A Project report on

Strategic Management Cycle of Bajaj Auto Ltd.

Submitted By:

In partial fulfillment of the requirements for the subject Strategic Management for the award of the degree of MBA

Submitted to: Prof. Dr. Jignasa Savalia

Declaration

The project report entitled Strategic Management Cycle of Bajaj Auto Ltd. has been submitted to Gujarat Technological University, Ahmedabad in partial fulfillment for the award of degree of Master of Business Administration. I the undersigned hereby declare that this report has been completed by me under the guidance of Prof. Jignasha mam (Faculty Member, Shayona Institute of Business Management, Ahmedabad)

The report is entirely the result of my own efforts and has not been submitted either in part or whole to any other institute or university for any degree.

Date:

Place: Ahmedabad

PREFACE
As it is always said that if you give some-one theory knowledge it will make person understandwell.But if you give some-one theory as well as practical knowledge then it will help the person to understand and remember that always. In the same way to get practical knowledge,the report which we prepare not only make us understand the various functions but also gives us different vision regarding them and along with it gives us experience of practical assignment and managers work. By preparing report on Analytical Study on Strategic Management Cycle of Bajaj Auto Ltd. we have tried to develop skill to understand well and also how to implement theoretical knowledge work. For this we are thankful to Gujarat Technological University for including such a project as practical studies in the syllabus of M.B.A.

Acknowledgement

The succession completion of this report would not have been possible without co-operation and support of our professor , friends and our institute. We forward gratitude to respected director of our institute. We are heartily thankful to the management for providing us the opportunity to make a study to practical in their organization. We express our sincere thanks to the company who have given us all the information on-line. We are also thankful our professor out with whose help, this becomes possible and who provided full guidance, co-operation and valuable suggestion about company report. We are also thankful to our college friends and all those who have helped us directly or indirectly in the preparation of this report.

Executive Summary

In our project we have conducted a research on how bajaj auto ltd works By using stretegic management & their different moves.. Hence on the basis of the Information we have found out our finding and have done an in-depth analysis on Strategic Management Cycle of Bajaj Auto Ltd.. It is followed by recommendations and conclusion.

TABLE OF CONTENTS

1. Objective of SM 2. Introduction of ABC Co. 3. History of ABC Co. 4. Strategic Thinking i. Vision ii. Mission iii. Corporate Purpose iv. Values: (Standard of Conduct, Law, Employees, Consumers, Shareholders, Business Partners, Community Involvement, Public Activities, the environment, innovation, competition, business integrity etc.) 5. Strategic Planning i. Strategy adopted by ABC Co. ii. Action plan by ABC Co. iii .Responsibilities of ABC Co. CSR (Internal as well as External) iv .Michael Porters 5 Forces analysis v. McKinseys7S Model vi. SWOT Analysis of ABC Co. vii. PEST Analysis viiiBCG MATRIX 6.Analysis of Strategies of ABC Co 7. Strategic Implementation i. Resource Allocation 7. Strategic Evaluation i .Balance Scorecar

1. OBJECTIVE OF SM :

Statements of vision tend to be quite broad and can be described as a goal that represents an inspiring, overarching, and emotionally driven destination. Mission statements, on the other hand, tend to be more specific and address questions concerning the organizations reason for being and the basis of its intended competitive advantage in the marketplace. Strategic objectives are used to operationalize the mission statement. That is, they help to provide guidance on how the organization can fulfill or move toward the high goals in the goal hierarchy-the mission and vision. As a result, they tend to be more specific and cover a more well-defined time frame. Setting objectives demands a yardstick to measure the fulfillment of the objectives. If an objective lacks specificity or measurability, it is not very useful, simply because there is no way of determining whether it is helping the organization to move toward the organizations mission and vision. Statements of vision tend to be quite broad and can be described as a goal that represents an inspiring, overarching, and emotionally driven destination. Mission statements, on the other hand, tend to be more specific and address questions concerning the organizations reason for being and the basis of its intended competitive advantage in the marketplace. Strategic objectives are used to operationalize the mission statement. That is, they help to provide guidance on how the organization can fulfill or move toward the high goals in the goal hierarchy-the mission and vision. As a result, they tend to be more specific and cover a more well-defined time frame.

2. INTRODUCTION OF BAJAJ GROUP :

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.

3.HISTORY OF BAJAJ AUTO LTD

Bajaj Auto is a $2.3 billion company founded in 1926. It is world?s fourth largest two- and three-wheeler manufacturer. Bajaj Auto has three plants in all, two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttaranchal. The company is into manufacturing of motorcycles, scooters and three-wheelers. In India, Bajaj Auto has a distribution network of 485 dealers and over 1,600 authorised services centres. It has 171 exclusive dealers for the three-wheeler segment .It has total 3750 rural outlets in rural areas. The company has opened 11 retail stores for bikes across the country, exclusive for high-end and performance bikes. It has opened these stores under the name ??Bajaj Probiking?? in cities like Pune, Nashik, Ahmedabad, Chennai, Hyderabad, Kolkata, Navi Mumbai, Chandigarh, New Delhi, Faridabad and Mangalore. The Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. It has a distribution network in 50 countries with a dominant presence in Sri Lanka, Colombia, Bangladesh, Mexico, Central America, Peru and Egypt. It has technical tie up with Kawasaki Heavy Industries of Japan to manufacture latest models in the two-wheeler space. Bajaj Auto has launched brands like Boxer, Caliber, Wind125, Pulsar and many more. It has also launched India's first real cruiser bike, Kawasaki Bajaj Eliminator. Bajaj Auto's has in all three plants, two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttranchal, western India.

Waluj - Bajaj range of motorcycles and three-wheelers Chakan - Bajaj range of motorcycles Pant Nagar - Bajaj range of motorcycles Achievement

1945- On November 29 Bajaj Auto came into existence as Bachraj Trading Corporation Private Limited. 1948- The company commenced sales in India by importing two- and three-wheelers. 1959- Bajaj Auto obtained the licence from the Government of India to manufacture two- and three-wheelers. 1960- The company became a public limited company and conducted Bhoomi Poojan of the Akurdi Plant. 1970- Bajaj Auto rolled out its 100,000th vehicle. 1971- The company introduced its three-wheeler goods carrier. 1972- The company introduced Bajaj Chetak.

