Bajaj Auto Limited's Business Strategy - From Market Leader to Follower
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Case Code: BSTR344 Case Length: 16 Pages Period: 1990-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Bajaj Auto Limited Industry: Automobile Countries: India Themes: Failure Strategy, Revival Strategy, Competitive Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Even though they [Bajaj Auto] have worked much harder than Hero Honda in creating a differentiated product, none of them, other than the Pulsar, have been successful."
- Joseph George, Analyst at BNP Paribas Securities Limited, in January 2009.
Introduction
On July 18, 2009, India-based Bajaj Auto Limited (Bajaj Auto), a leading manufacturer of two wheelers and three wheelers, launched the 100 cc Discover DTS-Si motorcycle. The new product had several unique features such as a Digital Twin Spark-Swirl Induction (DTS-Si) engine, nitrox suspension, the longest wheelbase in the 100 cc segment, a 5 speed gear - the first in the 100 cc segment, and a maintenance free battery. Commenting on the new product, Rajiv Bajaj (Rajiv), Managing Director, Bajaj Auto, said, "We are launching a bike which is not seen as a 100 cc bike and we wish to offer it to people who typically buy 100cc motorcycles but would like to upgrade."
For Bajaj Auto, the launch of the 100 cc Discover DTS-Si motorcycle served as a point of re-entry into the entry segment of the motorcycle market. The company had reduced its focus on the entry segment motorcycles three years earlier, citing low operating margins, even though the entry segment motorcycles accounted for about 50 percent of the company's total sales volumes in 2006. Commenting on the launch of the new product and the renewed focus on the 100 cc motorcycle segment, Rajiv said, "We are not changing our strategy. The 100 cc market has got numbers. All we wanted to do was give the commuter a choice, more value for money. We have no choice but to have substantial share here."
Bajaj Auto, which had been selling two wheelers in India since 1945, was the market leader in the Indian two wheeler industry till the 1990s, riding on the success of its popular scooter models. The company faced hardly any significant competition during that time, but this worked against the company. It grew complacent, with the result that it failed to realize the structural shift in demand toward motorcycles among Indian consumers...
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