Bajaj Auto - Strategy

This case is about the Brand-centric strategy that the fourth largest two-and three-wheeler manufacturer in the world,
Bajaj Auto Ltd., adopted in 2009. The scooters produced under the Chetak brand dominated the Indian two-wheeler market from the early 1970s to the early 1990s and helped Bajaj Auto become a leader in the industry. As the Indian Two-wheeler Industry was deregulated and welcomed competition in the 1990s, Bajaj Auto began to face a threat from foreign players. In addition, in the late 1990s, due to a shift in consumer preferences and demand from scooters to motorcycles, Bajaj Autos sales and market shares started declining and posed a challenge of sustenance for the company. As a result, by the early 2000s, motorcycle sales surpassed that of scooters and Bajaj Auto lost its market share to Hero Honda. In an attempt to recapture market share, Bajaj Auto restructured its business and launched new motorcycle models. However, Bajaj Auto lost its dominance in the scooter market. Realizing the changing dynamics of the Indian two-wheeler industry and the deficiencies at Bajaj Auto, Rajiv Bajaj began to develop a new strategy for the company. He shifted the focus from scooters to motorcycles and emphasized enhancing the quality of products. Twin-Brand Focus vs. Multiple Brands Under Single Umbrella In December 2009, Bajaj Auto Ltd. (Bajaj Auto), the flagship company of Bajaj Group and the fourth largest two-and three-wheeler manufacturer in the world, halted the production of scooters in order to focus solely on the motorcycle segment and make itself a globally dominant manufacturer of motorcycles. Bajaj Auto, which began in 1945 as a trading company, importing and selling two-and three-wheelers in India, started vehicle manufacturing in 1959 by obtaining the rights from Italy-based Piaggio . Once the agreement with Piaggio2expired, the company made and sold vehicles under the Bajaj name. Since the mid-1960s, under the reins of Rahul Bajaj, the third generation head of the company, Bajaj Auto began to grow and create the image of a reliable scooter brand in India. Twin-Brand Focus vs. Multiple Brands Under Single Umbrella cont... The scooters produced under the Chetak brand dominated the Indian two-wheeler market from the early 1970s to the early 1990s and helped Bajaj Auto become a leader in the industry. As the Indian Two-wheeler Industry was deregulated and thrown open to competition in the 1990s, Bajaj Auto began to face a threat from foreign players, who entered India through collaborations. The new entrants gradually strengthened their foothold by introducing enhanced features, improved technology, and new models into the two-wheeler market. Moreover, in the late 1990s, there was a shift in consumer preference and demand from scooters to motorcycles. All these factors contributed to the decline of Bajaj Autos sales and market shares and posed a challenge for the company. The market share of geared scooters started declining while that of motorcycles soared. Various reasons were cited for the shift demographic change, with a significant growth in the proportion of younger people in the population; the growth of the economy and increased disposable incomes of the middle class; and the availability of various models of motorcycles. As a result, by the early 2000s, motorcycle sales surpassed that of scooters and Bajaj Auto lost its market share to Hero Honda 3. In an attempt to recapture market share, Bajaj Auto restructured its business and entered the motorcycle segment launching new models, which arrested the declining trend the company was witnessing. However, Bajaj Auto wanted to continue the manufacture of scooters as well. It launched a few new models and upgraded existing ones. But with the introduction and subsequent popularity of the Activa, a gearless4 scooter from Honda Motorcycle and Scooter India (HMSI), Bajaj Auto lost its dominance in the scooter market The Indian Two-Wheeler Industry The history of the Indian two-wheeler industry, comprising scooters, motorcycles, and mopeds, had its beginnings in the late 1940s, when Bajaj Auto started selling imported scooters (1948) and Automobile Products of India (API) along with Royal Enfield started manufacturing scooters (1955) and motor cycles respectively in India. In the evolution stage, the Indian two-wheeler industry was highly regulated by the Government of India (GOI) and was largely structured by Indian industrial policies. The License Raj system imposed a strict control on the industry by regulating the entry of new players, imports, foreign investments, etc... Bajaj Auto: The Initial Years The origin of Bajaj Auto goes back to the days of the Indian independence struggle. Jamnalal Bajaj (Jamnalal), freedom fighter and follower of Mahatma Gandhi, was a businessman himself and founded the Bajaj Group in 1926. The businesses included cotton ginning and pressing, and sugar and steel mills. These were, however, looked after by his sons as Jamnalal actively participated in the freedom struggle. In 1942, after the death of Jamnalal, his elder son Kamalnayan Bajaj (Kamalnayan) took over the family business and diversified into the electrical and automobile... Bajaj Auto Under Rahul Bajaj In the 1960s, Rahul Bajaj (Rahul), the elder son of Kamal nayan, also entered the family business. In 1962, he left for the US to pursue an MBA degree at Harvard Business School. By 1968, Rahul had become a key person at Bajaj Auto and he rose to the level of managing director in 1970.Rahul began to drive Bajaj Auto toward the growth path. He focused on standardization of product and quality, cost control, and margin growth....
Entry of Gen Next: The Beginning of Revival Amidst this crisis, Rajiv and Sanjiv Bajaj (Sanjiv), Rahuls sons, joined Bajaj Auto (in early 1990s) and began to focus on ways to regain Bajaj Autos lost position in the two-wheeler market. Rajiv, who had received a BE (Mechanical) degree from the University of Pune and an MS in manufacturing systems engineering from the University of Warwick, began especially to work on drawbacks at Bajaj Auto... Rajiv's Brand-Centric Strategy Rajiv realized that the name Bajaj was linked with various products ranging from tube lights to motorbikes and financial services among others. The Bajaj brand was highly spread out. He said, "The Bajaj name is associated with various segments ranging from hair oil to insurance and hence for a consumer the brand is not and cannot be Bajaj as it stands for too many things." Thus, Rajiv...

Bajaj Auto - Strategy

Uploaded by

Copyright:

Available Formats

Bajaj Auto - Strategy

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bajaj Auto - Strategy

Uploaded by

Copyright:

Available Formats

This case is about the Brand-centric strategy that the fourth largest two-and three-wheeler manufacturer in the world,

You might also like