liberalized by theIndian government.followed a year later. NEW TOOLS IN THE 1990S Still.6 million) to produce two new models. behind Japan's Honda. low-cost cycles were not faring as well as its rivals' higher-end offerings. Bajaj'smost popular models cost about Rs 20. particularly in highpowered motorcycles. in . in fact. 'You just can't beat a Bajaj. Bajaj's low-tech.5 billion ($185 million) on advanced. Suzuki.000 units in its first 12 months. The next year saw the debut of the Kawasaki Bajaj Caliber. the Spirit. Bajaj also signed development agreements with two Japanese engineering firms. andKawasaki. computer-controlled machine tools. In fact. Kubota and Tokyo R & D. Several of Bajaj's rivals were looking at this market as well. India's first four-stroke scooter. It would need new models to comply with the more stringent emissions standards slated for 2000.Bajaj Auto produced one million vehicles in the 1994-95 fiscal year.5 percent. lowcost car manufacture. Bajaj Auto's profit sincreased slightly at the end of the 1997-98 fiscal year. Rahul Bajaj was able to boast. Africa. one to be developed in collaboration with Cagiva of Italy. intense competition was beginning to hurt sales at home and abroad during the calendar year 1997. falling to 40. but soon was reaching markets in Europe. Thecompany began by shipping a few thousand vehicles a year to neighboring Sri Lanka andBangladesh. The Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw were introduced in 1997. About this time. which limited the amount of investment any one company could make in a particular industry. Bajaj was planning to buildits third plant at a cost of Rs 4 billion ($111. since poorer consumers were with standing the worst of the recession. 'My competitors are doing well.' Hero Honda was perhaps Bajaj's most serious local threat. the Indian government was initiating a program of market liberalization.

Kubota (diesel engine s)... Most of the Bajaj models comeloaded with the latest features within the price band acceptableby the market.. Hisson..000 workers inthe short term and another 3. Sales of three-wheelers fell as some states. Mukand Ltd. which was looking to sell some shares after turning the company around. Bajaj Auto Holdings Ltd. 'Honda's annual spend on R & D is more than my turnover. Honda Motor of Japan announced that it was withdrawing from this joint venture.. Principal Competitors: Honda Motor Co. and a surge in consumer confidence. The Italian firm had exited a relationship with entrepreneur Deepak Singhania and was looking toreenter the Indian market. REVAMPING THE DESIGN Bajaj Auto had quadrupled its product design staff to 500. It also acquired technology from itsforeign partners.These. Sangiv Bajaj. including a seat on the board and an exclusive Piaggio distributorship in India.000 in 1995-96 (the year Bajaj suffered a two-month strike at its Waluj factory) to 17. Piaggio SpA The Project Report On Strategic Leaders Page 21 Marketing Strategies: The focus of BAL off late has been on providing the best of the class models at competitive prices. Maharashtra Scooters Ltd. Employment fell from about 23.. citing traffic and pollution concerns. Suzuki Motor Corporation.' noted Ruhal Bajaj. and it began to regain market share in the fast-growing motorcycle segment. The company planned to lay off another 2. A marketing executive was lured from TVS Suzuki to help push the new The Project Report On Strategic Leaders Page 20 cycles. and Cagiva(scooters). BAL has been the pioneer in stretchingcompetiti . Deutsche Morgan Grenfell (DMG).thefall of 1998. Principal Subsidiaries: Bajaj Auto Finance Ltd. Piaggio itself had been mostly bought out by a German investment bank. possibly through acquisition. was working to improve the company's supply chain management. Bajaj Hindustan Ltd. Bajaj attached several conditions to his purchase of a minority share. Ltd. Bajaj Electricals Ltd. Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999. limited the number of permits issued for them. SHARE IN COMPETITOR In late 1999.000 in the following three to four years.000 in 1999-2000. Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million.. propelled Bajaj to sales records. such as Kawasaki (motorcycles).