1975- Bajaj Auto & Maharashtra Scooters entered into a joint venture. 1976- The company introduced Bajaj Super. 1977- Bajaj Auto introduced rear engine autorickshaw and achieved production and sales of 100,000 vehicles in a single financial year. 1981- Bajaj Auto launched Bajaj M-50. 1984- On January 19, the foundation stone laid for the new plant at Waluj, Aurangabad. 1985- On November 5, the Waluj plant inaugurated by the erstwhile President of India, Giani Zail Singh. The company commenced production at Waluj, Aurangabad in a record time of 16 months. 1986- The Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles were introduced. The company produced and sold 500,000 vehicles in a single financial year. 1990- The Bajaj Sunny was introduced. 1991- The company introduced Kawasaki Bajaj 4S Champion. 1994- It launched Bajaj Classic. 1995- On November 29, Bajaj Auto turned into a 50-year old company. It signed agreements with Kubota of Japan for the development of diesel engines for three-wheelers and with Tokyo R&D for ungeared scooter and moped development. The Bajaj Super Excel is introduced while Bajaj celebrated its ten millionth vehicle. The same year one million vehicles were produced and sold by company in that financial year. 1997- The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw are introduced. 1998- The company commenced production at Chakan plant. It rolled out Kawasaki Bajaj Caliber from its Waluj plant. Bajaj Auto launched Legend, India's first four-stroke scooter from Akurdi plant. The same year Spirit was launched. 1999- Caliber motorcycle notched up 100,000 sales in record time of 12 months. 2000- The company launched Bajaj Saffire. 2001- Bajaj Auto launched its latest offering in the premium bike segment 'Pulsar'. The same year Eliminator was launched. 2003- Bajaj Pulsar DTS-i was launched. The company sold 107,115 motorcycles in a month. The company launched Bajaj Wind 125, The World Bike in India. It launched its Caliber115 'Hoodibabaa!' in the executive motorcycle segment. 2004- Bajaj Discover DTS-I, new Bajaj Chetak 4-stroke with wonder gear and Bajaj CT100 were launched. Bajaj unveiled new brand identity, new symbol, logo and brandline. 2005- Bajaj Discover, Bajaj Avenger DTS-I and Bajaj Wave DTS-I were introduced. 2006- Bajaj Platina was launched. 2007- RE GDi autorickshaw, Bajaj XCD 125 DTS-Si, Bajaj Pulsar 220 DTS-Fi, 200 cc Pulsar DTS-I and Bajaj Kristal DTS-i were launched. The company also underwent through revamping of its organisational structure. 2008- Bajaj Platina 125 DTS-Si was launched.

2009- Bajaj Pulsar 150 & 180 upgrade and Bajaj XCD 135 DTS-Si were launched 2011- April, Bajaj Records its best year ever of 2010.

HISTORY OF RAHUL BAJAJ Rahul Bajaj Chairman, Bajaj Auto Limited.

Mr. Bajaj (b. June 10, 38) is recognized as one of the most successful business leaders of India. He heads the Bajaj Group of Companies which is a leader in a variety of manufactured products and financial services in India and abroad including motorized 2 and 3-wheelers, home appliances, electric lamps, wind energy, special alloy and stainless steel, cranes, forgings, infrastructure development, material handling equipment, travel, general and life insurance and investment, consumer finance & asset management. Mr. Bajaj holds an Honours Degree in Economics from Delhi University, a degree in Law from Bombay University and an MBA from Harvard Business School. Mr. Bajaj is the Chairman of the Board of many companies. He was elected to the Upper House of Parliament (Rajya Sabha 2006 - 2010). Mr. Bajaj has received many prestigious awards and recognitions, notable being the award of 'Padma Bhushan' by the Government of India in 2001, Alumni Achievement Award by the Harvard Business School and Life Time Achievement Awards from Economic Times, Ernst & Young and CNBC TV18. Mr. Bajaj was appointed Knight in the Order of the Legion of Honour by the President of the French Republic. Mr. Bajaj has been conferred Honorary Doctorates by 7 Universities including IIT Roorkee. The Project Report On Strategic Leaders Page 4 Mr. Bajaj was the President of Confederation of Indian Industry (CII 1979-80/1999-2000). He was President of Society of Indian Automobile Manufacturers (SIAM) and Mahratta Chamber of Commerce, Industry And Agriculture (MCCIA) and Chairman of the Development Council for Automobiles and Allied Industries. Mr. Bajaj was appointed by the Government of India the Chairman (198689) of the Government owned domestic carrier, Indian Airlines. Mr. Bajaj was nominated by the President of India the Chairman of the Board of Governors of the Indian Institute of Technology, Bombay during 2003-06. Mr. Bajaj is a Member & former Chairman of the International Business Council of the World Economic Forum, Geneva and a Member of Harvard

Business School's Global Advisory Board. He is also a Member of the International Advisory Council of the Brookings Institution, Washington DC and a Member of the Executive Board of Indian School of Business. Mr. Bajaj spear-heads the CSR initiatives of the Bajaj Group which include Jamnalal Bajaj Foundation and Shiksha Mandal and a number of social organizations including Bharatiya Yuva Shakti Trust and Ruby Hall Clinic, a large hospital in Pune as their Chairman.

BAJAJ GROUP OF COMPANIES

Bajaj Auto is the flagship of the Bajaj group of companies. The group comprises of 34 companies and was founded in the year 1926. The companies in the group are: Bajaj Auto Ltd. Bajaj Holdings & Investment Ltd. Bajaj Finserv Ltd. Bajaj Allianz General Insurance Company Ltd. Bajaj Allianz Life Insurance Co. Ltd Bajaj Financial Solutions Ltd. Bajaj Auto Finance Ltd. Bajaj Allianz Financial Distributors Ltd. Bajaj Auto Holdings Ltd. P T Bajaj Auto Indonesia (PTBAI) Bajaj Auto International Holdings BV Bajaj Electricals Ltd. Hind Lamps Ltd. Bajaj Ventures Ltd. Mukand Ltd. Mukand Engineers Ltd. Mukand International Ltd. Bajaj Sevashram Pvt. Ltd. Jamnalal Sons Pvt. Ltd. The Project Report On Strategic Leaders Page 6 Rahul Securities Pvt Ltd Shekhar Holdings Pvt Ltd Madhur Securities Pvt Ltd Niraj Holdings Pvt Ltd Shishir Holdings Pvt Ltd Kamalnayan Investments & Trading Pvt Ltd Sanraj Nayan Investments Pvt. Ltd. Hercules Hoists Ltd. Hind Musafir Agency Pvt. Ltd. Bajaj International Pvt. Ltd. Bachhraj Factories Pvt. Ltd.

Baroda Industries Pvt. Ltd. Jeevan Ltd. Bachhraj & Co Pvt Ltd The Hindustan Housing Co. Ltd. Hospet Steels Ltd

4. STRATEGIC THINKING :

MISSION AND VISION :

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.

