PROJECT ON

BAJAJ AUTOMOBILES LIMITES

(STRATEGIC MANAGEMENT)

Submitted To
Pro. Amit Sareen

Submitted by

Name- Naveen Kumar Roll Number-18/090

Apeejay School of Management New Delhi July 2011

INDEX

OBJECTIVE OF REPORT INDURODUCTION OF BAJAJ COMPANY PROFILE MANAGEMENT TEAM BAJAJ PRODUCTS COMPANY VISION AND MISSION COMPANY SWOT ANALYSIS PORTERS ANALYSIS MANAGERILA STYLE HR PRACTISES BUSINESS STARATEGIES MARKETING STRATEGIES OTHER STRATEGIC ISSUES COMPANY CODE OF CONDUCT INDUSTRIAL RELATIONSHIP RECOMMENDATION

OBJECTIVE OF THE PROJECT:

Developing an understanding of the Strategic Management and business policy and its application in Bajaj Automobile Company. Bajaj Automobile problems and issues cover the whole spectrum of business, including finance, marketing, management, management information systems, production operations, economics, and statistics. Strategic management is an emerging and rapidly developing discipline. Weighing the pros and cons of alternative strategies entails a total enterprise perspective and a talent for judging how all relevant factors fit together. This is quite a contrast to other required and elective courses, which are generally concerned with a narrower, more specialized body of knowledge.

INTRODUCTION OF BAJAJ AUTOMOBILES:

Bajaj Auto limited is one of the largest two wheeler manufacturing company in India apart from producing two wheelers they also manufacture three wheelers. The company had started way back in 1945. Initially it used to import the two wheelers from outside, but from 1959 it started manufacturing of two wheelers in the country. By the year 1970 Bajaj Auto had rolled out their 100,000th vehicle. Bajaj scooters and motor cycles have become an integral part of the Indian milieu and over the years have come to represent the aspirations of modern India. Bajaj Auto also has a technical tie up with Kawasaki heavy industries of Japan to produce the latest motorcycles in India which are of world class quality The Bajaj Kawasaki eliminator has emerged straight out of the drawing board of Kawasaki heavy industries. The core brand values of Bajaj Auto limited includes Learning, Innovation, Perfection, Speed and Transparency. The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance. The group's flagship company, Bajaj Auto, is ranked as the world's fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Founded in 1926, at the height of India's movement for independence from the British, the group has an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him

as his son. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture. His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also diversified into various manufacturing activities. The present Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from INR.72 million to INR. 120 billion, its product portfolio has expanded and the brand has found a global market. He is one of Indias most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit. Bajaj Auto has three manufacturing units in the country at Akurdi, Waluj and Chakan in Maharashtra, western India, which produced 2,314,787 vehicles in 2005- 06. The sales are backed by a network of after sales service and maintenance work shops all over the country. Bajaj Auto has products which cater to every segment of the Indian two wheeler market Bajaj CT 100 Dlx offers a great value for money at the entry level. Similarly Bajaj Discover 125 offers the consumer a great performance without making a big hole in the pocket. Over the last decade, the company has successfully changed its image from a scooter manufacturer to a two wheeler manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Its real growth in numbers has come in the last four years after successful introduction of a few models in the motorcycle segment. According to the authors of Globally Competing with Everyone from Everywhere for Everything, Bajaj has grown operations in 50 countries by creating a line of value-for-money bikes targeted to the different preferences of entry-level buyers. Bajaj has made a number of motorcycles, scooters and cars. Motorcycles in current production are the XCD, Platina, Discover, Pulsar and Avenger. Bajaj also produces many motorcycles for other manufacturers, such as the Kawasaki Ninja 250R, and new for 2011, the KTM Duke [Link] includes the Bajaj ULC ultra-low-cost car.

COMPANY PROFILE:
Founder Year of Establishment Industry Business Group Listing & Its Codes Jamnalal Bajaj 1926 Automotive- Two& Three Wheelers The Bajaj Group BSE-Code: BAJAJAUTO_ Presence Distribution network covers 50 countries. Dominant Presence in India, Sri Lanka, Bangladesh, Colombia, Guatemala, Peru, 500490, NSECode:

Egypt, Iran and Indonesia. Joint Venture Registered & Head Office Kawasaki Heavy Industries of Japan Akurdi Pune-411035 India Tel:+(91)-(20)-27472851 Fax:(91)-(20)-27473398