25-plus.executive segment bike buyer). Pulsar Pulsar was launched in direct competition to the HeroHonda's 'CBZ' model in 150 cc plus segment.BAL now is taking a leaf out of the FMCG business model to take the company to greater heights. high ground clearance and high mileage were theselling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100. The time at which Kawasaki 4S was launched HeroHonda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. anti-skid technology and dual suspension. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model. Bajaj has kicked off a project to completely restructure . the teaser campaign and the emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle for the college-goers and the 25 plus executives do that the same time. the campaign was clearly a hit in the 5-10 years age bracket. Boxer It took the reins from where the Kawasaki 4S left. Going by the initialmarket response.on into providing latest features in the price segment byup dating the low price bikes with the latest features like disk-brakes. The Project Report On Strategic Leaders Page 22 Caliber – The focus for the Caliber 115 was youth. Bajaj could realize its success riding on the back of technological innovation rather than the joint venture way followed by competitors to gain market share. The target customer was the father in the family but the target audience of the commercial was the son in the family. Boxermarketed as a value for money bike with great mileage. picking them from the clique of three agencies that do promos for the company (theother two being Leo Burnett and O&M).BAL adopted different marketing strategies for different models . Target was the rural population and the price sensitive customer. etc. And though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics that will attract the average. Largerwheelbase. With this. The model was a great success and has already crossed 1 million mark in sales.few of them are discussed below: Kawasaki 4S First attempt by bajaj to make a mark in the motorcycle segment. So. The campaignbeared in novative punch line of "Definitely Male" positioningPulsar to be a masculine-looking model with an appeal to the performance sensitive customers. its approach towards advertising is even more radically different this time around. Bajaj gave the man date for the ad campaign to Lowe. The Project Report On Strategic Leaders Page 23 Discover The same DTSI technology of Pulsar extended to 125cc Discover was a great success.

The bajaj already sale its new product 50cc fuel efficient motorcycle. is being sold by the same dealers. New Competition in the 1980s ( adopt synergistic strategy alliance) Japanese and Italian scooter companies began entering the Indian market in the early 1980s. distribution and even after-sales service are completely different in the rural areas and do not makes sense for city dealers tocontrol this. the company adopt changing policy to develop its business. Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. BajajAuto's entire product portfolio.S . With the help of this strategy company try to sale maximum product in the domestic market and create the brand value. The bajaj always try to maintain its product selling and its profitability. The needs of financing.the company's retail network and create multiple sales channels. Germany The bajaj group earning at that time is Rs. .K. So we can see taht at the changing time the company change its product . the company will set-up separate for every segment of its business and consumers.. The restructuring willinvolve separate dealer networks catering to the urban and ruralmarkets as well as its threewheeler and premium bikessegments. The bajaj successful in management decision and easy to increase sales in outside of India. U. selling. Over the next few months. The company made 500000 bike in a year.20 million.133. After 1981 Bajaj launch MK100cc bike. Both company joint hand and launch new product in domestic market or foreign market. from the entry-level to thepremium. EXPLATION OF BAJAJ STRETEGY Before 1980s ( adopt International strategy) After the completion of Piggio agreement the Bajaj group export its product scooter to another countries like U. The company also plans to set-up exclusivedealerships for its three-wheeler products instead of having them sold through an estimated 300 of its existing dealers. In this strategy two company joint hand and produced new product in market and increase the brand name. END OF LICENSE RAJ (adopt Business level Cooperative strategies) The government of india decided outside company easy to collaborate that business to the Indian company so the bajaj group joint hand to Japanese company KAWASAKI to launching new bike in india and outside india.

was working to improve the company's supply chain management. The benefit of the bajaj company easy to collect worker to its own plant and also in Piaggio India‘s worker also work in Bajaj so the overall production maintain easily. EW TOOLS IN THE 1990S ( adopt Corporate Relatedness) 'Honda's annual spend on R & D is more than my turnover. the Spirit. The Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw were introduced in 1997. It is called EQUITY STRATEGIC ALLIANCE.6 million) to produce two new models. one to be developed in collaboration with Cagiva of Italy.These. In the business level cooperative strategy two company shared their resources and reached the product. The company adopt Business level Cooperative strategies. A marketing executive was lured from TVS Suzuki to help push the new cycles. Sangiv Bajaj. His son. The Caliber sold 100. limited the number of permits issued for them.' noted Ruhal Bajaj. India's first four-stroke scooter. propelled Bajaj to sales records. At this time SUZUKI and HONDA came in Indian market. Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million. The Bajaj capture market and the brand name is very popular and famous so the company launch and new product easy to sale there product in market it is called The Project Report On Strategic Leaders Page 26 corporate relatedness. SHARE IN COMPETITOR (adopt Equity Strategic Alliance) In late 1999. and the Legend. In this strategy the engine and bikes design made by Kawasaki and launches the new product. Because at that time the design made by KAWASAKI. and it began to regain market share in the fast-growing motorcycle segment. The . The next year saw the debut of the Kawasaki Bajaj Caliber. The benefit is the customers not identify the product because the products given parent brand name. Other Strategies apply by Bajaj LOW COST STRATEGY The Bajaj famous for its scooter and bike in india and outside of india.The KAWASAKI was famous Japanese company for technology and manufacturing engine. and a surge in consumer confidence. In this strategy one company purchase some percentages holding in another company and try to produced product and sale in the market. Bajaj was planning to buildits third plant at a cost of Rs 4 billion ($111. citing traffic and pollution concerns. Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999.000 units in its first 12 months. Sales of three-wheelers fell as some states.