EXPLATIONAL THE STATEMENT :

As per the mission and vision statement the Bajaj group try to focus its brand identity and try to improve the brand in national and international level. The Bajaj group focus the people demand and launch the product so they are easy to fulfil the local demand as well as the international people

demand.

Brand Identity :
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. Brand Essence : Brand Essence is the soul of our brand. 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 spokenand the implicit expectations of our customers. By challenging the given. By exploring the unknown and thereby stretching ourselvestowards tomorrow, today. 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 proactivity. 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. I n 1960, when bicycle was still the primary means of transport in india , Bajaj Auto Limited was one of the first companies to introduce two wheelers in India;

Forward to the 1980s and again Bajaj becomes one of the first companies to introduce motorcycles in India; Fast forward to 2012 and Bajaj is a two wheelers giant with presence in more than 40 countries and boasting revolutionary technologies like DTSi, exhaustec, SNS with unmatched industry performance. To know more about the different technologies, glance through the different sections.

Perfection : Perfection is how we set new standards. It is a value that exhibits our determination toexcel 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 characterise ourselves. It is a value that makes us worthyof credibility through integrity, of trust through sensitivity and of lo yalty through interdependence.

LONG TERM GOALS. MARKET LEADERSHIP :

To provide quality, reliability and good value in the products we sell and services we offer. To be sensitive and responsive to changing customer needs right from product development stage to after-sales-service. To aim to become market leaders in whatever we take up for marketing whether in restricted areas for certain products or on an All-India basis for others.

PRICE COMPETITIVENESS
To improve our competitiveness by constantly enhancing the performance of our manufacturing, development, marketing and administrative functions. We would like to improve our profits by higher market share rather than by higher margin.

CONSUMER SATISFACTION
To develop the right relationship between the Company and all its customers, so that the customers needs are met simply and effectively. Services should not just be a slogan; it should be our Dharma. We have already established a consumer cell to take care of consumer complaints as also desired by the council for FAIR Business Practices.

ETHICAL DEALINGS
To conduct the companys affairs with honesty and integrity. People at every level will be expected to adhere to high standards of business ethics. The Project Report On Strategic Leaders Page 11

SOCIAL RESPONSIBILITY
To discharge our responsibility to people. We are committed to five groups of people and we cannot reduce the emphasis of obligations and responsibilities on any of them.

SUPPLIERS
They are our backbone. We have to see that they earn reasonable profits from dealings with us. We should also assure them satisfactory growth so that they also prosper with the prosperity of the company.

DEALERS
To motivate them by offering quality products at reasonable prices. We must create conditions for them in which they would like to establish long term relationship with us. We must make such policies that will improve the profits of our dealers.

PEOPLE
To offer growth and encourage promotion from within by proper training and motivation. To create an atmosphere that will encourage best of talent talent to join our company. To see that the fruits of prosperity are shared by those who have contributed in the prosperity of the company.

SHAREHOLDERS
To assure them proper growth and return for their trust in us by investing their money in our company.

CONSUMERS
To ensure that our customers are kept satisfied through good quality products at reasonable price and proper after-sales-services.

PROFIT AWARENESS
To earn reasonable profit is extremely essential for discharging our obligation to any of the above five groups of people. Awareness to profit has to be strengthened and percolated at all levels, since each person is expected to and must contribute to increasing the profitability of the Company.

QUALITY CONSCIOUSNESS
To perpetually strive to improve the quality where there is to be no compromise. People at all levels-whether they are employees or vendors, or dealers should be made to consider quality as a way of life. The emphasis on quality is not to be restricted to our products and our services only, but to all spheres of our activities.

TECHNICAL SUPERIORITY
To develop our Company in technical orientation so that we sell our products on the basis of technical superiority.

ACTION ORIENTATION
To be on our toes and always dynamic whether markets are good or bad. There should be no place for demoralization and frustration if the markets are bad or for complacency or lethargy when they are good. We should not The Project Report On Strategic Leaders Page 13 be satisfied with our past achievement but strive for higher and better

performance like a real Karma yogi.

EXCELLENCE CULTURE
To develop a culture where mediocrity is neither accepted nor tolerated. To create conditions where each person is striving to surpass his earlier best; where each person is motivated and assisted to give out his best.

5.STRATEGIC PALNNING

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 markets.

PORTERS FIVE FORCES ANALYSIS:

Supplier Bargaining Power:

Suppliers of auto components arefragmented and are extremely critical for this industry since most of the component work isoutsourced. Proper supply chain management is a costly yet critical need.
Buyer's Bargaining Power:

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

Industry Rivalry:

The industry rivalry is extremely high with any product being matchedin 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.
Substitutes:

There is no perfect substitute to this industry. Also, if there is any substitute to a two-wheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never directly compete or come in consideration while selecting two-wheeler ,cycles donever even compete with the low entry level moped for even this choice comes at acomparatively higher economic potential. .
Managerial Style: Off late Bajaj Auto Limited, Indias premier automotive company, has emphasiseda lot on organizational restructuring for the Auto business. With thisrestructuring,the existing business roles and responsibilities at the compay has beenstrengthened 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 be President- Engineering. 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 Josephwill continue to lead Research & Development.

BAJAJ GROUP STRETEGY :

The Bajaj Group is one of best and oldest group of India. The Bajaj group try to focus lower class people and produced product. The technical collaboration agreement with Piaggio of Italy expired in 1977. Afterward, Piaggio,maker of the Vespa brand of scooters, filed patent infringement suits to block Bajaj scooter salesin the United States, United Kingdom, West Germany, and Hong Kong. Bajaj's scooter exports plummeted from Rs 133.2 million in 1980-81 to Rs 52 million ($5.4 million) in 1981-82,although total revenues rose five percent to Rs 1.16 billion. Pretax profits were cut in half, to Rs63 million. Rahul Kamalnayan Bajaj, 66, has stepped down as managing director of Bajaj Auto passing onthe mantle of the company to his eldest son, Rajiv. Rahul Bajaj will continue as the chairman of the Bajaj conglomerate. Bajaj Auto is facing increased competition from Honda and Piaggio.Honda has overtaken Bajaj as India's No.1 scooter maker in the past two years. New Competition in the 1980s : Japanese and Italian scooter companies began entering the Indian market in the early 1980s.Although some boasted superior technology and flashier brands, Bajaj Auto had built up several advantages in the previous decades. Its customers liked the durability of the product and the ready availability of maintenance; the company's distributors permeated the country. The Bajaj M-50 debuted in 1981. The new fuel-efficient, 50cc motorcycle was immediately successful, and the company aimed to be able to make 60,000 of them a year by 1985. Capacity was the most important constraint for the Indian motorcycle industry. Although the country's total production rose from 262,000 vehicles in 1976 to 600,000 in 1982, companies like rival Lohia Machines had difficulty meeting demand. Bajaj Auto's advance orders for one of its newminimotorcycles amounted to $57 million. Work on a new plant at Waluj, Aura ngabadcommenced in January 1984.The 1986-87 fiscal year saw the introduction of the Bajaj M-80 and the Kawasaki Bajaj KB100motorcycles. The company was making 500,000 vehicles a year at this point. Although Rahul Bajaj credited much of his company's success with its focus on one type of product, he did attempt to diversify into tractor-trailers. In 1987 his attempt to buy control of Ahsok Leyland failed. So as per this detail the Bajah adopt because it deals with product market.