Works

Akurdi, Pune 411035 Bajaj Nagar, Waluj Aurangabad 431136 Chakan industrial Area, Chakan, Pune 411501

E Mail Websites

rahulbajaj@[Link] [Link]

MANAGEMENT TEAM:Rahul Bajaj Madhur Bajaj Rajiv Bajaj Sanjiv Bajaj Pradeep Shrivastava Abraham Joseph R C Maheshwari Rakesh Sharma Eric Vas K Srinivas Kevin P Dsa S Ravikumar Amrut Rath Chairman Vice Chairman Managing Director Executive Director Chief Operating Officer Chief Technology Officer President (Motorcycle Business) President (Commercial Vehicle Business) President (International Business) President (New Projects) President (Retail Finance) President (Finance) Senior Vice President (Business Development & Assurance) N H Hingorani Vice President (Human Resources) Vice President (Commercial) C P Tripathi Vice President (Corporate Social

Responsibility)

Shareholders & Investors Grievance committee

Shri D.J. Balaji Rao Shri J.N. Godrej Shri S.H. Khan Shri Naresh Chandra Shri S.H. Khan Chairman Member Member Member

Committees of the Board

Shri Nanoo Pamnani Rao Shri S.H. Khan Shri D.J. Balaji Shri Naresh Chandra Chairman Member Member Member

Remuneration committee
D.J. Balaji Rao Chairman

S.H. Khan Naresh Chandra

Product of Bajaj auto LTD:Product Motercycles Brands 4S

Bajaj Pulser Bajab CT 100 Bajaj Wind 125 Caliber

4S CHAMPION Bajaj Avenger

Bajaj Dicover Bajaj Pulsar DTSi Bajaj XCD 125 Caliber 115 Bajaj Platina Bajaj Sonic Boxer Kawasaki Eliminator Bajaj

KB RTZ

KB 100 Bajaj Kristal Dtsi

KB125 Bajaj Wave

Scooters

Bajaj Chetak

COMPANY VISSION AND MISSION STATEMENT:Bajaj doesn't have a straight vision or mission statement. They define it in terms of brand identity, brand essence (derived from mission) and brand values.

Our Brand Identity:-

Our Brand is the visual expression of our thoughts and actions. It conveys to everyone our intention to constantly inspire confidence. Our customers are the primary audience for our brand. Indeed, our Brand Identity is shaped as much by their belief in Bajaj as it is by our own vision. Everything we do must always reinforce the distinctiveness and the power of our brand. We can do this by living our brand essence and by continuously seeking to enhance our customers experience. In doing so, we ensure a special place for ourselves in the hearts and the minds of our customers.

Our Brand Essence:Our Brand Essence is the soul of our brand. Our brand essence encapsulates our mission at Bajaj. It is the singular representation of our terms of endearment with our customers. It provides the basis on which we grow profitably in the market. Our Brand Essence is Excitement. Bajaj strives to inspire confidence through excitement engineering. Blending together youthful creativity and competitive technology to exceed the spoken and the implicit expectations of our customers. By challenging the given. By exploring the unknown and thereby stretching ourselves towards tomorrow,today.

Our Brand Values:We live our brand by its values of Learning, Innovation, Perfection, Speed and Transparency. Bajaj will constantly inspire confidence through excitement engineering.

Learning
Learning is how we ensure proactively. It is a value that embraces knowledge as the platform for building well informed, reasoned, and decisive actions.

Innovation
Innovation is how we create the future. It is a value that provokes us to reach beyond the obvious in pursuit of that which exceeds the ordinary.

Perfection
Perfection is how we set new standards. It is a value that exhibits our determination to excel by endeavoring to establish new benchmarks all the time.

Speed
Speed is how we convey clear conviction. It is a value that keeps us sharply responsive, mirroring our commitment towards our goals and processes.

Transparency
Transparency is how we characterize ourselves. It is a value that makes us worthy of credibility through integrity, of trust through sensitivity and of loyalty through interdependence.

SWOT ANALYSIS:Let's analyze the position of Bajaj in the current market set-up, evaluating its strengths, weaknesses, threats and opportunities available.

Strengths:
Highly experienced management. Product design and development capabilities. Extensive R & D focus. Widespread distribution network. High performance products across all categories. High export to domestic sales ratio. Great financial support network (For financing the automobile) High economies of scale. High economies of scope.

