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MicroProjectDiagnosingStrategicManagementofTechnologyat

BajajAutoLtd.VijayKrishnan139278070

Harsha Gollapinni129278037

DeepakEdake129278045

Yatharth Grover129278112

StrictlyforinternalclassuseinSJMSOMbyregisteredlearnersofMNG608in2015only

Disclaimer

AnexampleofmicroprojectpresentationforStrategicManagementofTechnologycourseunderguidanceofProfessorK.S.Momaya.MicroprojectsareundertakenintheuniquecourseatIITBombaysSJMSchoolofManagement(SJMSOM)forlearningandclassroomdiscussionpurposeandnottocriticizetheprocessofmanagerialdecisionmakingoractualdecisionsatthecompany.Theymustnotbeusedassourceofsecondarydatawithoutwrittenpermissionoftheguideatmomaya@iitb.ac.in MiniprojectcopyrightbyIITBombay,2014

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Quicktonoticethechangesinthe2wheelerindustry CreatedaselfreliantR&Dcentrewhichdevelopedmostinnovativetechnologiesandplatformsonwhichmostsuccessful

bikeslikePulsar,Discoveretc.werelaunched Bajajstwinsparktechnologyactsasaharbinger,developedtriplesparkplugtechnology Alwaysmanagedtostayaheadofitscompetitors

BenchmarkingBajaAutowithleadingindustrycompetitorson Financialmetrics R&Dcapabilities Patents Exports MarketShare

RootCauseanalysis MarketShare CriticalSuccessFactors

Process OrganizationalInnovation ProductInnovation MarketingInnovation

GamechangersinAutowood inIndia:WhatcanbeSMOTissuesforaKing?Bajajgrouphaslonghistoryofcontributiontocountry;theircontributionstopersonalmobilitygavethemmarketleadershipinscooterandautorikshawsegmentstobecalledaKingofIndianRoads.FireontheIndianroadsafter100xxrevolutionandparadigmshiftduetodiscontinuitiessuchas1991broughtmorecompetition.WhileBajajAutotriedseveralinnovations(mostlyproduct&associatedprocess)tocatchupwithHeroHonda,itdecidedtowithdrawfromitscashcowsegmentscooters.RevivalofthatsegmentsbyHondacanbeattributedtoquitesmartSMOTandotherenablers.YouenergetictechnomanagerialgroupleadbyIITians areaskedtoundertakelongitudinalreviewofpositionsandtrendsinbusiness,strategyandMoT toevolvemajoroptionsfortechnologymanagementtoregainmarketandprofitshareinIndiaandkeyinternationalmarkets.

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KeySMOTQuestions WhatareCSFin2W(specificsegment)inIndia?Willtheybeverydifferentinternationally?What@3W?

WhichofthemareinfluencebySMOTdecisions? Onwhichofthefactors,BajajhasrelativestrengthonKey/pacingtechnologies?

Whataremajorstrategicoptionsin2W,3W,4W? Whatstrategicchoicescanenhancesuccessontheselectedoption?

1961 1972 1981 1986 1990 1994 1998 1999 2000 2001 2003 2007 2012 2014

Vespa 150underthelicenseofPiaggio,ItalyVespa 150underthelicenseofPiaggio,Italy

BajajChetak145cc2strokescooterBajajChetak145cc2strokescooter

KawasakiBajajKB100100cc2strokemotorcycle

KawasakiBajajKB100100cc2strokemotorcycle

BajajClassic145cc2strokescooterBajajClassic145cc2strokescooter

KawasakiBajajBoxer100cc4strokemotorcycle

KawasakiBajajBoxer100cc4strokemotorcycle

BajajM80major74cc2strokemopedBajajM80major74cc2strokemoped

BajajSpirit60cc2strokescootyBajajSpirit60cc2strokescooty

BajajEliminator175cc4strokemotorcycleBajajEliminator175cc4strokemotorcycle

BajajPulsarDTSi TechnologyBajajPulsarDTSi Technology

BajajPulsar150cc4strokemotorcycleBajajPulsar150cc4strokemotorcycle

BajajPulsar220DTSFi FuelInjectionBajajPulsar220DTSFi FuelInjection

KTM390DukeDTSFi FuelInjectionKTM390DukeDTSFi FuelInjection

Pulsar400ss,400csPulsar400ss,400cs

BajajSunny50cc2strokescootyBajajSunny50cc2strokescooty

BajajM5050cc2strokemopedBajajM5050cc2strokemoped

EvolutionofBajajthroughyears

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2stroke,scooter&bike(JV)era4strokebikeImitatorera

