Strategic Analysis of Behr

India
A study of internal and external environment.
Abhishta, Nikhil Agarwal and Samarth Bharadwaj


Table of Contents
1. About the Company .......................................................................................... 3
1.1 Behr GmbH & Co.KG, Germany ............................................................................................................ 3
1.2 Anand Group ............................................................................................................................................... 3
1.3 Products ........................................................................................................................................................ 4
1.3.1 Air Conditioning Systems ...................................................................................................................... 4
1.3.2 Engine Cooling Systems ......................................................................................................................... 4
1.4 Boston Consultancy Group Matrix for its products ..................................................................... 6
1.5 SWOT Analysis ........................................................................................................................................... 7
1.5.1 Strengths ....................................................................................................................................................... 7
1.5.2 Weakness ...................................................................................................................................................... 8
1.5.3 Opportunities .............................................................................................................................................. 8
1.5.4 Threats ........................................................................................................................................................... 8
1.6 PESTLE Analysis ........................................................................................................................................ 9
1.6.1 Importance of PESTLE Analysis ......................................................................................................... 9
1.6.2 Political.......................................................................................................................................................... 9
1.6.3 Economic .................................................................................................................................................... 10
1.6.4 Social ............................................................................................................................................................ 10
1.6.5 Technological ........................................................................................................................................... 11
1.6.6 Environmental ......................................................................................................................................... 11
1.6.7 Legal ............................................................................................................................................................. 11
1.6.8 Our comments on the PESTLE Analysis ........................................................................................ 12
1.7 TOWS Framework .................................................................................................................................. 13
1.8 Value Chain Analysis of Engine Cooling Modules ..................................................................... 14
1.9 Conclusion ................................................................................................................................................. 14



1. About the Company

Behr India Limited is a Joint Venture between Behr GmbH & Co.KG, Germany &
Anand, India. The company was incorporated in July 1997 as a systems partner
for the Indian automobile industry and is the leading manufacturer and supplier
of thermal management systems to the passenger car and commercial vehicles
segments.

1.1 Behr GmbH & Co.KG, Germany

Behr GmbH & Co. KG, Stuttgart, is a systems partner of the international
automobile industry. A specialist for automotive air conditioning and engine
cooling systems, the Behr Group is one of the worlds leading manufacturers and
suppliers of original equipment for light vehicles and trucks. Group sales in the
2011 business year came to EUR 3.7 billion. Currently, Behr employs some
17,400 staff at 36 production locations and 17 R&D centers worldwide. Since its
foundation in 1905, Behr has developed from a small family-owned operation
into a globally active automotive industry supplier that is active worldwide -
with continually increasing success. Today, the Behr name is synonymous with a
seal for future- oriented innovations and top-quality products.

1.2 Anand Group


Provider of the widest range of solutions to the Indian Automotive Industry,
Anand is among India's leading manufacturers of Automotive Systems and
Components making it the countrys leading OEM supplier. Anand has a major
presence in the Indian Aftermarket as well, with some of its major brands being
Market Leaders. The group supplies to every major vehicle and engine
manufacturer in the country.
Anand is known for its established and successful partnerships with leading
global automotive front runners, each one being a global leader in its area of
operation. The group has 15 Joint Ventures and 6 Technical Collaborations with
these world leading companies.

1.3 Products
Air Conditioning Systems
Engine Cooling System

1.3.1 Air Conditioning Systems

1.3.1.1 HVAC Modules

Behr offers design and validation for complete refrigerant circuits and solutions
for optimal air distribution in the vehicle cabin. Behr designs entire HVAC
systems or delivers finely- tuned HVAC modules based on customer
specifications. Behrs HVAC system is generally robust & compact in size and
provides excellent cooling performance with low noise & low power
consumption. Behr is known for making the HVACs for most of the bus
manufacturers in the country.

HVAC modules include:
Climate Box
Heater & Evaporator
Control Panel
Piping
Rear Blower

1.3.2 Engine Cooling Systems

Engine Cooling Modules
Visco Fan Drive Systems
EGR Coolers




1.3.2.1 Engine Cooling Modules

Engine Cooling Systems from Behr are very compact with high performance &
durability. There intercoolers are constructed with high performance tabulators
provided inside tube giving high durability & plastic inlet/outlet tanks which
withstands high pressure resulting in compact size with less weight. We have
KOMO type condenser designed such that it can be directly snap mounted to
radiator without bracket & plastic frame and can withstand high refrigerant
internal pressure. One of the most popular product of Behr India which is
presently the most selling.

