An Assignment on Business Strategy

Submitted to: Prof. A. K. Mitra

Submitted by: Abhishek Rawat 09BS0000080 Sec E


About Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. Founded in 1948, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market share of 28% (2007–08). With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment.The company claims to carry over 60 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons. The joint venture announced with Nissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (<7.5 tons). Vision Be among the top Indian corporations acknowledged nationally and internationally for: • Excellence in quality of its products • Excellence in customer focus and service Mission Be a leader in the business of commercial vehicals, excelling in technology, quality and value to customer fully supported by customer service of the highest order and meeting national and international safety environments and safety standards.

with its plant at Gummidipoondi. apart from tippers. ACCL has perfected the art and science of high quality body building. OB vans. Tamil Nadu. The factory is situated at Panagoda. ACCL has built over 18. aluminum containers. this is a joint venture between Ashok Leyland and the Government of Sri Lanka.SCOPE AND BUSINESS Ashok Leyland has five associate companies that adds up to its business Automotive Coaches & components Limited (ACCL) ACCL is the largest Tipper Body manufacturer in the organised sector in India. Since 1987. which takes care of marketing and after-sales service including sale of spares. about 40 Kms from Colombo. Hinduja Foundaries . This company is fully managed by Sri Lankan professionals. energy vans and the like. and sells them in the local market. as the case may be. through timely technology induction. tankers. Ashok Leyland supplies chassis in both completely built-up and knocked down conditions to Lanka Ashok Leyland. Lanka Ashok Leyland has also established a fully owned subsidiary called Lanka Ashok Leyland Services. Over the years.front-end structures(FES). in the joint venture is 28%.000 FES Lanka Ashok Leyland Established in 1982. Equity holding of Ashok Leyland Ltd.000 tippers and 24. ACCL has been offering its customer in India and abroad. which in turn assembles the chassis and builds bodies. well engineered afterchassis solutions: bus bodies.

a strong metallurgy base. Certified to ISO . product ranging from 10 kg to 300 kg in Grey Iron casting and up to 16. IRIZAR-TVS Started in 2001. competent engineering skills and expertise. This company provides specialised services for undertaking pre-investment. Through its pool of multi-sector professionals (in areas such as power. . Apart from assisting the investment entities of the Group identify and implement successfully projects in India. IRIZAR-TVS provides a platform for Ashok Leyland to introduce new bus body concepts and designs even as it heralds the pioneering concept of fully built buses of international luxury standards from an Indian vehicle manufacturer.Established in 1959. Ashok Leyland Project Services Limited Ashok Leyland Project Services Limited (ALPS).5. IRIZAR-TVS is a joint venture between Ashok Leyland. Capability to adapt to emerging trends and absorb new technologies. TVS & Sons Ltd and IRIZAR. the internationally reputed bus body builder from Spain.9001 and QS 9000 Quality systems. As a preferred supplier to Ashok Leyland. kg in Aluminum gravity die casting. ALPS adds the Indian element to the multinational company or consortium. spearheads the project development activities of the Hinduja Group in India. This joint venture addresses the growing demand for luxury coaches in the country. uncompromising quality consciousness and dedicated team work have all contributed to create a sound and solid base for Ennore Foundries in the foundry industry. ALPS also provides professional services to help international companies interested in projects in India. industrial engines and power generators.000 MT in Grey Iron and 3000 MT in aluminum gravity die castings per annum. tractors. Ennore Foundries is also largest manufacturers of Cylinder Block and Cylinder head castings in India catering to different segment like automobiles. telecommunications and surface transport infrastructure). Ennore Foundries is India's largest automotive jobbing foundry with production capacity of 45.

appraisals. 7168.7729. .469. TURNOVER AND PROFITABILITY OF THE COMPANY • Ashok Leyland registered a sales turnover of Rs.8% • After a sluggish start in 2008.5981.07 crores in the 2008-09.project development which includes feasibility studies. • The net profit rose by 6. the sales turnover improved by 21% touching Rs.28 crore in 2006-07. development of joint ventures.17 Crore in 2006-07 showing an improvement of 7. company formation and other professional services that are designated to deliver project opportunities from concept to commissioning.7244.441.71 crores in 2009-10 compared to Rs.31 crores compared to Rs.12 crores during 2007-08 compared to Rs.4% in 2007-08 to touch Rs.

