1.

2. Analyse the competitive advantages of Hero Honda, Bajaj, and TVS.

Hero Honda
 Superior supply chain
 Vendor mgmt capabilities
 External-R&D technology access of Honda
 Internal R&D- Focused on value engineering, localisation and integration with
market understanding of evolving needs & expectations of Indian users.
 Expertise of Honda with 4 stroke engines
 Dealer network in rural areas enhancing brand loyalty in economic segment
 Ease of credit to buyers in economic segment
 Value for money and efficient fuel economy in vehicles
 2007- 67% market share in economic segment

Bajaj
 R&D- More power from vehicle, lower emissions and better fuel economy and
patented DTS-i tech, ExhausTEC
 2007- 60% market share in executive segment
 Technical collaboration with Kawasaki who had expertise in higher cc bikes
which Bajaj leveraged to design and manufacture lower end bikes
 Market expansion in other developing countries Philippines, Thailand, Brazil,
Columbia, Indonesia
 Technical collab not equity- so better stronghold and higher flexibility at
decision making
 Brand reputation of value for money and reliability due to long running
Chetak scooter

TVS
 JV with Suzuki, which was the 3rd largest 2 Wh brand in the world
 Past dominancy in moped segment
 CC-VTi technology from AVL introduced in Flame 125cc
 Success of TVS Victor

3. Start with the industry analysis and then try to figure out how each firm fits in. (Try to
multiple snapshots at different relevant slices of time since independence.

In 2007 – two wheeler industry

Bargaining power of the customers: Multiple brands available at the same

Bargaining power of the suppliers:
Competitive rivalry: Highly concentrated + High amount of rivalry due to price wars
and patent infringement fights.
Threat from substitutes: Substitutes can be electric vehicles (Not so popular in 2007),
bicycles,
Threat from new entrants: Need proprietary technology, huge investment, supply
chain and branding. Threat is Low.
4. Identify the key success factors of the 2W industry 
Economy segment: Value for money, Fuel efficiency, availability of financing
Executive segment: Styling, design, power, branding along with fuel efficiency

5. To help, prepare a 2X2 plot of relative market share of these three companies and
their ROCE. You may use information provided in exhibits 3 and 7 of the case.

2x2 plot
40
35
30
25
ROCE

20
15
10
5
0
10 15 20 25 30 35 40 45 50 55
Market Share

ROCE

Red: Hero Honda Blue: Bajaj Yellow: TVS

6. Why does Bajaj want to ramp up in the executive segment?

 Executive segment growth (96% CAGR) was faster than the 2Wh market
(23.78% CAGR) ( 2001-07 analysed) Exhibit 2
 Pulsar ( launched in 2001) was a great hit in terms of both price and product
superiority
 High end technology in higher cc bikes from Kawasaki
 Price war with Hero was not sustainable, Hero had better financials and Hero
had a competitive advantage in pricing. Industry dynamics changed due to
price war.
7. Should Hero Honda start a price war (or do you suggest another strategy) to protect its
turf and ward off competition from Bajaj?
 Try expanding in executive segment due to better grwoth prospects-Inhouse
R&D investment to ramp up and External R&D better tech transfer with Hero
to move to new product segment of 125cc ( Currently Hero Honda R&D
expense is 0.2% of Net Sales, Bajaj is 1% and TVS is 1.9%)
 Maintain price war in economic segment(67% market share) bcoz of already
existing price competitiveness
 Maintain status quo in economic segment

8. Why does TVS want to move in to a scooterette segment given that the biggest
scooter player more or less existed the market?

1994 -> Leading scooterette

TVS specialization in mopeds -> 50% stake increase in 1986 in TVS suzuki
TVS – Suzuki split in 2000 - difficulty in design integration
Hence TVS set up own manufacturing and launched Victor ( 4 stroke ) in 2001.
After Split, TVS designed and manufactured 4 stroke two wheelers –
causing possible delay ? Manufactured scooterette ( core competency of TVS at that
time) - also promised greater margins ( from footnote D).

9. What are the competitive advantages (if any) for Hero Honda, Bajaj, and TVS?