DTSi,DTSFiPioneerera

MarketpositionofBajajoveryears

Gainsmarketshareintheeconomyandexecutivecategories

Leaderinthepremiummotorcyclessegment Marketshareinthe premiumcategoryof

motorcyclesdeclinedto43.8percentin201213from49.5percentin201011

YamahaMotorsgainsmarketsharefromBajajwithmajornewlauncheslikeFZ16,SZandFazer

Stepsundertakentoincreasemarketshare In201112,BajajAuto's dealershipsrose by159to

650, expandingitsreach intothe ruralandsemiurbanareas FinancingschemessuchastheDirectCashCollection(DCC)

schemesimplementedacrossruralareas Relauch ofPlatina 125intheeconomysegmentat RelaunchofDiscover150DTSSiintheexecutivesegmentRs.

45000 LaunchofthepremiumcategorymotorcycleKTMDuke

equippedwitha200ccenginepricedatRs.1.17lakh LaunchesnewversionofitssportsbikePulsar200NSatthe

exshowroomprice(Pune)ofRs.84,096,inJune2012.

Source:Crisil ResearchWebsite

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CriticalSuccessFactorsofBajajMotors

Technological Innovation

Process Innovation The company launched an External

Portal Initiative for sales through a project called Go Live

Existing SAP R/3 ERP being upgraded with mySAP

Enterprise Portal for enhancing the IT to breed quality information

Bajaj was found to have linked 380 out of its 483 dealers through this system

Organizational Innovation Project Hunting, Bajaj Auto sets up

assembling units in few of the continental hubs

The logistics outsourced to third party vendors like Maersk

JIT supply and inventory system networked by a single LAN

The supply is triggered by E-Kanbans

Product Innovation Updated the low price bikes with the

latest features like disk-brakes, anti-skid technology and dual suspension

Introduction of new technologies like DTSi, ExhausTEC etc

Product launches that catered to the needs of different market segments which differed mainly on CC

Marketing Innovation Ad campaigns brought a completely

new dimension to product design, engineering, and mind-set of the market.

Tag line changes from Hamara Bajaj to Inspiring Confidence to Distinctly Ahead

ItwassosymbolicofBajajAutosproceedings

andofferingsasitproposedthatproductsshouldbedistinctly

aheadofthecompetition

BajajPulsar135,150,180,200F,220Sand200NS

14.9 13.575 13.2096

21.603220.1506 20.0044 19.1305

200607 200708

200809

200910

201011

201112

201213

OperatingMarginsBajajAuto HeroMotorcorp TVSMotor

http://businesstoday.intoday.in/story/rajivbajajbajajgroupplanandfuture/1/198329.htmlSource:

Bajaj India'slargestexporterof

two andthreewheelers. Recordedhighesteverexportsin201213

Exportsroseby31percentovertheprioryear,accountingfor35percentofthecompany'stopline.

BajajAutoIndonesiagivesthecompanyanentryintothekeymarketsofJakarta,Java,BaliandSulavesi.

ThecompanyhasalsopenetratedAfricancountrieslikeAngola,SudanandUganda

Hero

Motors Hero'spresenceinthe

exportmarketswaslimitedtill2011

HondarestrictedHero'sentryintomanymarkets.

Asaresult,thecompany'sexportsweremainlytoBangladesh,SriLanka,NepalandColombia.

RecentlyenteredAfrica,LatinAmericaandtheSouthEastAsianmarkets.

Planstoexportonemillionunitsacrosstheworldby201617

In201213,Hero'stotalexportsrosesignificantlyby18.2%

GlobalPresenceBenchmarking

2463863

5912538

26068411293231

161043 147931

BAJAJAUTOLTD. HEROMOTOCORPLTD. HONDAMOTORCYCLE&SCOOTERINDIA(PVT)LTD

ExportStatisticsDomesticsales Exports

6,33,463 7,26,4499,72,437

12,67,648 12,93,231

81,193 97,699 1,33,063 1,92,303 1,61,043

200809 200910 201011 201112 201213

ExportsovertheyearsBajaj Hero Honda

Source:BajajInvestorRelationsReport Source:Crisil ResearchWebsite

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RootcauseAnalysisfallingdomesticmarketshareandvolumecontraction

Workhard,partyharderattitudeofyouth

A paradigmshiftinmarket

preferencesfrommotorcyclesto

scooters

InvestmentinR&Disjust

1.22%ofSales

InterestRatesManybankshaveincreasedinterestrateswhichmaketwowheelerscostlier.

