Bajaj Auto Case Study Answers
SECTION A: QUESTIONS 1. WHY DID BAJAJ LOSE MARKET SHARE AND HOW DID IT RESPOND? 1.1. Bajaj lost market share to Hero Honda due to limited success in launching successful models into the executive segment where Hero Honda had market leadership. 1.2. To recharge and revive their market position in motorcycles, Bajaj Auto developed three major strategies: 1.2.1. New executive top of range units: As this was the fastest growing market in India, Baja set up a R&D facility at their main manufacturing plant in Pune to deliver new technology. The executive segment had the highest profit margins due to a result of a premium pricing strategy associated with the top of the range. 1.2.2. Cost Reduction: As Bajaj’s large number of suppliers were fragmented and unable to gain true economies of scale in production, they reduced the number of suppliers from 900 to 80. This was achieved over a period of 10 years from 1998 to 2007. They further located these suppliers closer to their assembly lines – similar to Toyota’s Just-in-Time’s delivery systems. Low costs were important in the smaller motorcycle segment where profit margins were low and price competition, aggressive. 1.2.3. Exports and overseas production: Bajaj Auto promoted overseas sales in Sri Lanka, Nepal, Columbia, Bangladesh, Mexico, Peru and Egypt from its three factories. By 2010 Bajaj Auto were selling 800,000 units annually in these countries. 2. WHAT ARE THE MOST PROFITABLE SEGMENTS OF THE INDIAN MOTORCYCLE
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