g. For e. This Strategy is called low cost strategies. After all. Eicher Motors. 1 in technology. are as under. "One day BAL will have to come back to scooters but I am sure it will be a premium product. I tell my father it's not as if we have given up on that metric. a combination of a presence in the mass market for bikes — at the higher end — coupled with a scooter portfolio will go a long way in closing the gap with leader Hero MotoCorp. and Rajiv is at pains to point out that it is not a me-too product. "We need to take the longer route to that [to become No.. he second milestone of the "longer route" is unlikely to appear in the sshort to medium term. more power. in profitability. features and styling. BAL recently launched the 100 cc Discover T in this segment. DIFFERTIATION STRETEGY Bajaj try to innovative its product so they are changing bikes engine and manufacturing fuel efficient bike. Bajaj Discover is Fuel efficient bike. The products details of Bajaj auto ltd." The Scooter Segment The "longer route" Rajiv is talking about involves a re-entry into the entrylevel market. more space etc. which accounts for 65% of the bike market.the only bit that remains is to be a leader in volumes.." says RL Ravichandran.Bajaj focus rural area and try to manufacturing low cost bike ( Bajaj Platina) so they are easy to sale its product in the market. a former marketing honcho at the Puneheadquartered two-wheeler maker. With scooters growing at a healthy clip of 18. Rajiv says he "may" return to scooters. Bajaj Pulser is more powerful bike and Bajaj Avenger is famous for space. in market cap. Rajiv's answer on many such days is: "We are No. executive director. but only after BAL reaches a "dominant" global share in bikes — from 10% today to 30% or even 40%. . Bajaj try to provide innovative product to its customers. we're just taking the more profitable road there. and high on fuel efficiency. in exports. and "more expensive than the most expensive product" in the 100-cc segment." A few days ago.. 1 in volumes] because only in mathematics is a straight line the shortest distance between two points. The details of low cost strategy with example are as under. the 46-year-old CEO told this writer. but a well-differentiated one with superior power. there's adequate reason for the chairman (Rahul Bajaj) and board members to gently nudge Rajiv towards scooters. a point at which BAL may feel there is little headroom left to grow the motorcycles business.4% in fiscal year 2013 — faster than the 0.77% motorcycles are plodding at — and everybody from Honda to Hero MotoCorp to Mahindra & Mahindra scoring healthy gains in this segment.

senior vice-president. Keeping in line with its growth target for the next 5 years. It promises double the mileage as compared to any car in the economy segment and is also considering the option of introducing Diesel and LPG variants." Adds YS Guleria. sales & marketing at Honda Motorcycle & Scooters India (HMSI): "You can take an Indian out of the scooter market but not a scooter out of an Indian heart." The Project Report On Strategic Leaders Page 31 Strategy or U-turn? FOCUS STRETEGY As per the details of differentiation strategy the bajaj auto adopt focus group strategy in this strategy the Bajaj group focus the class of people and then after they launches its product so they are easy to fulfil the demand of customers. This is a significant move because it directly competes with Tata NANO.Says Anil Dua. you have to be both in 100cc bikes and scooters. Hero MotoCorp: "If you want to be a significant player in India. The four wheeler segment will also be able to hedge any risk that might arise because of the two wheeler industry and would profit from retaining consumers switching from two wheelers. Scooters account for 20% of the two-wheeler market and 100 cc accounts for 65% of the bikes market. vice-president. Bajaj is virtually absent in this range that caters to the needs of women and families. Scaling Up Service Centers BAL needs to scale up its service centers both in numbers and in capacity. Focus on Gearless Scooters The market share of gearless scooters is increasing at a healthy rate. sales & marketing. The Project Report On Strategic Leaders Page 36 . Entry into Four Wheeler Segment Bajaj has entered into a joint venture with Renault-Nissan in the development of a small car priced at $30004. Presently Honda. Bajaj has also displayed its small car prototype in the recently held auto expo. Scooters are now selling in the commuting segment and in terms of mileage are comparable to motorcycles. its service centers should not only cater to two wheelers but should also be upgraded to cater to the needs of four wheelers that Bajaj plans to launch. Hero Honda and TVS are big players in this segment.