OilPricesIncreasingoilpriceshavedeterredmanylowermiddleclassfamiliesfrombuyingtwowheelers.

LaunchofLowPricedCarsLikeTataNano

Expectationsandaspirationsrisingtoglobalstandards

Lackofpenetrationingearlessscooter

market

TighteningRegulationsItwillbemorechallengingtostringentnormswhilstsimultaneouslyofferingcompetitiveprices.

StrategicAlliances,Jointventures,Acquisitionsetc

RE60hasbeenafailurewhenit

comestoconfrontationwith

Nano

Background Netrevenuefellby5.5%to

Rs.5,183.2crore Therevenuedeclinewas

arrestedbystrongexportperformancea12.3%growthinexportvolumes

11.9%dropindomesticvolumesandasharp24%fallinrealization.

OperatingprofitwasflatfromtheyearagoperiodatRs.1,092crore.

Operatingmarginat21.1%wasthebestintheindustry

Thefirmisfacingstiffcompetitionandconceded45%marketshareintheninemonthsendedDecember

Contributionfromthepremiumsegmentdeclinedfrom37%to28%.

BajajMissingitssalestargetsinitstraditionallystrongsegments

Nothavinganequitypartnerthatprovidedthetechnology,suchasHondaforHero,gavethemopportunitytolearn

DTSIyields15percentmorefueleconomyand12percentmorepower

http://economictimes.indiatimes.com/bajajautoltd/directorsreport/companyid21430.cms

FinancialBenchmarking

IntermsofmarketshareHerohasbeenthemarketleaderwithquiteamarginInpastfewyearsHerohasbeenlosingmarketsharetootherplayersHMSIhasgrownphenomenallytosurpassBajajandbecomethesecondlargest2wheelerproducerinIndia

From2009to2011BajajhadgrownwellabovetheIndustryaverage

RecentsalesfigureofBajajshowsnegative

growth,withtheoverallautomobileindustry

suffering

HMSIshowingexcellentfinancialperformanceevenissuchturbulent

timesSource:Crisil ResearchWebsite

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FinancialBenchmarkingContd

Technologycost/volumesaleshasgoneupsignificantlyEarlierR&Dspendingwerebetween(23)%ofsalesTheindustryaveragestandsataround(57)%ofsalesDecliningsalesvolumeisanothercauseofconcern

66%8%

8%

7% 11%

ShareofExportsBajajAutoLtd.

HeroMotoCorpLtd.

HondaMotorcycle&ScooterIndia(Pvt)LtdIndiaYamahaMotorPvt.Ltd.

TVSMotorCompanyLtd.

o IntermsofoperatingmarginBajajstandsoutofitscompetitors,exhibitingoptimizedoperationalefficiency

o BajajAutoleadstheexportmarketinthe2wheelerindustry0

5

10

15

20

25

200607 200708 200809 200910 201011 201112 201213

OperatingMargins

BajajAuto

HeroMotorcorp

Source:Crisil ResearchWebsite

TechnologyBenchmarkingBajajAutoLtd.(BAL) Corecompetency:TechnologyandInnovation(DTSi &DTSFi)

Pioneeroftriplesparkignitionsystem PioneerinProductInnovationsuchasExhausTEC,LEDTaillamps,LCDDisplay,SNS,Spareparts(Tubelesstyres,reardiscbrakes),Blackcolourschemeetc.

Venturingintothemarketofgearlessscooterswhereitisvirtuallyabsent

Corecompetency:TechnologyandInnovation(DTSi &DTSFi)

Pioneeroftriplesparkignitionsystem PioneerinProductInnovationsuchasExhausTEC,LEDTaillamps,LCDDisplay,SNS,Spareparts(Tubelesstyres,reardiscbrakes),Blackcolourschemeetc.

Venturingintothemarketofgearlessscooterswhereitisvirtuallyabsent

HondaMotorsScotersIndia(HMSI) HondaEcoTechnology(Activa,Dio andtheAviator)whichcanboostfuelefficiencyby11%

NewtechnologicalcentreinManesar(incorporatesstateoftheartequipmentlikeachassisdynamo,benchdynamo,layoutmachines,anSEMmicroscopeetc.)

HaslaunchedneweditionofdreamYugain2013equippedwithHETtechnology,ineconomyclasssegment

ThecountdownforthecommercialrolloutofHondaMotorcycle&ScooterIndias(HMSI)Activa 125hasbegun

HondaEcoTechnology(Activa,Dio andtheAviator)whichcanboostfuelefficiencyby11%

NewtechnologicalcentreinManesar(incorporatesstateoftheartequipmentlikeachassisdynamo,benchdynamo,layoutmachines,anSEMmicroscopeetc.)