To help analyse these factors we categorize them using the PESTEL model. PESTEL ENVIRONMENT There are many factors that affect any organization. new laws. social. demographic changes government policy changes etc. economical. are all examples of macroscopic changes. .67 crores in 2009-10 against Rs. Tax changes.• Similarly the net profit improved to 123% to touch 423.190 crores in 2008-09. trade barriers. This classification distinguishes between political.

Economic change can have a major impact on a firm's behaviour. • Promoting multi-model transportation and the implementation of mass rapid transport system.technological. The economics factors related to automobile industry are: . By PESTEL analysis we can know about extended environment and key drivers of change of an organization. ecological and legal factor. taxation changes. What goods and services does a government wants to provide. economic growth. phased and conductive growth of the Indian automobile industry. Economical: These include interest rates. • Foreign equity investment up to 100% in the automotive sector and there is no minimum investment criteria. Political: These refer to government policy such as the degree of intervention in the economy. what are its priorities in terms of business support. inflation and exchange rates. to what extent does it believe in subsidising firms. • Changes in taxation policy. The political factors related to automobile industry are: • Indian government auto policy aimed at promoting an integrated.

• Govt.• Weighted tax deduction of up to 150% for in-house research and R&D activities. • Increase in petrol price. • Cost of automobile in India is the cheapest in world . such as reduced interest rates for export financing. Hence there exists tremendous scope for exports. The social factors related to automobile industry are • Indian customers are highly price sensitive and put a lot of emphasis on value for money. Social: Changes in social trends like population increase can impact on the demand for a firm's products and the industry as a whole. . • Several Indian firms have partnered with global players. has granted concessions. poor buying capacity and comparatively cheaper import of second hand automobile from developed country reduces the export of automobile from India in recent days. • Rise in price of the raw materials.The cost of a finished vehicle here is as much as the cost of gear box in developed countries. • Deteriorating foreign exchange situation in western country.

. The technological factors related to automobile industry are • Accelerated acquisition of technology capabilities to raises productivity in agriculture. coal gas renewable. So the company has a large customer base to serve. Environmental: The ecological factors related to automobile industry are • Physical infrastructure such as roads and bridges affect the use of automobiles. • Continuous technological innovation. • Preference for fuel efficient vehicles with lower running cost. These developments can benefit consumers as well as the organizations providing the products. Sometimes the technology reduces the life cycle of products.• Changed lifestyle of people has lead to increased purchase of automobiles. • Growth in urbanization. • Renewable energy development. improve quality and lead to innovation. Ex. Technical: New technologies create new products and new processes. • Upward migration of household income levels. • Global warming. Technology can reduce costs.

The legal factors related to tractor industry are • Collaboration with government which shapes policy issues. one must examine the following: . Legal changes can affect a firm's costs if new systems and procedures have to be developed and demand if the law affects the likelihood of customers buying the good or using the service. In this. PORTER’S FIVE FORCES (P5F) ANALYSIS A Porter's Five Forces Analysis explores five principal industry factors to determine the attractive of a given industry in a given market. it applies to every Indian car manufacturer. In any P5F analysis. As such. This is independent of any manufacturer. In recent years the changes legal factors of developed countries affected firms' behaviour in other countries due to globalization.Legal: These are related to the legal environment in which firms operate. we look at the automobile industry in India. • Legal provisions relating to safety measures. • Legal provision relating to environmental pollution by automobiles.