Weaknesses: Hasn't employed the excess cash for long. Still has no established brand to match Hero Honda's Splendor in commuter segment. Not a global player in spite of huge volumes. Not a globally recognizable brand (unlike the JV partner Kawasaki)

Threats:
The competition catches-up any new innovation in no time. Threat of cheap imported motorcycles from China. Margins getting squeezed from both the directions (Price as well as Cost)

 TATA Ace is a serious competition for the three-wheeler cargo segment.

Opportunities:
Double-digit growth in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards higher-end motorcycles. The growing gearless trendy scooters and scooterette market. Growing world demand for entry-level motorcycles especially in Emerging market.

Porters Five Forces Analysis:

Supplier Bargaining Power:

Suppliers of auto components are fragmented and are extremely critical for this industry

since most of the component work is outsourced. Proper supply chain management is a costly yet critical need.

Buyer's Bargaining Power:

Buyers in automobile market have more Choice to choose from and the increasing competition is driving the bargaining power of customers uphill. With more models to choose from in almost all categories, the market forces have empowered the buyers to a large extent.

Industry Rivalry:
The industry rivalry is extremely high with any product being matched in a few months by competitor. This instinct of the industry is primarily driven by the technical capabilities acquired over years of gestation under the technical collaboration with international players.

 Substitute:
There is no perfect substitute to this industry. Also, if there is any substitute to a twowheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting a two-wheeler, cycles do never even compete with the low entry level moped for even this choice comes at a comparatively higher economic potential.

Managerial Style:
Off late Bajaj Auto Limited, Indias premier automotive company has emphasized a lot on organizational restructuring for the Auto business With this restructuring, the existing business roles and responsibilities at the company has been strengthened and enhanced to ensure greater operational empowerment and effective management. The five pillars of this new structure (Strategic units) are R&D, Engineering,

Two Wheeler Business Unit, and Commercial Vehicles Business Unit &International Business Unit. These pillars will be supported by functions of Finance, MIS, HR, Business Development and Commercial. Pradeep Srivastava, who was VP-Engineering prior to restructuring, will, now, is PresidentEngineering. As per the reorganized structure the company will have three CEOs. S. Sridhar, currently, VP, Mktg. & Sales Two-Wheelers, will now head the Two Wheeler Business Unit as CEO with manufacturing operations at Waluj and Akurdi also reporting to him. RC Maheshwari has joined Bajaj Auto as CEO Commercial Vehicles. The company is in the process of identifying a CEO for its International Business. The three CEOs will be responsible for Top line, Business Growth & profitability of their respective businesses. Abraham Joseph will continue to lead Research & Development. Mr. Rajiv Bajaj, Managing Director, Bajaj Auto Ltd. Said, The new structure would assist in Aligning the Vectors of the organization and will enable the company to live its Brand Values

& be Distinctly Ahead. The objective of this is to transit from relatively narrow functional definitions into more integrated and cross-functional working with clear focus on business results (Ahead) as well as focus on our Brand Values of speed, Innovation.

HR Practices:
The Company affirms that its competitiveness is interlinked with the well Being of all sections of the Indian society. The Company believes that equal opportunities in employment for all Sections of the society are a component of its growth and competitiveness. It further believes

that inclusive growth is a component of growth and development of the country. The Company affirms the recognition that diversity to reflect socially The Company will not practice nor support conscious discrimination in The Company does not bias employment away from applicants disadvantages

sections of the society in the workplace has a positive impact on business. any form.

belonging to

disadvantaged sections of society if such applicants possess competitive skills and job credentials. The Company's selection of business partners is not based on any considerations other than normal business parameters. In case of equal business offers, the Company will select a business partner belonging to a socially disadvantaged section of society. This Code of Conduct for Affirmative Action will be put up on the company web-site

to encourage applications from socially disadvantaged sections of society. The Company makes all efforts for up skilling and continual training of all employees in order to enhance their capabilities and competitive skills. No discrimination of any type will be shown in this process. The Company may have a partnership programme with educational The Company will maintain records of Affirmative Action. institution/s to its

support and aid students from socially disadvantaged sections of society.

 The Company has nominated Mr K Srinivas, Vice President (HR), to

oversee and

promote the Affirmative Action policies and programmes. He will be accountable to the Chairman. The Company will make available its learning and experiences as a good corporate

citizen in Affirmative Action to other companies desiring to incorporate such policies in their own business.