Bajaj insurance in coming up with schemes that will help consumers buy two wheelers on friendly terms. cult brand image and strong product line-up. Disbanding of Dedicated Sales Force for each Product Because of the differentiation in the products that Bajaj currently possesses and is expected to launch in the near future we recommend Bajaj to discontinue its current strategy of dedicated sales force for each product line.S. it should definitely target global markets.U. Bajaj is present in over 50 countries all over the globe Dominant presence in Africa. Bajaj has successful in INTERNATIONAL STRETEGY because they have easy to capture Indian market. This would eventually achieve synergies in selling thereby leading to a reduction in costs INTERNATIONAL STRETEGY Bajaj also adopt international strategy because bajaj sale its motorcycle and scooters in outside of india. By doing so. In international strategy company compulsory successful in domestic market than after he enter the foreign market. With the help of international strategy company expand its brand name and customer easy to identify the products of bajaj. A movement is seen in this direction since it is focusing on the British cult bike company. With the help of international strategy the bajaj auto sale its product in U..Focus on Easy Credit Lending In the present economical crisis. Triumph. They have to introduce efficient and powerful bikes as well as develop alternate energy vehicles. In The international strategy.K. Triumph as its target takeover. Bajaj needs to invest heavily in R&D. is an attractive target for the Pune based firm. As set up cost and export costs are extremely cheap in China. Focus on Exports and Global Market Bajaj Electricals has already setup a manufacturing unit in China. Bajaj can utilize low cost exports. and other countries. Bajaj can utilize its subsidiary. we recommend the same strategy for BAL.. In order to increase market share and become the market leader. Bajaj is not yet a global name. Latin America and South Asia with increasing market share every year . Investment in Research and Development We have already identified that the core competency of Bajaj is its R&D and investment in technology. given its niche positioning. Considering the fact that it is one of the oldest two wheeler companies and is doing very well in India. the bajaj develop the products demand and firm exports product.

the article proposes the strategic options available to Bajaj.002 units exported in 2009-10. Such high fixed costs can be offset only by achieving economies of scale. Central America. In order to sustain brand equity. growth of 15% over 2008-09 Largest exporter of three wheeled commercial vehicles in the world: 164. Philippines.5% of the two wheeler market in India1. Bangladesh. This is primarily due to better fuel efficiencies. Exhibit 1. Two Wheeler Industry: An Overview The Indian two-wheeler industry has witnessed spectacular growth in the last few years. developing a distribution channel is extremely difficult in . In addition to coping with fierce competition from other players in the two wheeler segment. Sri Lanka.Market leader in motorcycles in Colombia. players spend large percentages of their revenues in advertising and brand building activities.887 units exported in 2009-10.115 in 2009-10. Market Shares of the major players in the two wheeler market segment The industry exhibits some degree of collusive behaviour and thus represents an oligopolistic form of market structure. Moreover. an increase of over 15 % over the previous year Total motorcycle exports of 726. The supply and distribution networks are decisive factors in staying competitive and normally need a huge capital investment. Exhibit 1 shows that Bajaj is the second largest player in this segment after Hero Honda. Nigeria. a rise of 19% over 2008-09 The Project Report On Strategic Leaders Page 38 Bajaj Auto is one of the oldest and the second largest two wheele manufacutrer in India. The article analyses the two wheeler market in India and Bajaj's positioning therein. dynamics. It also contributes to three-fourths of the total exports in the two wheeler industry. Uganda and Kenya 891. Holding on to its postion in such a challenging market environment requires innovative strategies and deep understanding of consumers needs. The Project Report On Strategic Leaders Page 39 The motorcycle segment constitutes about 81. The market dynamics of the industry has substantially changed with a majority of the customers preferring bikes to scooters and mopeds. looks and longer product lives of motorcycles. This involves substantial design and R&D costs. Product and brand differentiation are seen as the primary means of sustaining competitive advantage. The two wheeler industry is capital intensive with large fixed cost requirements and new model introductions mandatory at frequent intervals in order to sustain the demand. it also has to protect its market share from the impending onslaught of low price small cars such as Tata Nano. Based on the analysis.