BUSINESS LEVEL STRETEGYEND OF LICENSE RAJ

The Bajaj Sunny was launched in 1990; the Kawasaki Bajaj 4S Champion

followed a year later. About this time, the Indian government was initiating a program of market liberalization, doing away with the old 'license raj' system, which limited the amount of investment any one company could make in a particular industry. It was hoping to increase its exports, which then amounted to just five percent of sales. Thecompany began by shipping a few thousand vehicles a year to neighboring Sri Lanka andBangladesh, but soon was reaching markets in Europe, Latin America, Africa, and West Asia. Itsdomestic market share, barely less than 50 percent, was slowly slipping.By 1994, Bajaj also was contemplating high-volume, lowcost car manufacture. Several of Bajaj's rivals were looking at this market as well, which was being rapidly liberalized by theIndian government.Bajaj Auto produced one million vehicles in the 1994-95 fiscal year. The company was theworld's fourth largest manufacturer of twowheelers, behind Japan's Honda, Suzuki, andKawasaki. New models included the Bajaj Classic and the Bajaj Super Excel. Bajaj also signed development agreements with two Japanese engineering firms, Kubota and Tokyo R & D. Bajaj'smost popular models cost about Rs 20,000. 'You just can't beat a Bajaj,' stated the company's marketing slogan. The Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw were introduced in 1997. The next year saw the debut of the Kawasaki Bajaj Caliber, the Spirit, and the Legend, India's first four-stroke scooter. The Caliber sold 100,000 units in its first 12 months. Bajaj was planning to buildits third plant at a cost of Rs 4 billion ($111.6 million) to produce two new models, one to be developed in collaboration with Cagiva of Italy.

NEW TOOLS IN THE 1990S

Still, intense competition was beginning to hurt sales at home and abroad during the calendar year 1997. Bajaj's low-tech, low-cost cycles were not faring as well as its rivals' higher-end offerings, particularly in highpowered motorcycles, since poorer consumers were with standing the worst of the recession. The company invested in its new Pune plant in order to introduce new models more quickly. The company spent Rs 7.5 billion ($185 million) on advanced, computer-controlled machine tools. It would need new models to comply with the more stringent emissions standards slated for 2000. Bajaj began installing Rs 800 catalytic converters to its two-stroke scooter models beginning in 1999.Although its domestic market share continued to slip, falling to 40.5 percent, Bajaj Auto's profit sincreased slightly at the end of the 1997-98 fiscal year. In fact, Rahul Bajaj was able to boast, 'My competitors are doing well, but my net profit is still more than the next four biggest companies combined.' Hero Honda was perhaps Bajaj's most serious local threat; in fact, in

thefall of 1998, Honda Motor of Japan announced that it was withdrawing from this joint venture.

REVAMPING THE DESIGN

Bajaj Auto had quadrupled its product design staff to 500. It also acquired technology from itsforeign partners, such as Kawasaki (motorcycles), Kubota (diesel engine s), and Cagiva(scooters). 'Honda's annual spend on R & D is more than my turnover,' noted Ruhal Bajaj. Hisson, Sangiv Bajaj, was working to improve the company's supply chain management. A marketing executive was lured from TVS Suzuki to help push the new The Project Report On Strategic Leaders Page 20 cycles. Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999.These, and a surge in consumer confidence, propelled Bajaj to sales records, and it began to regain market share in the fast-growing motorcycle segment. Sales of three-wheelers fell as some states, citing traffic and pollution concerns, limited the number of permits issued for them.

SHARE IN COMPETITOR
In late 1999, Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million. The Italian firm had exited a relationship with entrepreneur Deepak Singhania and was looking toreenter the Indian market, possibly through acquisition. Piaggio itself had been mostly bought out by a German investment bank, Deutsche Morgan Grenfell (DMG), which was looking to sell some shares after turning the company around. Bajaj attached several conditions to his purchase of a minority share, including a seat on the board and an exclusive Piaggio distributorship in India. Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-month strike at its Waluj factory) to 17,000 in 1999-2000. The company planned to lay off another 2,000 workers inthe short term and another 3,000 in the following three to four years. Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd. Principal Competitors: Honda Motor Co., Ltd.; Suzuki Motor Corporation; Piaggio SpA The Project Report On Strategic Leaders Page 21 Marketing Strategies: The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models comeloaded with the latest features within the price band acceptableby the market. BAL has been the pioneer in stretchingcompetiti

on into providing latest features in the price segment byup dating the low price bikes with the latest features like disk-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 HeroHonda 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. Boxermarketed as a value for money bike with great mileage. Largerwheelbase, high ground clearance and high mileage were theselling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100. The Project Report On Strategic Leaders Page 22 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 man date for the ad campaign to Lowe, picking them from the clique of three agencies that do promos for the company (theother two being Leo Burnett and O&M). Going by the initialmarket 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 do that the same time. Pulsar Pulsar was launched in direct competition to the HeroHonda's 'CBZ' model in 150 cc plus segment. The campaignbeared in novative punch line of "Definitely Male" positioningPulsar 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 mark in sales. The Project Report On Strategic Leaders Page 23 Discover The same DTSI technology of Pulsar extended to 125cc 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 for every segment of its business and consumers. BajajAuto's entire product portfolio, from the entry-level to thepremium, is being sold by the same dealers. The restructuring willinvolve separate dealer networks catering to the urban and ruralmarkets as well as its threewheeler and premium bikessegments. Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. The needs of financing, selling, distribution and even after-sales service are completely different in the rural areas and do not makes sense for city dealers tocontrol this. The company also plans to set-up exclusivedealerships for its three-wheeler products instead of having them sold through an estimated 300 of its existing dealers.

EXPLATION OF BAJAJ STRETEGY

Before 1980s ( adopt International strategy) After the completion of Piggio agreement the Bajaj group export its product scooter to another countries like U.S , U.K., Germany The bajaj group earning at that time is Rs.133.20 million. The bajaj always try to maintain its product selling and its profitability. The bajaj successful in management decision and easy to increase sales in outside of India.