Business Strategies:
Marketing Strategies:
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brakes, anti-skid technology and dual suspension, etc. BAL adopted different marketing strategies for different models, few of them are discussed below: Kawasaki 4S - First attempt by Bajaj to make a mark in the motorcycle segment. The target customer was the father in the family but the target audience of the commercial was the son in the family. The time at which Kawasaki 4S was launched Hero Honda was the market leader in fuel-efficient bikes and Yamaha in the performance bikes. Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural population and the price sensitive customer. Boxer marketed as a value for money bike with great mileage. Larger wheelbase, high ground clearance and high mileage were the selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100. Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the bike look bigger and feel more powerful than its predecessor (characteristics)that will attract the average, 25-plus, executive segment bike buyer), its approach towards advertising is even more radically different

this time around. Bajaj gave the mandate for the ad campaign to Lowe, picking them from the clique of three agencies that do promos for the company (the other two being Leo Burnett and (O&M). Going by the initial market response, the campaign was clearly a hit in the 5-10 years age bracket. So, the teaser campaign and the emphasis on the Caliber 115 being a`Hoodibabaa' bike placed it as a trendy motorcycle for the college-goers and the 25 plus executives both at the same time.

Pulsar - Pulsar was launched in direct competition to the Hero Honda's CBZ model in 150 cc
plus segment. The campaign beard innovative punch line of Definitely Male" positioning Pulsar to be a masculine-looking model with an appeal to the performance sensitive customers. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched a twin variant of Pulsar with the 180 cc model. The model was a great success and has already crossed 1 million marks in sales.

Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a great
success. With this, Bajaj could realize its success riding on the back of technological innovation rather than the joint venture way followed by competitors to gain market share. BAL now is taking a leaf out of the FMCG business model to take the company to greater heights. Bajaj has kicked off a project to completely restructure the company's retail network and create multiple sales channels. Over the next few months, the company will set-up separate sales channels for every segment of its business and consumers. Bajaj Auto's entire product portfolio, from the entry-level to the premium, is being sold by the same dealers. The restructuring will involve separate dealer networks catering to the urban and rural markets as well as its three-wheeler and premium bikes segments. Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. The needs of financing, selling, and distribution and even after- sales service are completely different in the rural areas and do not makes sense for city dealers to control this. The company also plans to set-up exclusive dealerships for its three-wheeler products instead of having them sold through an estimated 300 of its existing dealers.

9b, Other Strategic Issues:

Cash is strength: 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 to intensify. TVS Motors and Hero Honda are on a product expansion binge. To fight this battle and retain its hard-earned market share in the motorcycle segment, Bajaj Auto will need its cash muscle. A look at its own story over the past five years provides valuable insight.

Delisting worry: What is worrying is that there is an idea to delist the investment company
(also an indirect indication that it would be listed initially). This would be closing the valve of equitable ownership distribution. There is a hint of a buyback of shares of the investment company as this is the only way it can be delisted. The company would not be short of cash to put through such a buyback. Factors such as low valuation, low trading interest and the need to provide shareholders may be cited as plausible reasons for the buyback.

Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate company
may be a prelude to offering a stake to Kawasaki of Japan in the equity of the automobile company. The latter has been playing an increasingly active role in Bajaj's recent models, and its brand name is also more visible in Bajaj bikes than in the past.

Better value proposition: Shareholder interests may be better served if the cash is retained
to pursue growth in a tough market. This would also obviate the need to fork-out fancy sums as stamp duty to the government for the de-merger. A combination of a large one-time dividend and a regular buyback program through the tender route may offer better value. A strategic stake for Kawasaki would only positively influence the stock's valuation.

Strategies for the Overseas Markets: Bajaj Auto looks at external markets primarily
with three strategies: 1) A market where all BAL need to do is distribute through CKD or CBU routes.

2) Markets where BAL need to create new products. 3) Markets where BAL need to enter with existing products and probably with a good distributor or a production facility or a joint venture. Earlier, most of the products that Bajaj exported were scooters and some motorcycles. However, in its target markets, like in India, the shift was towards motorcycles. With the expansion in Bajaj's own range to almost five-six platforms of motorcycles, it had a better offering to export, also the reason for its stronger showing. For the last fiscal, 60 per cent of its exports were two- wheelers and the rest three-wheelers. Of the two wheeler exports, close to 90 per cent were motorcycles. Bajaj has identified certain key markets, which hold potential. Its first overseas office established at the Jebel Ali free trade zone has been the focal point for exports to middle Africa and the Saharan nations. Egypt and Iran also continue to be strong markets for Bajaj.