Engine cooling module includes:

Radiator
Intercooler
Condenser
FMS

1.3.2.2 Visco Fan Drive Systems

Behr manufactures:

Mechanical Visco Clutch
Electronic Visco Clutch

Behr has locally designed & manufactured mechanical visco clutches available to
serve applications like SUV, LCV & M/HCV segment. We supplies to most of the
OEMs present in India. Behr has a wider range of fans available locally as well as
can import the same based on need of application. To meet noise emissions &
fuel economy norms, we have introduced Electronic visco clutch which is
directly controlled by engine ECU using PWM signals. Benefits of E-Visco are
reduced parasitic losses for improved fuel economy, Reduced noise etc. Behr is
probably the only firm producing this redundant product which will soon
be in no demand.

1.3.2.3 EGR Coolers

Behr recently commissioned a high-tech Laser welding set up for manufacture of
Euro IV and onwards compliant EGR coolers. This is technology; at present; used
for emission compliance for Euro IV norms, particularly for the NOx emission.
Behr uses the patented Winglet Tubes design with the latest laser welding
process in this product. It has varied EGR configurations to suit various
applications in both passenger car and commercial vehicle segments. They are a
new product and need investment but are a product of the future.

1.4 Boston Consultancy Group Matrix for its products

A business with a range of products has a portfolio of products. However, owning
a product portfolio poses a problem for a business. It must decide how to
allocate investment (e.g. in product development, promotion) across the
portfolio. A portfolio of products can be analyzed using the Boston Group
Consulting Matrix. This categorizes the products into one of four different areas,
based on:
Market share does the product being sold have a low or high market
share?
Market growth are the numbers of potential customers in the market
growing or not



Boston Consultancy Group Matrix for Behr India (Category Wise)

1.5 SWOT Analysis

A SWOT analysis (alternatively SWOT matrix) is a structured planning method
used to evaluate the strengths, weaknesses, opportunities and threats for a
business analysis.SWOT analysis can be carried out for a product, place, industry
or person. It involves specifying the objective of the business venture or project
and identifying the internal and external factors that are favorable and
unfavorable to achieve that objective.

1.5.1 Strengths

The following are the strengths of the firm:

The only German company producing automobile heat exchangers in the
country.
A great connection with all the German car manufacturing companies.
Biggest producer of Charger air coolers in the company.
Fully automated CNC machine tools and a much reduced cycle time due to
the introduction of wheel crimping machines on the shop floor which
reduce setup time.
Behr holds the patent for its special brazing process for aluminum heat
exchangers.
Greater employee satisfaction as they can change jobs between Anand
Group companies.
Special employee engagement programs result in high efficiencies.

1.5.2 Weakness

The following are the weaknesses of the firm:

Still a huge amount of rejections due to after brazing leak.
Less amount of space available on the shop floor for further expansion.
Use of redundant processes such as hydraulic dye crimping machines.
Low worker productivity as compared to other companies as per their
own study.

1.5.3 Opportunities

The opportunities that can be explored by Behr to open new avenues:

Increased sells of diesel vehicles.
More number of air conditioned busses in demand.
Increase in sells of German car companies.
Hiring by Anand group from elite colleges.

1.5.4 Threats

Subros, which is popular among Japanese car manufacturers.
Increase in prices of aluminum.
Its own sister companies which are with Anand Group may become a
threat in the future.



1.6 PESTLE Analysis

PESTLE Analysis is a simple, useful and widely-used tool that helps you
understand the "big picture" of your Political, Economic, Socio-Cultural and
Technological, Legal and Environmental aspects. As such, business leaders use it
worldwide to build their vision of the future. PESTLE analysis is concerned with
the environmental influences on a business. Identifying PESTLE influences is a
useful way of summarizing the external environment in which a business
operates. However, it must be followed up by consideration of how a business
should respond to these influences.
1.6.1 Importance of PESTLE Analysis

It is important for these reasons:
First, by making effective use of PESTLE Analysis, you ensure that what
you are doing is aligned positively with the powerful forces of change that
are affecting our world. By taking advantage of change, you are much
more likely to be successful than if your activities oppose it;
Second, good use of PESTLE Analysis helps you avoid taking action that is
doomed to failure from the outset, for reasons beyond your control;
Third, PESTLE is useful when you start operating in a new country or
region. Use of PESTLE helps you break free of unconscious assumptions,
and helps you quickly adapt to the realities of the new environment

1.6.2 Political

In 2002, the Indian government formulated an auto policy that aimed at
promoting integrated, phased, enduring and self-sustained growth of the
Indian automotive industry
Allows automatic approval for foreign equity investment up to 100% in
the automotive sector and does not lay down any minimum investment
criteria.
Laying emphasizs on R&D activities carried out by companies in India by
giving a weighted tax deduction of up to 150% for in house research and
R&D activities.
Indian government auto policy aimed at promoting an integrated, phased
and conductive growth of the Indian automobile industry.
Allowing automatic approval for foreign equity investment up to 100%
with no minimum investment criteria.

1.6.3 Economic

Several Indian firms have partnered with global players. While some have
formed joint ventures with equity participation, other also has entered
into technology tie-ups.
Establishment of India as a manufacturing hub, for mini, compact cars,
OEMs and for auto components.