As such. The threat of substitute products. and ever-expanding financing options to rural residents. the capital and expertise needed to setup an auto or parts manufacturing facility would be a great enough barrier to entry to prevent many new entrants from setting up. the market is attractive. 3. There are more than 20 foreign manufacturers selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). The bargaining power of buyers/customers. 2.1. The amount of bargaining power suppliers have. given India's incredible growth forecasts. The threat of substitute products . The amount of rivalry among competitors. The threat of new entrants: In most markets. like the famous Tata Nano. However. 5. 4. The threat of new entrants. we expect the threat of new entrants to be high. Of course there are also a plethora of incredibly cheap choices. The bargaining power of buyers/customers: Buyers in India have a wide variety of choice. infrastructure progress (especially new and better roads).

These are very real and obvious threats to auto manufacturers The amount of bargaining power suppliers have: It is likely that the suppliers to the manufacturers have considerable bargaining power. . The amount of rivalry among competitors: The amount of rivalry amongst competitors in India is high.India is famous for its two-wheelers (bikes and mopeds) and three-wheelers. They are not held ransom by one single manufacturer as they can market their products to any of the others in India. The industry is not yet in its shake-out phase and is still struggling to find the up-and-coming stars and possibly topple the leaders.

It is aiming at expanding its production operation overseas to make it a more globally accessible company. which have an established product line.Eicher is giving competition to Ashok Leyland with Truck’s and Buses. USA on Indian roads known as Mahindra Navistar.The trucks will be between 16 tonners and 49 tonners.Eicher began its business operation in 1959 with Tactor. An example would be the 2007 acquisition of the Czech based Avia’s truck business rechristened Avia Ashok Leyland Motors.As.Buses.Eicher small trucks are making there good market in India.etc. will introduce 15 new truck models as India's biggest truck makers by sales seek to beat growing competition from Tata motors.but now Eicher had expanded it self with Truck’s. It is looking to acquire a small to medium sized commercial vehicle manufacturers in China and other developing nations. To Compite with Ashok Leyland Tata motors will also introduce three new heavy trucks in India by March from its Prima range of so-called world trucks. COMPETITION WITH EICHER:Eicher is also one of competitor of Ashok Leyland. With a commanding strength of the about 12.which is going to give tuff competition to Ashok Leyland. COMPETITION WITH MAHINDRA:Mahindra had also launched a truck in collaboration with Navistar Inc.COMPETITION OF ASHOK LEYLAND WITH OTHER AUTOMOBILE SECTOR COMPETITION WITH TATA MOTORS:Ashok Leyland Ltd.000 employees the company is looking forwards to enhance the scope of its action.we had seen that Ashok Leyland low floor buses giving tide competition to Tata motors low floor buses in Delhi.Gear box. The new truck models under its new U-Truck platform by March 2011. .

000 customers. Ashok Leyland has built-up a data base of 130. The information captures the business nuances of the customers and shows Ashok Leyland precisely where and how the customer would use trucks. industrial buyer. and engines. Segmentation of Ashok Leyland can be done on the basis of it’s user:Segmentation Industrial user Defense user . Ashok Leyland has a large customer base for public transport buses. buses. over five decades in the transport solution industry. special application vehicles. touching millions across 40 countries world wide. defence and special vehicles for special purpose. government buyer and defence also. offering a world class range of trucks. Ashok Leyland is Brand name with the flagship of Hinduja group. To sell is to know your customers. Ashok Leyland has a good customer base most of the customer who comes to Ashok Leyland become a loyal customer. The company today knows much more about its customers today than caters to different class of society which includes individual buyer.CUSTOMER BASE AND SEGMENTATION Ashok Leyland. commercial vehicles.