New Competition in the 1980s

( adopt synergistic strategy alliance) Japanese and Italian scooter companies began entering the Indian market in the early 1980s. The bajaj already sale its new product 50cc fuel efficient motorcycle. After 1981 Bajaj launch MK100cc bike. The company made 500000 bike in a year. So we can see taht at the changing time the company change its product , the company adopt changing policy to develop its business. Both company joint hand and launch new product in domestic market or foreign market. In this strategy two company joint hand and produced new product in market and increase the brand name. With the help of this strategy company try to sale maximum product in the domestic market and create the brand value.

END OF LICENSE RAJ

(adopt Business level Cooperative strategies) The government of india decided outside company easy to collaborate that business to the Indian company so the bajaj group joint hand to Japanese company KAWASAKI to launching new bike in india and outside india.

The KAWASAKI was famous Japanese company for technology and manufacturing engine. At this time SUZUKI and HONDA came in Indian market. The Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw were introduced in 1997. The next year saw the debut of the Kawasaki Bajaj Caliber, the Spirit, and the Legend, India's first four-stroke scooter. The Caliber sold 100,000 units in its first 12 months. Bajaj was planning to buildits third plant at a cost of Rs 4 billion ($111.6 million) to produce two new models, one to be developed in collaboration with Cagiva of Italy. The company adopt Business level Cooperative strategies. Because at that time the design made by KAWASAKI. In the business level cooperative strategy two company shared their resources and reached the product. In this strategy the engine and bikes design made by Kawasaki and launches the new product.

EW TOOLS IN THE 1990S

( adopt Corporate Relatedness) 'Honda's annual spend on R & D is more than my turnover,' noted Ruhal Bajaj. His son, Sangiv Bajaj, was working to improve the company's supply chain management. A marketing executive was lured from TVS Suzuki to help push the new cycles. Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999.These, and a surge in consumer confidence, propelled Bajaj to sales records, and it began to regain market share in the fast-growing motorcycle segment. Sales of three-wheelers fell as some states, citing traffic and pollution concerns, limited the number of permits issued for them. The Bajaj capture market and the brand name is very popular and famous so the company launch and new product easy to sale there product in market it is called The Project Report On Strategic Leaders Page 26 corporate relatedness. The benefit is the customers not identify the product because the products given parent brand name.

SHARE IN COMPETITOR
(adopt Equity Strategic Alliance) In late 1999, Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million. The benefit of the bajaj company easy to collect worker to its own plant and also in Piaggio Indias worker also work in Bajaj so the overall production maintain easily. It is called EQUITY STRATEGIC ALLIANCE. In this strategy one company purchase some percentages holding in another company and try to produced product and sale in the market.

Other Strategies apply by Bajaj LOW COST STRATEGY

The Bajaj famous for its scooter and bike in india and outside of india. The

Bajaj focus rural area and try to manufacturing low cost bike ( Bajaj Platina) so they are easy to sale its product in the market. This Strategy is called low cost strategies. The details of low cost strategy with example are as under.

DIFFERTIATION STRETEGY
Bajaj try to innovative its product so they are changing bikes engine and manufacturing fuel efficient bike, more power, more space etc. For e.g. Bajaj Discover is Fuel efficient bike, Bajaj Pulser is more powerful bike and Bajaj Avenger is famous for space. Bajaj try to provide innovative product to its customers. The products details of Bajaj auto ltd. are as under. Rajiv's answer on many such days is: "We are No. 1 in technology, in exports, in market cap, in profitability....the only bit that remains is to be a leader in volumes." A few days ago, the 46-year-old CEO told this writer. "We need to take the longer route to that [to become No. 1 in volumes] because only in mathematics is a straight line the shortest distance between two points. I tell my father it's not as if we have given up on that metric; we're just taking the more profitable road there."

The Scooter Segment

The "longer route" Rajiv is talking about involves a re-entry into the entrylevel market, which accounts for 65% of the bike market; BAL recently launched the 100 cc Discover T in this segment, and Rajiv is at pains to point out that it is not a me-too product, but a well-differentiated one with superior power, features and styling, and "more expensive than the most expensive product" in the 100-cc segment. he second milestone of the "longer route" is unlikely to appear in the sshort to medium term. Rajiv says he "may" return to scooters, but only after BAL reaches a "dominant" global share in bikes from 10% today to 30% or even 40%, a point at which BAL may feel there is little headroom left to grow the motorcycles business. "One day BAL will have to come back to scooters but I am sure it will be a premium product, and high on fuel efficiency," says RL Ravichandran, executive director, Eicher Motors, a former marketing honcho at the Puneheadquartered two-wheeler maker. With scooters growing at a healthy clip of 18.4% in fiscal year 2013 faster than the 0.77% motorcycles are plodding at and everybody from Honda to Hero MotoCorp to Mahindra & Mahindra scoring healthy gains in this segment, there's adequate reason for the chairman (Rahul Bajaj) and board members to gently nudge Rajiv towards scooters. After all, a combination of a presence in the mass market for bikes at the higher end coupled with a scooter portfolio will go a long way in closing the gap with leader Hero MotoCorp.

Says Anil Dua, senior vice-president, sales & marketing, Hero MotoCorp: "If you want to be a significant player in India, you have to be both in 100cc bikes and scooters. Scooters account for 20% of the two-wheeler market and 100 cc accounts for 65% of the bikes market." Adds YS Guleria, vice-president, sales & marketing at Honda Motorcycle & Scooters India (HMSI): "You can take an Indian out of the scooter market but not a scooter out of an Indian heart. Scooters are now selling in the commuting segment and in terms of mileage are comparable to motorcycles." The Project Report On Strategic Leaders Page 31

Strategy or U-turn?

FOCUS STRETEGY As per the details of differentiation strategy the bajaj auto adopt focus group strategy in this strategy the Bajaj group focus the class of people and then after they launches its product so they are easy to fulfil the demand of customers. Focus on Gearless Scooters The market share of gearless scooters is increasing at a healthy rate. Bajaj is virtually absent in this range that caters to the needs of women and families. Presently Honda, Hero Honda and TVS are big players in this segment. Entry into Four Wheeler Segment Bajaj has entered into a joint venture with Renault-Nissan in the development of a small car priced at $30004. This is a significant move because it directly competes with Tata NANO. Bajaj has also displayed its small car prototype in the recently held auto expo. It promises double the mileage as compared to any car in the economy segment and is also considering the option of introducing Diesel and LPG variants. The four wheeler segment will also be able to hedge any risk that might arise because of the two wheeler industry and would profit from retaining consumers switching from two wheelers.

