TRANSFORMATION OF INDIAN TWO WHEELER

MARKET

Business Environment

Internal Environment (Control)

ValuesMission

ObjectivesCo. Image

Human Resource

Suppliers

Competitors

CustomersInter-mediaries

Political

Economic

Technological

Cultural

Demographic

Legal

MicroEnvironment (Influence)

MacroEnvironment (Respond)

Factor Changes Impact on Industry

Demographic UrbanizationGrowing youth population

Increased Demand Increased demand for stylish bikesDevelopment of new market segment

Regulatory orPolicy

Broad banding of license

Liberalized FDI regulations

100% FDI

New Models leading to Market developmentJoint Ventures between Indian and foreign co.s Break-up of JVsForeign co.s set up wholly owned subsidiariesIndian co.s had to go alone

Technological Fuel-efficient Bikes

Switch-start

Auto Gear Scooters

Fall in demand for Scooters and old-tech bikes (Chetak, Rajdhoot, Yezdi, Yamaha, Kinetic Honda etc.)New demand from women and old age peopleScooters and Scooterettes for dual / family use

Socio-Cultural Acceptance of employment / education for women

New demand for sleek, stylish, lower CC scooterettes from women

New Work

Factor Changes Impact on Industry

Socio-Cultural Changes in dressing

Increased travel needs among rural India

Increased demand for all categories of two-wheelersPent-up rural demand

Economic Increasing disposable incomesReduced interest ratesEasy availability of credit for purchase of automobilesInadequate public transport facilities

Increased demand for two / four wheelersShift from two-wheeler to four-wheeler Second hand two-wheeler market Auto co.s started NBFCs to provide easy-financing options

Competition Intensified with entry of MNCs

Improved market due to availability of variety of scooters and bikes

After-sales Service network had to be created with trained technicians

Create world-class R&D facilities to face foreign competition

Factor Changes Impact on Industry

Political Economic ReformsLiberalizationPrivatizationGlobalization

Reduced breakdowns due to Improved road conditions

Increased demand for all categories of two-wheelers as buying capacity of all segments of people improved tremendously

Internal Environment

Investment on R&D facilitiesChanging / re-crafting strategies to compete with MNCsChanging Brand / Co. Image

Question: “Firms which systematically analyze and diagnose the environment are more effective than those which don’t”. Comment in the light of the above case.

Answer• Bajaj – Introduced bikes and discontinued Chetak.

Changed its Brand Image to attract youth. Invested on R&D, Distribution, After-sales Service and Marketing to withstand the competition from MNCs

• Hero, TVS – Developed R&D to stay in the competition after breaking-up of JVs with foreign partners

• Kinetic – Disappeared from market after breaking-up of JV with Honda.

• Rajdhooth, Yezdi, Road King – Could not survive in the new competition from Japanese automakers