The average time period taken to replace an existing bike with a newer model has decreased from 7 years to 5 years. while simultaneously improving the public transport. This is a favourable factor since India’s workforce is young. The Project Report On Strategic Leaders Page 41 Exhibit 2. As the penetration of the rural market is significantly low. only to be substituted later by the demand for four wheelers. From a peak of over 40% growth in 2002 it is currently facing a growth of -12% in the second quarter of 2008. The IT and BPO revolution has influenced this movement. Penetration Level The lower the penetration levels in the market. The two wheeler industry has been shrinking continuously3.Negative Growth Negative growth is the major problem being faced by companies in the two wheeler industry. Income has been steadily growing in India and is projected to stabilise at a growth rate of 9-12 percent range by 20122. FY06 9M/07 Q4/07 Q1/08 Q2/08 Motorcycles 19% 18% 4% -10% -12% 100cc 7% 14% -12% -20% -23% 125cc 121% 31% 71% 10% 11% . it is going to be a significant long term growth driver. Demand and Growth Drivers The following factors play a major role in increasing the demand for two wheelers in India. the better the scope for future demand.a country like India. Exhibit 2 shows the recent trends. De-growth in the industry Analysis of the different segments leads us to the conclusion that the main reason for negative growth in the two wheeler market is the fall in demand for the 100 cc segment which has traditionally enjoyed the maximum market share as shown in Exhibit3. demography and penetration level are key growth drivers in the two wheeler industry. resulting in replacement demand growth. Demography and Inspiration The bigger the young and working population. Problems in the Two Wheeler Industry . Therefore. Personal Income. Personal Income Demand increases as the income increases. the greater is its need for commutation. it is difficult for a new player to enter this industry. Other Factors Improvement in infrastructure increases competition.

Black colour scheme etc. In spite of these factors. any player will have to correctly position itself to appeal to the consumer. to capture this growth. A few of them are discussed ahead. > 125cc will continue to grow strongly. Thus we observe that BAL which used to be a Defender in 1970-1990 through Bajaj Chetak radically moved towards becoming an Analyzer (1990-1997) by focussing on bike segments and has now become a Prospector (1997-date) with several patents in its kitty and new bike . Positioning of Bajaj Auto in the Two Wheeler Industry Bajaj Auto is the flagship company of the Bajaj Group of Companies. tightening of loan recovery laws and various other factors have dissuaded consumers from availing loans and led to further problems in credit lending. Bajaj Auto Limited (BAL) is currently India's second largest two wheeler and three wheeler manufacturer.e. The major impact of this phenomenon would be experienced in the 100-125 cc two wheelers whereas the performance segment i. Launch of Low Priced Cars Like Tata Nano Introduction of low priced cars will directly affect the market. However. Interest Rates Interest rates are one of the prime reasons for the sharp fall in demand. demand drivers are present for the foreseeable future and are favourable for the two wheeler industry. LED Tail Lamps. SNS. LCD Display. Both DTS-i (Digital Twin Spark Ignition) and DTS-Fi (Digital Twin Spark Fuel Ignition) are technological breakthroughs by Bajaj. BAL is also a pioneer in product innovation having introduced technologies such as ExhausTEC (Exhaust Torque Expansion Chamber). Spare parts (Tubeless tyres. The core competency of Bajaj Auto Ltd is its technology and innovation. Credit Crunch Difficulty in availing loans. Segment-wise analysis Many factors have contributed to this phenomenon. rear disc brakes). Oil Prices Increasing oil prices have deterred many lower middle class families from buying two wheelers. it will be more challenging to meet these stringent norms whilst simultaneously offering competitive prices. Many banks have increased interest rates which make two wheelers costlier. rising defaults.150cc 29% 22% 43% 28% 22% Exhibit 3. Tightening Regulations (Emission Standards) With the introduction of the Bharat-4 norms. The family segment would want to gradually move from two wheelers to four wheelers.