Scaling Up Service Centers BAL needs to scale up its service centers both in numbers and in capacity. Keeping in line with its growth target for the next 5 years, its service centers should not only cater to two wheelers but should also be upgraded to cater to the needs of four wheelers that Bajaj plans to launch. The Project Report On Strategic Leaders Page 36

Focus on Easy Credit Lending In the present economical crisis, Bajaj can utilize its subsidiary, Bajaj insurance in coming up with schemes that will help consumers buy two wheelers on friendly terms. Investment in Research and Development We have already identified that the core competency of Bajaj is its R&D and investment in technology. In order to increase market share and become the market leader, Bajaj needs to invest heavily in R&D. They have to introduce efficient and powerful bikes as well as develop alternate energy vehicles. Focus on Exports and Global Market Bajaj Electricals has already setup a manufacturing unit in China. As set up cost and export costs are extremely cheap in China, we recommend the same strategy for BAL. By doing so, Bajaj can utilize low cost exports. Bajaj is not yet a global name. Considering the fact that it is one of the oldest two wheeler companies and is doing very well in India, it should definitely target global markets. A movement is seen in this direction since it is focusing on the British cult bike company, Triumph as its target takeover. Triumph, given its niche positioning, cult brand image and strong product line-up, is an attractive target for the Pune based firm. Disbanding of Dedicated Sales Force for each Product Because of the differentiation in the products that Bajaj currently possesses and is expected to launch in the near future we recommend Bajaj to discontinue its current strategy of dedicated sales force for each product line. This would eventually achieve synergies in selling thereby leading to a reduction in costs INTERNATIONAL STRETEGY Bajaj also adopt international strategy because bajaj sale its motorcycle and scooters in outside of india. Bajaj has successful in INTERNATIONAL STRETEGY because they have easy to capture Indian market. In international strategy company compulsory successful in domestic market than after he enter the foreign market. With the help of international strategy the bajaj auto sale its product in U.S.,U.K., and other countries. With the help of international strategy company expand its brand name and customer easy to identify the products of bajaj. In The international strategy, the bajaj develop the products demand and firm exports product. Bajaj is present in over 50 countries all over the globe Dominant presence in Africa, Latin America and South Asia with increasing market share every year

Market leader in motorcycles in Colombia, Central America, Sri Lanka, Bangladesh, Philippines, Nigeria, Uganda and Kenya 891,002 units exported in 2009-10, an increase of over 15 % over the previous year Total motorcycle exports of 726,115 in 2009-10, growth of 15% over 2008-09 Largest exporter of three wheeled commercial vehicles in the world: 164,887 units exported in 2009-10, a rise of 19% over 2008-09 The Project Report On Strategic Leaders Page 38 Bajaj Auto is one of the oldest and the second largest two wheele manufacutrer in India. In addition to coping with fierce competition from other players in the two wheeler segment, it also has to protect its market share from the impending onslaught of low price small cars such as Tata Nano. Holding on to its postion in such a challenging market environment requires innovative strategies and deep understanding of consumers needs. The article analyses the two wheeler market in India and Bajaj's positioning therein. Based on the analysis, the article proposes the strategic options available to Bajaj.

Two Wheeler Industry: An Overview

The Indian two-wheeler industry has witnessed spectacular growth in the last few years. The market dynamics of the industry has substantially changed with a majority of the customers preferring bikes to scooters and mopeds. This is primarily due to better fuel efficiencies, dynamics, looks and longer product lives of motorcycles. The Project Report On Strategic Leaders Page 39 The motorcycle segment constitutes about 81.5% of the two wheeler market in India1. It also contributes to three-fourths of the total exports in the two wheeler industry. Exhibit 1 shows that Bajaj is the second largest player in this segment after Hero Honda. Exhibit 1. Market Shares of the major players in the two wheeler market segment The industry exhibits some degree of collusive behaviour and thus represents an oligopolistic form of market structure. Product and brand differentiation are seen as the primary means of sustaining competitive advantage. In order to sustain brand equity, players spend large percentages of their revenues in advertising and brand building activities. The supply and distribution networks are decisive factors in staying competitive and normally need a huge capital investment. The two wheeler industry is capital intensive with large fixed cost requirements and new model introductions mandatory at frequent intervals in order to sustain the demand. This involves substantial design and R&D costs. Such high fixed costs can be offset only by achieving economies of scale. Moreover, developing a distribution channel is extremely difficult in

a country like India. Therefore, it is difficult for a new player to enter this industry.

Demand and Growth Drivers The following factors play a major role in increasing the demand for two wheelers in India. Personal Income, demography and penetration level are key growth drivers in the two wheeler industry. Personal Income Demand increases as the income increases, only to be substituted later by the demand for four wheelers. Income has been steadily growing in India and is projected to stabilise at a growth rate of 9-12 percent range by 20122. Demography and Inspiration The bigger the young and working population, the greater is its need for commutation. The IT and BPO revolution has influenced this movement. This is a favourable factor since Indias workforce is young. Penetration Level The lower the penetration levels in the market, the better the scope for future demand. As the penetration of the rural market is significantly low, it is going to be a significant long term growth driver. Other Factors Improvement in infrastructure increases competition, while simultaneously improving the public transport. The average time period taken to replace an existing bike with a newer model has decreased from 7 years to 5 years, resulting in replacement demand growth. Problems in the Two Wheeler Industry - Negative Growth Negative growth is the major problem being faced by companies in the two wheeler industry. The two wheeler industry has been shrinking continuously3. From a peak of over 40% growth in 2002 it is currently facing a growth of -12% in the second quarter of 2008. Exhibit 2 shows the recent trends. The Project Report On Strategic Leaders Page 41 Exhibit 2. De-growth in the industry Analysis of the different segments leads us to the conclusion that the main reason for negative growth in the two wheeler market is the fall in demand for the 100 cc segment which has traditionally enjoyed the maximum market share as shown in Exhibit3. FY06 9M/07 Q4/07 Q1/08 Q2/08 Motorcycles 19% 18% 4% -10% -12% 100cc 7% 14% -12% -20% -23% 125cc 121% 31% 71% 10% 11%

150cc 29% 22% 43% 28% 22% Exhibit 3. Segment-wise analysis Many factors have contributed to this phenomenon. A few of them are discussed ahead.