1.6.4 Social

Since changed lifestyle of people, leads to increased purchase of
automobiles, so automobile sector have a large customer base to serve.
The average family size is 4, which makes it favorable to buy a four
wheeler.
Growth in urbanization, 4th largest economy by PPP index.
Upward migration of household income levels.
Indian customers are highly discerning, educated and well informed. They
are price sensitive and put a lot of emphasis on value for money.
Preference for small and compact cars. They are socially acceptable even
amongst the well off.
Preference for fuel efficient cars with low running costs.




1.6.5 Technological

Companies in India are laying more and more emphasis on R&D activities
carried out.
Weighted tax deduction of up to 150% for in-house research and R & D
activities.
The Government of India is promoting National Automotive Testing and
R&D Infrastructure Project (NATRIP) to support the growth of the auto
industry in India.
Technological solutions helps in integrating the supply chain, hence
reduce losses and increase profitability.
Customized solutions (designer cars, etc) can be provided with the
proliferation of technology.
With the entry of global companies into the Indian market, advanced
technologies, both in product and production process have developed.

1.6.6 Environmental

Physical infrastructure such as roads and bridges affect the use of
automobiles. If there is good availability of roads or the roads are smooth
then it will affect the use of automobiles.
Physical conditions like environmental situation affect the use of
automobiles. If the environment is pleasant then it will lead to more use
of vehicles.
Technological solutions helps in integrating the supply chain, hence
reduce losses and increase profitability.

1.6.7 Legal

Legal provision relating to environmental population by automobiles.
Legal provisions relating to safety measures.


1.6.8 Our comments on the PESTLE Analysis

Well, the environment of the Behr India as a industry directly depends
upon the environment of the Indian automobile industry.
Also at the rate at which the rates of petrol are growing, demand of diesel
cars is going to increase a lot, thus increasing the demands of charger air
coolers of Behr.
As people are shifting to public transport HVAC will be a product to look
on for the company.
More technological betterments in the company will surely allow Behr to
produce greater heat exchangers in lesser amount of time.
Their relationship with the German companies is strong.

















1.7 TOWS Framework

TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS
and SWOT are acronyms for different arrangements of the words Strengths,
Weaknesses, Opportunities and Threats.


External
Opportunities
(O)
1. Increased Sales of
diesel vehicles.
2.More demand of air-
conditioned cars.
3. Increase in sells of
german made cars.
External Threats
(T)
1. Subros is more
popular among
Japanese firms.
2. Increase in prices
of aluminum.
Internal
Strengths
(S)
1.Connection with
german firms.
2.Biggest
producer of CACs.
3.Automated
Machining
4.Patent for
brazing of
aluminum.
SO
Contact the German
Car Manufacturers to
increase market share.
ST
Patent can be
licensed so as to
cover aluminum costs
and CAC can be
marketed among
Japanese companies.
Internal
Weaknesses (W)
1.High rejection
rate.
2.Less space
available in shop
floor.
3.Use of some
redundant
machines.
4.Low per worker
productivity.
WO
German car
manufacturers can
help Behr to improve
there processes.
WT
Increased process
efficiency can become
competitive
advantage.


TOWS framework for Behr India

1.8 Value Chain Analysis of Engine Cooling Modules

Radiators, CACs and Condensers cool down the air that passes through it. Hence
value of the product is in how effectively the product cool down the heated up
medium. It basically depends upon the amount of air that comes in contact with
the cooling portion of the product in one unit time and the material of the
product. Hence increase in surface area would result in more volume of air
getting cooled down per unit time. So, all of these products have a basic structure
of fin tube matrix allowing a very large surface area to come in contact with the
air. All of these products are made up of aluminum as it is a good conductor of
heat and is also cost effective as compared to copper. As a matter of fact copper
radiators also exist in the market.
Secondly the air that is an input to the device is needed back by the system for
cooling; hence it is very important that during the cooling procedure minimal
amount of air is lost. For this brazing of the core is done. As for a fact we cannot
achieve zero leak hence it is taken care that the leak remains on the lower side.
Finally as all these products are manufactured for the automotive industry hence
there performance should not be affected by shocks and jerks during the travel;
thereby strength of the joints and proper crimping of the manifold to the header
adds value.
Summarizing it all we can conclude that the value of radiators, CACs and
condensers depend upon the following properties:
Surface area and the material used
Leak proof nature
Joining at the contact point of tubes and fins in the matrix.
Overall strength of the product against the shocks and jerks
1.9 Conclusion

The corporate level strategy of Behr may soon change as Mahale now acquired it.
The strategy at the other levels may remain same. It would be a matter of
curiosity for me to see how fast they take Visco Fans off the market. Their
strategy is hugely impacted by the strategy of their customers i.e. the automobile
giants.