With its recent launch of XCD 125cc. With the introduction of DTS-i and DTS-Fi technology. we conclude that Bajaj wants to make a slow departure from 100cc segment. This would also obviate the need to fork-out fancy sums as stampduty to the government for the de-merger. Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate company may be a prelude to offering a stake to Kawasaki of Japan in the equity of the automobile company. It has already stopped production of the Discover 125 and will continue production of the Platina until the demand for the 100cc remains. competition in the two-wheeler market is set to intensify. it has brought in competition for its own 100cc model. for a follower to move on and become a market leader it is essential that it focus on innovation and consumer demand. Platina by delivering a bike that is better in all respects (including fuel efficiency). A look at its own story over the past five years provides valuable insight. The latter has been playing an increasingly active role in Bajaj's recent models. BAL wants to shift users from 100. greater than 125cc segment. Bajaj Auto Limited has led the way in pioneering technology along with style. i. Better value proposition: Shareholder interests may be better served if the cash is retained to pursue growth in a tough market. A combination of alarge one-time dividend and a regular buyback program .e. It has priced the XCD between the Platina and the Discover and in the future. and its brand name is also more visible in Bajaj bikes than in the past. Bajaj Auto will need its cash muscle. The Way Ahead Graduating Customers from the 100cc to Higher Segments There are several reasons why Bajaj should concentrate on its core segment. Thus Bajaj not only wants to play on the margins but also wants to increase the market share of 125cc bikes. 115cc segment to 125cc and higher. The Profitability Pyramid in Exhibit 4 shows that the margin is very low in the sub-125cc segment but volumes are high. TVS Motors and HeroHonda are on a product expansion binge. The Project Report On Strategic Leaders Page 44 Exhibit 4. Over the next couple of years. Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years now. To fight this battle and retain its hard-earned market share in the motorcycle segment. Profitability Pyramid Thus.launches every year. Therefore. would ideally wish to project the XCD 125 as its base model.

be they of the four-wheeled or two-wheeled variety. Sanjiv Bajaj must have assumed he would spend most of his life among vehicles. A strategic stake for Kawasaki would only positively influence the stock's valuation. He began his career on the shopfloor of Tata Motors before joining the family firm. However. an MBA from Harvard Business School. financing autos. was thrown into a business in which the group had no experience. Rajiv's more highprofile Bajaj Auto. was a profit-making firm riding on the success of its two-wheelers. Bajaj Finserv and Bajaj Holdings. It was not an easy transition. The Project Report On Strategic Leaders Page 47 "Five years ago. most of the products that Bajaj exported were scooter sand some motorcycles. Sanjiv. With the expansion in Bajaj's own range to almost five-six platforms of motorcycles. The big change came after Bajaj Auto was demerged into three separate companies in 2008 Bajaj Auto. on the other hand. Bajaj Auto. in its target markets. Sanjiv. took charge of the financial services side of the business while elder brother Rajiv ran the automobiles business. Earlier. He took charge as managing director of Bajaj Finserv soon after. Egypt and Iran also continue to bestrong markets for Bajaj. 60 per cent of its exports were two-wheelers and the rest three-wheelers. like in India. the shift was towards motorcycles. That was . 2) Markets where BAL need to create new products.through the tender route may offer better value. 3) Markets where BAL need to enter with existing products and probably with a good distributor or a production facility or a joint venture. when we started looking at financial services. Exports to middle Africaand the Saharan nations.financial services. what we had was a small mono-line company. But in December 2007. Bajaj Auto Finance. Strategies for the Overseas Markets: Bajaj Auto looks at external markets primarily with three strategies: 1) A market where all BAL need to do is distribute through CKD or CBU routes. it had a better offering to export. For the last fiscal. As part of the deal. who had also studied mechanical engineering and manufacturing. its financial firm was deep in the red. Rahul Bajaj's younger son shifted gears altogether and took control of a completely new portfolio of businesses . We had two insurance companies in different stages of growth. At that point. The first year after he took charge of Bajaj Finserv Ltd. also the reason for its stronger showing.