Government user include state and central transport like DTC. coal and mining industry and other industries etc. Ashok Leyland understand that they have a deep and far-reaching impact on society. .Ashok Leyland care for there customer. driver training and a responsive after-market network. always endeavoured to engineer products and systems that promote progress on all these fronts. the national economy and the environment. GOVERNMENT USER:. therefore.Defense user include Indian army trucks. finance. Ashok Leyland firmly believe that this honest approach will make the Ashok Leyland marquee the symbol of the very best in transportation. and by backing them up with consultancy.Industrial user includes transporter. Ashok Leyland have. logistics company. today and tomorrow.Public user Government user INDUSTRIAL USER:.they try to give best quality engineering as well as best quality service to there customer. earned the only way Ashok Leyland know: by giving our customers the most appropriate transport solutions for each of their applications.UPSRTC and other. PUBLIC USER:-Public user includes individual or passenger transport . Ashok Leyland are conscious of the fact that vehicles are more than just a means of transporting people and goods. tanks and transport buses. CUSTOMER’S VALUE Ashok Leyland believe that our impressive strides in the marketplace stem in equal parts from our proactive approach and our customers' unstinting support. DEFENSE USER:.

Superior products manufactured as also services offered by the company. The quality assurance of Ashok Leyland is to make continual improvements in the processes that constitute the quality management system.The major characteristic through which Ashok Leyland give the best quality to there customer are:* Reliability * Maintainability * Safety * Strength * Performance * Features * Conformance * Durability * Service * Response *Aesthetics * Reputation Ashok Leyland is committed to achieve customer satisfaction by anticipating and delivering superior value to the customer in relation to their own business. through the products and services offered by the company and comply with statutory requirements. Maximum use of employees potential to contribute to quality and . (2). to make them more robust and to enhance their effectiveness and efficiency in achieving stated objectives leading to (1).

High Market Share . 3. For the Quality assurance Ashok Leyland completed journey towards global standards of quality. Good Training System. 2. SWOT ANALYSIS Strength of the company 1. (3).environment by progressive up gradation of their knowledge and skills as appropriate to their functions. The more comprehensive ISO 9001 certification came in 1994. QS 9000 in 1998 and ISO 14001. Good Organisational Climate. history to win the ISO 9002 certification. Seamless involvement from suppliers and dealers in the mission of the company to address customers changing needs and protection of the environment.

Company provides better credit facility to dealers. High price 3. 3. Complicated national market 5. Strong Functional Structure 6. Good replacement facility if other brands. Liberal credit policy of other brand 3. Promotional programmes of other brand 4. Low margin 2. 2. High competition 2. National market through good advertisement.4. demand for heavy vehicle have steeped up all over the globe. Company introduces promotional programmes Threats faced by the company 1. 4. Standard Quality Product Weakness of the company 1. Skilled Employees 5. STRATEGIC GAPS AND OPPORTUNITIES FOR THE COMPANY As we know through this assignment that Ashok Leyland is also one of the leading automobile manufacturer in the world and it also came to know that:- . There is no proper mechanism to handle the grievance of the customers Opportunities for the company 1. Due to liberalization. Sales representatives are less 4.

this philosophy has been translated time and again into products that seamlessly integrate international technology with local needs. Seshasayee. Managing Director. R.Provide World class technology:To offer world-class technology that is relevant and affordable to the Indian customer is the philosophy that drives R&D at Ashok Leyland. Provide Value to the customer:The immediate R&D priorities are to pro-actively address safety and environmental issues. It helps to increase the brand awareness and image. The company should concentrate on markets in the international arena where its competitors are less powerful. "The role of R&D is central in fulfilling the company-wide commitment to total customer satisfaction" states Mr. . Keep innovating there product:Ashok Leyland product development successes have come from a keen sense of anticipation and attentiveness. Powering those who "engineer tomorrows" with an enabling infrastructure has been top priority for the company. harness and adopt technologies that provide value to the customer in an atmosphere enabling creativity and innovation. and adds that the increased infrastructural and financial support expresses the company's determination to become self-reliant in R&D. The company should concentrate more on the luxury truck segments to keep a strong hold in the market The company should earmark more money for the advertisement and sales promotion of its products. The company initiated research into alternative fuels well before legislative debate had even begun in the country. The result was the implementation of CNG technology ahead of the rest promising a breath of fresh air for polluted cities. Over the years.

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