Interest Rates Interest rates are one of the prime reasons for the sharp fall in demand. Many banks have increased interest rates which make two wheelers costlier. Credit Crunch Difficulty in availing loans, rising defaults, tightening of loan recovery laws and various other factors have dissuaded consumers from availing loans and led to further problems in credit lending. Oil Prices Increasing oil prices have deterred many lower middle class families from buying two wheelers. Launch of Low Priced Cars Like Tata Nano Introduction of low priced cars will directly affect the market. The family segment would want to gradually move from two wheelers to four wheelers. The major impact of this phenomenon would be experienced in the 100-125 cc two wheelers whereas the performance segment i.e. > 125cc will continue to grow strongly. Tightening Regulations (Emission Standards) With the introduction of the Bharat-4 norms, it will be more challenging to meet these stringent norms whilst simultaneously offering competitive prices. In spite of these factors, demand drivers are present for the foreseeable future and are favourable for the two wheeler industry. However, to capture this growth, any player will have to correctly position itself to appeal to the consumer. Positioning of Bajaj Auto in the Two Wheeler Industry Bajaj Auto is the flagship company of the Bajaj Group of Companies. Bajaj Auto Limited (BAL) is currently India's second largest two wheeler and three wheeler manufacturer. The core competency of Bajaj Auto Ltd is its technology and innovation. Both DTS-i (Digital Twin Spark Ignition) and DTS-Fi (Digital Twin Spark Fuel Ignition) are technological breakthroughs by Bajaj. BAL is also a pioneer in product innovation having introduced technologies such as ExhausTEC (Exhaust Torque Expansion Chamber), LED Tail Lamps, LCD Display, SNS, Spare parts (Tubeless tyres, rear disc brakes), Black colour scheme etc. Thus we observe that BAL which used to be a Defender in 1970-1990 through Bajaj Chetak radically moved towards becoming an Analyzer (1990-1997) by focussing on bike segments and has now become a Prospector (1997-date) with several patents in its kitty and new bike

launches every year. Therefore, for a follower to move on and become a market leader it is essential that it focus on innovation and consumer demand. The Way Ahead Graduating Customers from the 100cc to Higher Segments There are several reasons why Bajaj should concentrate on its core segment, i.e. greater than 125cc segment. With the introduction of DTS-i and DTS-Fi technology, Bajaj Auto Limited has led the way in pioneering technology along with style. The Profitability Pyramid in Exhibit 4 shows that the margin is very low in the sub-125cc segment but volumes are high. BAL wants to shift users from 100, 115cc segment to 125cc and higher. Thus Bajaj not only wants to play on the margins but also wants to increase the market share of 125cc bikes. With its recent launch of XCD 125cc, it has brought in competition for its own 100cc model, Platina by delivering a bike that is better in all respects (including fuel efficiency). The Project Report On Strategic Leaders Page 44 Exhibit 4. Profitability Pyramid Thus, we conclude that Bajaj wants to make a slow departure from 100cc segment. It has already stopped production of the Discover 125 and will continue production of the Platina until the demand for the 100cc remains. It has priced the XCD between the Platina and the Discover and in the future, would ideally wish to project the XCD 125 as its base model. 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 HeroHonda 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.

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 stampduty to the government for the de-merger. A combination of alarge 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 scooter sand 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. Exports to middle Africaand the Saharan nations. Egypt and Iran also continue to bestrong markets for Bajaj. He began his career on the shopfloor of Tata Motors before joining the family firm, Bajaj Auto. At that point, Sanjiv Bajaj must have assumed he would spend most of his life among vehicles, be they of the four-wheeled or two-wheeled variety. But in December 2007, Rahul Bajaj's younger son shifted gears altogether and took control of a completely new portfolio of businesses - financial services. He took charge as managing director of Bajaj Finserv soon after. The big change came after Bajaj Auto was demerged into three separate companies in 2008 Bajaj Auto, Bajaj Finserv and Bajaj Holdings. As part of the deal, Sanjiv, an MBA from Harvard Business School, took charge of the financial services side of the business while elder brother Rajiv ran the automobiles business. It was not an easy transition. Sanjiv, who had also studied mechanical engineering and manufacturing, was thrown into a business in which the group had no experience. The first year after he took charge of Bajaj Finserv Ltd, its financial firm was deep in the red. Rajiv's more highprofile Bajaj Auto, on the other hand, was a profit-making firm riding on the success of its two-wheelers. The Project Report On Strategic Leaders Page 47 "Five years ago, when we started looking at financial services, what we had was a small mono-line company, Bajaj Auto Finance, financing autos. We had two insurance companies in different stages of growth. That was

really all our presence," says Sanjiv. But the younger Bajaj scion, who practises yogic breathing exercises that help him tap his inner energy, has come a long way in the past five years. His business philosophy of focusing on the long-term but not losing sight of profitability is paying off. Today, Finserv is fast catching up with Rajiv's Bajaj Auto: the firm with a finger in both insurance and lending has seen a huge turnaround from a loss of Rs 32 crore in 2007/08 to a profit of Rs 1,338 crore in 2011/12. In comparison, Rajiv's auto business profits have jumped four times from Rs 726 crore to Rs 2,990 crore during the same period. "We don't want to act like venture capitalists. We'd rather focus on the long term and build businesses which we think have tremendous value," says Sanjiv, sitting in his swanky sixth-floor Pune office. "Choosing when to grow, and growth of the right quality are also important parts of strategy." Kevin D'Sa, an old loyalist who still splits his working day between the Bajaj brothers' businesses, says Sanjiv's empire will have assets of over Rs 100,000 crore in the next 10 years. Bajaj Finance Ltd, the lending arm, had assets under management of little over Rs 13,000 crore in March 2012, while the group says it has assets of nearly Rs 60,000 crore. "Sanjiv, who is 43 today, is here for the long haul," 58-year-old D'Sa adds. D'Sa began his career with the unified Bajaj Auto when the Bajaj scions were in their teens. Today, he wears two hats: he is President (Finance) at Rajiv's Bajaj Auto, as well as Chief Financial Officer and President (Business Development) at Sanjiv's Bajaj Finserv. The Project Report On Strategic Leaders Page 48 "A part of me was also split up. I spend 75 per cent of my time at Bajaj Auto," he says, sitting at the Bajaj corporate office at Akurdi on the outskirts of Pune. But he also works closely with Sanjiv in exploring new opportunities. D'Sa says Sanjiv is a manager who delegates, but does not abdicate. "At the operating level, decision-making is quick," he says. "Rajiv Bajaj believes, convinces himself and drives a business. Sanjiv goes a little more with consensus." A sports freak whose interests range from basketball to tennis, Sanjiv thinks out-of-the-box professionally and personally. He prefers, for example, to listen to audio books and is listening to The Signal and the Noise by Nate Silver, a book that involves 60 hours of listening. "After doing my phone calls and meetings, I take out time. I finish a book in three to four weeks," says Sanjiv. Despite the turnaround, Sanjiv has a lot of catching up to do with his brother in terms of market capitalisation. Five years ago, both brothers' companies were neck and neck at around Rs 8,000 crore. Today, Bajaj Finserv's market cap is Rs 14,947 crore, compared with Bajaj Auto's Rs 60,195 crore. But Sanjiv is not daunted by such comparisons. His mantra is to have a differentiated strategy and cautiously scale up his businesses. So, while he is in the process of tweaking the wealth management business strategy, the mutual fund business is still on the drawing board. The slow-and-steady