So.195 crore. had assets under management of little over Rs 13.338 crore in 2011/12.947 crore. sitting at the Bajaj corporate office at Akurdi on the outskirts of Pune. D'Sa says Sanjiv is a manager who delegates. but does not abdicate. "Rajiv Bajaj believes. "Choosing when to grow. to listen to audio books and is listening to The Signal and the Noise by Nate Silver. for example. He prefers.990 crore during the same period. convinces himself and drives a business." Kevin D'Sa. Today.000 crore. "We don't want to act like venture capitalists. Five years ago. the mutual fund business is still on the drawing board. "Sanjiv. The slow-and-steady . as well as Chief Financial Officer and President (Business Development) at Sanjiv's Bajaj Finserv.000 crore in March 2012. he wears two hats: he is President (Finance) at Rajiv's Bajaj Auto. Despite the turnaround. has come a long way in the past five years. Today. says Sanjiv's empire will have assets of over Rs 100. compared with Bajaj Auto's Rs 60. and growth of the right quality are also important parts of strategy. Rajiv's auto business profits have jumped four times from Rs 726 crore to Rs 2. both brothers' companies were neck and neck at around Rs 8. We'd rather focus on the long term and build businesses which we think have tremendous value. His business philosophy of focusing on the long-term but not losing sight of profitability is paying off.000 crore. But Sanjiv is not daunted by such comparisons." A sports freak whose interests range from basketball to tennis. who is 43 today. is here for the long haul. while he is in the process of tweaking the wealth management business strategy." 58-year-old D'Sa adds. I finish a book in three to four weeks." says Sanjiv. Finserv is fast catching up with Rajiv's Bajaj Auto: the firm with a finger in both insurance and lending has seen a huge turnaround from a loss of Rs 32 crore in 2007/08 to a profit of Rs 1." he says. Sanjiv has a lot of catching up to do with his brother in terms of market capitalisation. Bajaj Finance Ltd. In comparison. sitting in his swanky sixth-floor Pune office." he says. D'Sa began his career with the unified Bajaj Auto when the Bajaj scions were in their teens. Sanjiv thinks out-of-the-box professionally and personally. decision-making is quick. a book that involves 60 hours of listening. Sanjiv goes a little more with consensus. "At the operating level. The Project Report On Strategic Leaders Page 48 "A part of me was also split up. who practises yogic breathing exercises that help him tap his inner energy. His mantra is to have a differentiated strategy and cautiously scale up his businesses. "After doing my phone calls and meetings. I take out time. I spend 75 per cent of my time at Bajaj Auto. But the younger Bajaj scion. But he also works closely with Sanjiv in exploring new opportunities. Bajaj Finserv's market cap is Rs 14. the lending arm. while the group says it has assets of nearly Rs 60. Today." says Sanjiv." says Sanjiv. an old loyalist who still splits his working day between the Bajaj brothers' businesses.really all our presence.000 crore in the next 10 years.

"The business was falling because we were letting it fall. 80 per cent of Bajaj Finance's business focused on auto financing. while ranking fourth in firstyear premium collections. the product can be manufactured without fear of regulations changing. The Project Report On Strategic Leaders Page 49 He took a conscious decision to slow down the business from 2008 because. In wealth management. Cross-selling is the central framework of Sanjiv's financial services business." says Bajaj Finance's Jain. Sanjiv is bringing in the cross-selling model." says Sanjiv. the sector is dependent on the regulatory environment. Five years ago. once emissions and sound rules are followed. Sanjiv has moved fast at Bajaj Finance." says Sanjiv whose focus in general insurance is more on retail than on corporate business. followed by equipment and infrastructure financing at 27 per cent. but Bajaj Finserv's lending arm is no longer dependent on Bajaj Auto customers.107crore.163 crore as on March 2012. At a time when other NBFCs shut down or withdrew from the retail business.approach is also reflected in Sanjiv's strategy for the insurance business.420 crore in March 2010 to Rs 7. Despite his generally measured strides. A year-and-a-half ago. Bajaj Finance has expanded its product line from two products five years ago to nearly a dozen in 2012. He says the nature of auto manufacturing is different because. says Sanjiv always asks two questions about any fresh business proposal. Rajeev Jain. who heads Bajaj Finance Ltd. The gross premium of Bajaj Allianz Life Insurance fell from Rs 11. Sanjiv makes it a point to spend time interacting with financial regulators. The business has seen new product lines such as loans to small and medium enterprises (SMEs). SMEs have a 28 per cent share in the lending portfolio. construction equipment financing and infrastructure financing. The company has grown its assets to Rs 13. how will it be different from others in the same field? "Once broad goals are set. unlike manufacturing. His strategy has paid off. Today. he gives the operating CEO a free hand" says Jain. Sanjiv launched the advisory and wealth . "We managed to maintain our profitability. The Project Report On Strategic Leaders Page 50 Sanjiv believes there should be no chasing of market share at the cost of profits. too. a non-banking finance company (NBFC) focused on consumer lending and commercial loans. business loans. "The target for crossselling is to have two products per customer in the consumer business and five products per customer in the SME business. The 10-year-old Bajaj Allianz Life Insurance is the second most profitable insurance firm. Can it scale to become a billion-dollar business? And. profits to Rs 406 crore and top line to Rs 2.484 crore in March 2012.