HaslaunchedneweditionofdreamYugain2013equippedwithHETtechnology,ineconomyclasssegment

ThecountdownforthecommercialrolloutofHondaMotorcycle&ScooterIndias(HMSI)Activa 125hasbegun

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StrategyDiamond

Improvecustomerimageasahighqualityproductatcompetitivepricesandprovidinggoodservicetocustomers Theyhavetheirmotorbikesinalmostallsubsegments:InEconomyclass:PlatinaInExecutiveclass:DiscoverInPremiumclass:pulsar NewproductsshouldbeintroducedfasterinthemarkettoachievehighermarketshareandcompeteaggressivelyagainstcompetitorslikeHeromotocorp,TVSandHMSI ProvideproductreliabilitythroughwarrantyandGuaranteeonitsproducts

ThespeedoftheexpansionhastobefasterasBajajAutoLtd.iscurrently2nd intwowheelermarketinIndiaOneoftheinitiativesthatBAListakingistotapruralmarkets.WiththelaunchofDiscover100Min2013itishopingtotapthemileagesegmentofruralmarket Theiranotherinitiativebeingventuringintothemarketofgearlessscooters

24.4%marketsharein2wheelersmarketinIndia omnipresentinallthesubsegmentsof2wheelers: Economy,ExecutiveandPremium Theyaretargetingallrangeofcustomers:mileageconscious,aestheticsconsciousandperformanceconsciousTheircoretechnologiesinclude: DTSi,DTSFi,triplesparkignition. PioneerinprovidingqualityproductsatlowercoststhroughinnovationandcostreductioninmanufacturingFocusonJITmanufacturingmethodologies Number1exporterin2wheelersegment ThereislargeuntappedmarketinruralandsemiurbanIndia.2wheelersmarketisgrowingattherateof12%inIndia.TheirfirstpriorityshouldbetotakeadvantageofthisopportunitytobecomemarketleaderinIndia

LotofemphasishastogotowardsR&D(internaldevelopment)andincreasingthequalityofproductsalongwithcostreductiontocompeteagainstcompetitorslikeHMSI,Heromotocorp andTVS. TheyarenotmuchintoJVsandacquisitionswhicharerequiredtointroducequalityproductsatafasterrateinthemarkettocompete. IthasJVswithRenaultandNissanbuttheyarein4wheelerssegment Hasgot47.16%stakeinKTM,Europessecondlargestmotobike manufacturer.LaunchedKTMduke200in2012

OnemethodisscaleadvantagethroughlowercostsusingR&Dandinnovation Secondmethodistostartfocussingoninorganicgrowthtoexpanditshorizonswhichtheyarenotdoingtillnow

PatentsgrantedtoBALovertheyearsPatentsgrantedtoeachcompany BajajAutoLimitedhasfiledmajorityofpatentsinthecategoryofTransportandEngines Theactivitypickedupsignificantlyfrom2003peakingin2006beforefallingdrasticallyin2008 Patentgrantwouldtake3 5yearsforthepatenttobegranted,allpatentswerepublishedin2002 03,

whichiswhenPulsarislaunched Theglobalfinancialcrisisandtheconcomitantuncertaintycouldbethereasonforthemarkeddecreaseinthe

innovationactivityduringthelast4years,whichiswhyBajajhaslimitedfilingsintherecentpast 2Wheelermarketleader,Herohasonlyonepatentgrantedtill2010.AllpatentsgrantedinJVhadgoneasa

partofHonda,whichlicencedthepatentstoHerotouseinitsmotorbikes FirstcompanytoachieveBharatStage 3normcompliancefortheentirerangeoftwowheelerwithDTSFi

technology

PatenthistoryofBajajandothermajorplayersinautomobilesector

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BajajhassoughtawidegeographicalprotectionofitsIP Nextbigthinginthetwo wheelermarketinChinese

with12millionunitsalesannually EyeingthegrowingChinesemarket,BALisgettingits

majortechnologiespatentedinChina AwidespreadofIPCcategoryindicatesarobust

innovationactivityandtheconcernforIPprotection

BajajVs TVSVs HMSI TVShas75grantedpatentsasagainst38ofBajaj TVSfiledfor83patents,almostthesametheyhavefile

tilldate,in2007 08whentheentireautomobilesector,Bajajwasgoingdown

Bajajhadbeensuccessfulincommercializingthepatents Inthefiveyearstill201011,Hondahasfiledfora

whoophing 357patents,whichisthekeyfactorwhyHondasmarketshareisincreasingatagreaterpace