approach is also reflected in Sanjiv's strategy for the insurance business. The Project Report On Strategic Leaders Page 49 He took a conscious decision to slow down the business from 2008 because, unlike manufacturing, the sector is dependent on the regulatory environment. The gross premium of Bajaj Allianz Life Insurance fell from Rs 11,420 crore in March 2010 to Rs 7,484 crore in March 2012. "The business was falling because we were letting it fall," says Sanjiv. Sanjiv makes it a point to spend time interacting with financial regulators. He says the nature of auto manufacturing is different because, once emissions and sound rules are followed, the product can be manufactured without fear of regulations changing. His strategy has paid off. The 10-year-old Bajaj Allianz Life Insurance is the second most profitable insurance firm, while ranking fourth in firstyear premium collections. "We managed to maintain our profitability," says Sanjiv whose focus in general insurance is more on retail than on corporate business. The Project Report On Strategic Leaders Page 50 Sanjiv believes there should be no chasing of market share at the cost of profits. Rajeev Jain, who heads Bajaj Finance Ltd, a non-banking finance company (NBFC) focused on consumer lending and commercial loans, says Sanjiv always asks two questions about any fresh business proposal. Can it scale to become a billion-dollar business? And, how will it be different from others in the same field? "Once broad goals are set, he gives the operating CEO a free hand" says Jain. Despite his generally measured strides, Sanjiv has moved fast at Bajaj Finance. At a time when other NBFCs shut down or withdrew from the retail business, Bajaj Finance has expanded its product line from two products five years ago to nearly a dozen in 2012. The company has grown its assets to Rs 13,107crore, profits to Rs 406 crore and top line to Rs 2,163 crore as on March 2012. Five years ago, 80 per cent of Bajaj Finance's business focused on auto financing, but Bajaj Finserv's lending arm is no longer dependent on Bajaj Auto customers. The business has seen new product lines such as loans to small and medium enterprises (SMEs), business loans, construction equipment financing and infrastructure financing. Today, SMEs have a 28 per cent share in the lending portfolio, followed by equipment and infrastructure financing at 27 per cent. Cross-selling is the central framework of Sanjiv's financial services business. "The target for crossselling is to have two products per customer in the consumer business and five products per customer in the SME business," says Bajaj Finance's Jain.

In wealth management, too, Sanjiv is bringing in the cross-selling model. A year-and-a-half ago, Sanjiv launched the advisory and wealth

management business targeting the middle class. The strategy is to do it small, test the product, learn and then scale up rapidly. "We are tweaking the business model as the cost of acquisition is very high in a push model," The Project Report On Strategic Leaders Page 51 Sanjiv's biggest bet is to get a banking licence to scale up his lending businesses. "The business is not hampered today because of lack of licences," he says. "But a banking licence makes a sense in the long term, say 10 years down the line." But he is still not in a hurry to launch new businesses. The mutual fund business, for instance, which got the Securities and Exchange Board of India's clearance a year ago, has yet to start. Insiders say the group is considering acquring a mutual fund to build scale. For Sanjiv, funds are not a constraint. Bajaj Holdings & Investment Limited - the holding company created following the demerger - has all the investments and cash balances he would need. It also owns 31 per cent of Bajaj Auto and 39 per cent of Bajaj Finserv. "The market value of Bajaj Holdings & Investment is close to Rs 28,000 crore," says D'Sa, who also manages the treasury of this third company. In addition, Bajaj Finserv has reserves and surpluses of its own of over Rs 5,000 crore. If the banking licence comes through in 2013, Sanjiv will be en route to creating a truly powerful Bajaj brand in the financial services business. And this lanky sports enthusiast knows very well that profits will flow in once he has the right people and strategy in place.

STRETEGY OF SANJIV BAJAJ

(adopt joint venture strategy)

The Sanjiv Bajaj adopt Related constrained because they are manage Bajaj Holding and Investment but Sanjiv owns 31per cent of Bajaj Auto and 39 per cents of Bajaj Finserv. In the Related Constrained less than 70 per cents revenue comes from a single business. The market value of Bajaj Holding and Investments is close to 28000 crore. The Sanjiv manage Bajaj Holding and Investment, Bajaj finserv, and Bajaj Financial Services. The Project Report On Strategic Leaders Page 52 Sanjiv bajaj also adopt JOINT VENTURE STRETEGY and open one legal independent company that is Bajaj Allianz. The benefit of the joint venture, the Bajaj Allianz earn Rs.1311 Cror in life insurance policy and capture the Indian insurance market.

Mergers & Acquisitions

Bajaj Finserv, Allianz To Form JV For AMC Biz Marking its foray into the mutual fund business, Bajaj Finserv, the financial services arm ofBajaj Group, today said it has entered into an agreement with Germany-based Allianz Global Investors to set up an

asset management joint venture firm in the country. Under the agreement, Allianz would hold a 51 per cent stake in the joint venture firm, while the remaining 49 per cent stake would be with the Indian partner, Bajaj Finserv said in a filing to the Bombay Stock Exchange. The two groups are already in a joint venture relationship in the insurance sector. "Allianz and Bajaj have developed a close relationship over the past eight years in the process of jointly nurturing life and general insurance businesses. I am confident this JV will be as successful as our insurance firms in India," Bajaj Finserv Chairman Rahul Bajaj said. The agreement to set-up asset management JV is subject to approval from the regulatory authorities, the company further said. "In spite of the turmoil in the global financial markets, I believe India will continue to grow at a healthy pace in the long-term," Allianz Global Investors CEO Joachim Faber said.

Source: http://businesstoday.intoday.in

Conclusion:

Through this article we have tried to identify various factors that would impact growth of a company in two wheeler industry. We reflected on the importance of innovation and consumer demand. To graduate from being followers to market leaders, companies need to invest in the right technologies and develop the right products at the right time. Bajaj has shown the willingness to change and thus has been able to achieve strong sales growth. To further consolidate its position and gain market share in the industry, Bajaj needs to do strategic rethinking and assess its product focus. The new strategy should also be backed by efficient on the ground customer support and continuous research for product innovation.

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