today said it has entered into an agreement with Germany-based Allianz Global Investors to set up an . "But a banking licence makes a sense in the long term.the holding company created following the demerger . STRETEGY OF SANJIV BAJAJ (adopt joint venture strategy) The Sanjiv Bajaj adopt Related constrained because they are manage Bajaj Holding and Investment but Sanjiv owns 31per cent of Bajaj Auto and 39 per cents of Bajaj Finserv.1311 Cror in life insurance policy and capture the Indian insurance market. and Bajaj Financial Services. has yet to start. learn and then scale up rapidly. In the Related Constrained less than 70 per cents revenue comes from a single business." But he is still not in a hurry to launch new businesses. And this lanky sports enthusiast knows very well that profits will flow in once he has the right people and strategy in place. the financial services arm ofBajaj Group. "The market value of Bajaj Holdings & Investment is close to Rs 28." The Project Report On Strategic Leaders Page 51 Sanjiv's biggest bet is to get a banking licence to scale up his lending businesses.has all the investments and cash balances he would need.management business targeting the middle class." he says. The mutual fund business." says D'Sa. The strategy is to do it small. "The business is not hampered today because of lack of licences. which got the Securities and Exchange Board of India's clearance a year ago. Bajaj Finserv. Bajaj Holdings & Investment Limited . Bajaj Finserv has reserves and surpluses of its own of over Rs 5. the Bajaj Allianz earn Rs. The market value of Bajaj Holding and Investments is close to 28000 crore. The Project Report On Strategic Leaders Page 52 Sanjiv bajaj also adopt JOINT VENTURE STRETEGY and open one legal independent company that is Bajaj Allianz. say 10 years down the line. It also owns 31 per cent of Bajaj Auto and 39 per cent of Bajaj Finserv. The Sanjiv manage Bajaj Holding and Investment. "We are tweaking the business model as the cost of acquisition is very high in a push model. The benefit of the joint venture. funds are not a constraint. Mergers & Acquisitions Bajaj Finserv. who also manages the treasury of this third company. test the product. Allianz To Form JV For AMC Biz Marking its foray into the mutual fund business. Sanjiv will be en route to creating a truly powerful Bajaj brand in the financial services business.000 crore. In addition.000 crore. Insiders say the group is considering acquring a mutual fund to build scale. For Sanjiv. Bajaj finserv. for instance. If the banking licence comes through in 2013.

" Allianz Global Investors CEO Joachim Faber said. while the remaining 49 per cent stake would be with the Indian partner.asset management joint venture firm in the country. I believe India will continue to grow at a healthy pace in the long-term. Source: http://businesstoday." Bajaj Finserv Chairman Rahul Bajaj said. Allianz would hold a 51 per cent stake in the joint venture firm. Under the agreement. The agreement to set-up asset management JV is subject to approval from the regulatory authorities. "In spite of the turmoil in the global financial markets. The two groups are already in a joint venture relationship in the insurance sector.intoday. I am confident this JV will be as successful as our insurance firms in India. Bajaj Finserv said in a filing to the Bombay Stock Exchange. the company further said. "Allianz and Bajaj have developed a close relationship over the past eight years in the process of jointly nurturing life and general insurance businesses.in .

We reflected on the importance of innovation and consumer demand. . To further consolidate its position and gain market share in the industry. Bajaj needs to do strategic rethinking and assess its product focus. The new strategy should also be backed by efficient on the ground customer support and continuous research for product innovation. To graduate from being followers to market leaders.Conclusion: Through this article we have tried to identify various factors that would impact growth of a company in two wheeler industry. Bajaj has shown the willingness to change and thus has been able to achieve strong sales growth. companies need to invest in the right technologies and develop the right products at the right time.

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