Contd

TVSBAJAJ

BajajVs HondaVs HeroTechnologySignificance LevelofTechnology Competence

ClearLeader Strong Favourable Tenable WeakBase Engine Honda Bajaj Hero Bajaj No

presence infastgrowingscootersegment

Base ERP HondaEAM,SCM

Bajaj PLM,SAPR3

Base Service Hero Bajaj Honda

Key Network Hero Bajaj Honda

Key Technology Honda Bajaj DTSi,Hero

Pacing R&D Honda Bajaj ExhausTEC,TripleSparkIgnition

Hero only1patent

Emerging Honda Singlewheelvehicles

Bajaj HEVs,EVs

Emerging FuelEfficiency&alternatefuels

Hero electricdieselengine

BajajEngineefficiency

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Keytakeaways

Bajajhasgoneontechnologicalforefrontswithastrategyof Lookwide ThatisthereasonwhyithastheR&Ddoneacrossthecategories Lookdeep MoreR&DhasbeendoneintheareaswhereBajajhasthecorecompetencyi.e.,inthe

enginesandtransport CompanieshavetoconsidertheTriadicPatentstogetgreateracceptanceandmarketshare

TheTriadicpatentsareaseriesofcorrespondingpatentsfiledattheEuropeanPatentOffice(EPO),theUnitedStatesPatentandTrademarkOffice(USPTO)andtheJapanPatentOffice(JPO),forthesame invention,bythesameapplicantorinventor

IntegraltoitsR&Dactivity,Bajajhasassembledasophisticatedproductlifecyclemanagement(PLM)whichenabledmanagementtorapidlyassessoperationalneedsfaster

Electricallydrivenvehiclesarethenextbigthingtohappenintwowheelerindustry.Itwillhavethesameimpactwhat4strokeenginehadintermsofnoiseandpollutionreduction

Enginetechnologyisanotherareawherelargenumberofinnovationswilltakeplacebecauseoftheneedofhigherfuelefficienciesandadaptationofneweralternatefuels

BALsprovisiontosupportvendorstoupgradetheirtechnologymadethemtogetstrikingalliancesinducedbytherapidgrowthintwowheelersegment

Evenwhiletheywereembarkingonthegrowth,theyhavemaintainedcostleadershipwitheverydecisionbasedonthreeparameter:Cost,qualityandtime

Supplychainoperationsarestreamlinedtogetefficienciesfromvendors,theecosystemisbuilt

WayAhead

GraduatingCustomersfromthe100cctoHigherSegments

FocusonGearlessScooters

EntryintoFourWheelerSegment

ScalingUpServiceCentres

InvestmentinResearchanddevelopment

CorecompetencyofBajajisitsR&Dandinvestmentintechnology

BajajneedstoinvestheavilyinR&D

Theyhavetointroduceefficientandpowerfulbikesaswellasdevelopalternateenergyvehicles

Carbonemissionsofaround60gramsperkilometre,lessthanhalfthatofmostothersmallcars.

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Appendix

Appendix

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Appendix

Appendix

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References

http://businesstoday.intoday.in/story/rajivbajajbajajgroupplanandfuture/1/198329.htmlhttps://www.crisilresearch.com/industryasync.jspx?serviceId=5&State=null#storyId#94531#sectionId#2704#newsFeedId#undefined

http://www.divaportal.org/smash/get/diva2:372751/FULLTEXT01.pdfhttp://businesstoday.intoday.in/story/bajajre60/1/21381.htmlhttp://tejas.iimb.ac.in/articles/21.php

http://www.livemint.com/Money/9Hz7jOtDLdZT8lcU8GTizK/DomesticchallengeshurtBajajAutosperformance.htmlhttp://en.wikipedia.org/wiki/Root_cause_analysis

http://www.bajajauto.com/download/MDA.pdf

http://www.iitk.ac.in/techkriti/2004/events/olymbiz/LessonsInExcellenceCase.pdf

Suggestionstoimprovevalue Therearemanystrengthasdiscussedintheclass Thisslidefocusesonlyonsuggestionsforfurtherimprovement,sothatgroupcancompeteinsomebasicchallenges;e.g.Glogift;PICMET

Mentionsourcesinallslides CategorizetheevolutionofBajajoveryears ImprovementinRootcauseanalysis InferencefromFinancialAnalysis ImprovementsinCriticalSuccessFactorsofkeysegmentsBajajwishtofocusinfuture

HardlyanyinfoaboutorganizationstructureofNPD/RDDE,process,teams,initiatives,learning&action,..