Analysis of Bajaj 2

8/8/2019 Analysis of Bajaj 2

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SWOT ANALYSIS

SNEHA GIRIGOUDAR

SOURABHSHREE RAINA

SINGH AKASH

SMRITI

SUNIL







Bajaj matrix



STRENGHTS

Highly experienced management.

Product design and development capabilities. Extensive R&D focus.

Widespread distribution network.

High performance products across all categories .

High economies of scope.



High economies of scale .

Strong volume growth and a tight control on operational

costs. The strategy has helped the company to grow

aggressively without sacrificing margins.

The company¶s net profit during the first quarter more than doubled

to Rs 590 crore while net sales rose 65.4% to Rs 3,737.3 crore.

The result was largely due to a strong 70% growth in sales volume

that provided the company with economies of scale and enabled it tospread various fixed costs and overheads over a greater number of

motorcycles and three wheelers.



Cost effective and environmental

strategy

Reduction achieved in:

2008-09 2007-08

% %

Electrical energy 23 23

Water 11 16

LPG 44 12

Investment / savings:

Investment for energy conservation activities: Rs.9.35million Saving achieved through above activities: Rs.24.2 million



High export to domestic sales ratio

Based on their own brand of globalization,

they have built their distribution network over

60 countries worldwide and multiplied the

exports from 1% of total turnover in Fiscal

1989-90 to over 5% in Fiscal 1996-97.



Great financial support network (For

financing the automobile)



WEAKNESSES

Hasn't employed the excess cash for long.

Still has no established brand to match HeroHonda's Splendor in commuter segment.

Not a global player in spite of huge volumes.

Not a globally recognizable brand (unlike theJV partner Kawasaki)



Market share



Hasn't employed the excess cash for

long.

Bajaj Auto has been sitting on a cash pile for over

five years now. Over the next couple of years,competition in the two-wheeler market is set tointensify. TVS Motors and Hero Honda are on aproduct expansion binge. To fight this battle and

retain its hard-earned market share in themotorcycle segment, Bajaj Auto will need its cash

muscle. A look at its own story over the past fiveyears provides valuable insight.



OPPORTUNITIES

Double-digit growth in two-wheeler market .

FY10 however saw a turnaround in the space with real GDPgrowing by 7.9%. 3-wheeler and 2-wheelers segments sawabove 20% growth.



More maturity and movement towards

higher-end motorcycles.

Around 50% of the two-wheeler consumers buy high quality productsmargins on these products are higher.

BAL should adopt a deliberate strategy of focusing on executive andpremium segment motorcycles and three-wheelers, and a couple of brands on lower-end of motorcycles (To grab the market share) andscooters segment.

High margin products - Pulsar, Discover, Three-wheelers,Avenger.

NOw with increasing competition in the economy segment and limitedscope from cost saving measures, it is believed this strategy of focusing onhigher margin products would enable the company in retaining itsoperating margins.



Growing world demand for entry-level

motorcycles especially in emerging

markets

The company recently participated in a largeauto exhibition in Brazil and found goodconsumer acceptance to products like Pulsarand Wind 125.The other focus area is the

ASEAN nations, which constitute the thirdbiggest consumer of two-wheelers



The growing gearless trendy scooters and

scooterette market.

Considering the fast growing scooterettes segment,with high demand from female customers, followedby the moderately growing moped segment and therestructuring in the scooter segment with majornational and foreign players reinforcing their

presence, it was unlikely that the entire growth inthe two-wheeler sector would be due tomotorcycles.



THREATS

The competition catches-up any new

innovation in no time.

T

hreat of cheap imported motorcycles fromChina.

Margins getting squeezed from both the

directions (Price as well as Cost)



TATA Ace is a serious competition for

the three-wheeler cargo segment.

Ace mini-truck which can be regarded as 'theN

ano of the commercial vehicle segment'here. Now the Ace has become Indias first'one-lakh' (100,000-unit) nameplate in thesegment, grabbing almost 85% market share.



External FactorsInternal Factors

Strengths Weaknesses

Opportunities

Can use the existing R&D capabilities

for new models.

Can use Kawasaki's distribution

networks internationally.

Can invest and grow the life style

segments.

Must employ the cash in production

and product capabilities to match

competitors and for continuous export

growth.

Threats

Increase the customer centric

initiatives and command more

customer loyalty.

Improve the efficiency of the

financing and the insurance arm.

Invest in new product platforms.

Actively market electric range

internationally.

Invest in building world class bikes to

sustain the international markets

independently in the coming years like

WIND 125.



Bajaj on internal analysis found that it lacked

1. The technical expertise to deliver competitive

goods.

2.T

he design know-how.

3. And the immediate inability to support the

onslaught of competitors.



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Analysis of Bajaj 2