The other market, which would be a focus area, is South America, where the company feels it is fairly well represented in most countries, except in Brazil, the largest market. The company recently participated in a large auto exhibition in Brazil and found good consumer acceptance to products like Pulsar and Wind [Link] other focus area is the ASEAN nations, which constitute the third biggest consumer of two-wheelers. The biggest among them is Indonesia, where Bajaj distributors are looking to introduce eco- friendly four-stroke auto rickshaws. But two-wheeler market requires great deal of effort from BAL. Everybody is there with Honda leading the show. There's Suzuki, Kawasaki and some Korean and Chinese models. BAL should look at the right product mix for two-wheelers. Bajaj's Pulsar model has taken off well there. It also wants to develop a new step-through model for the Indonesian market, but for now it will create a base there with its motorcycle models. Bajaj has also made a beginning by selling bikes in the Philippines branded in the name of its technical partner, Kawasaki. The two signed a MoU in February. Kawasaki, a large multiproduct conglomerate, only makes high-end bikes and does not have sub-200cc models. Kawasaki is marketing the new model, Wind 125, developed by both companies, in the Philippines. The Bajaj-developed models, Caliber and Bike, which is a fuel-efficient bike, are also being distributed by Kawasaki. This is a good beginning strategically for Kawasaki to evince interest in Bajaj products for markets which can still buy less than 150 cc.

Industrial relations:
At Akurdi, the management signed the wage settlement on 18 July 2008 with Vishwakalyan Kamgar Sanghatana, the recognised union, in conciliation and accordingly, the benefits of the settlement have been given to all daily- rated employees at Akurdi. Subsequently, with a view to downsizing the workforce at Akurdi, Voluntary Retirement Scheme was floated for the permanent daily rated workmen. 2,331 workmen availed of the benefit under the scheme. Relations with staff and workmen across the plants at Akurdi, Waluj, Chakan and Pantnagar remained cordial.

CODE OF CONDUCT
Bajaj Auto Limited (herein after referred to as the "Company") hereby adopts the following Code of Conduct for Affirmative Action. This will be effective from 1st December 2006.

The Company affirms that its competitiveness is interlinked with the well being of all sections of the Indian society.

The Company believes that equal opportunity in employment for all sections of the society is a component of its growth and competitiveness. It further believes that inclusive growth is a component of growth and development of the country.

The Company affirms the recognition that diversity to reflect socially disadvantages sections of the society in the workplace has a positive impact on business.

The Company will not practice nor support conscious discrimination in any form. The Company does not bias employment away from applicants belonging to disadvantaged sections of society if such applicants possess competitive skills and job credentials.

The Company's selection of business partners is not based on any considerations other than normal business parameters. In case of equal business offers, the Company will select a business partner belonging to a socially disadvantaged section of society.

This Code of Conduct for Affirmative Action will be put up on the company web-site to encourage applications from socially disadvantaged sections of society.

The Company makes all efforts for up skilling and continual training of all its employees in order to enhance their capabilities and competitive skills. No discrimination of any type will be shown in this process.

The Company may have a partnership programme with educational institution/s to support and aid students from socially disadvantaged sections of society.

The Company will maintain records of Affirmative Action. The Company has nominated Mr. Amrut Kumar Rath., Vice President (HR), to oversee and promote the Affirmative Action policies and programmes. He will be accountable to the Chairman.

Recommendations
Focus on High Margin Products:
Around 50% of the two-wheeler consumers buy high quality products (products of executive and premium segment motorcycles). Margins on these products are [Link] should adopt a deliberate strategy of focusing on executive and premium segment motorcycles and threewheelers, and is reducing its dependence on lower-end of motorcycles and scooters segment.

High margin products - Pulsar, Discover, Three-wheelers, Avenger. Low margin products Platina, Scooters, Mopeds. Now with increasing competition in the economy segment and limited scope from cost saving measures, it is believed this strategy of focusing on higher margin products would enable the company in retaining its operating margins. Below are other useful recommendations: Company should keep focusing on the fast growing motorcycle segment. In view of the new threat posed by Honda Motors in the scooter segment, the company needs to review its products line-up and launch new products to cater the changed demand. The company needs to take a look at its un geared scooters offerings and need to adapt to the latest trends. The company needs to tap the export market more efficiently as there is a huge potential to make India as the world's two-wheelers production base. For this, it needs to look for joint ventures abroad. It needs to target the young age group more effectively as this group is extremely trend savvy. The advertising should have a fresh look and the product should live up to the Gen-X'sexpectations.