BAJAJ Auto: SWOT and PESTEL Analysis

BAJAJ machine tog up and PESTEL analytic thinkingINTRODUCTIONBAJAJ AUTO came into exis ecstasyce on November 29,1945 as M/s Bachraj Trading deal private limited. It started off by selling dole out cardinal and tercet wheeler in India .In 1959, it obtained a license from governing body of India to manufacture and it went public in 1960.In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to ingest and sell 100,000 vehicle in a single financial year. In 1985,it started producing at Waluj near Aurangabad. In 1986,it managed to produce and sell 500,000 vehicle in a single financial year. In 1995,it rolled out its ten millionth vehicle and produced and sold 1 million vehicle in a year.The union is headed by Rahul Bajaj who is worth to a greater extent than US$1.5 billion.According to the pen of Globality competing with Everyone from Everywhere for Everything, Bajaj has grown operation in 50 countries by creating a line of repute -for-money bikes targeted to th e different preference of entry- level buyers.(Kwenkbodenmille, 2008)LITERATURE go overSwot AnalysisSWOT analysis is a tool for auditing an nerve and its environment. It is the first stage of planning and religious services marketers to focus on key burns. SWOT stands for strengths, weaknesses, opportunities, and nemesiss. Strengths and weaknesses be upcountry factors. Opportunities and threats be outer factors.In SWOT, strengths and weaknesses ar internal factors.Strength could beYour specialist marketing expertise.A new, progressive point of intersection or wait on. side of your strain.Quality processes and procedures.Any other aspect of your stemma that adds value to your product or serviceWeakness could be want of marketing expertise.Undifferentiated products or services (i.e. in relation to your challengers)Location of your business.Poor lineament goods or services.Damaged reputation.In SWOT, opportunities and threats are external factors.An opportunity could beA developing market such as the Internet.Mergers, joint ventures or strategic alliances.Moving into new market separates that cite improved profits.A new international market.A market vacated by an ineffective competitor.A threat could beA new competitor in your home market.Price wars with competitors.A competitor has a new, innovative product or service.Competitors have superior access to channels of distribution.tax income is introduced on your product or service. (Gerry Johnson, 2008)PESTEL analysis of the macro-environmentThere are many another(prenominal) another(prenominal) factors in the macro-environment that leave alone effect the decisions of the managers of any organisation. Tax lurchs, new laws, parcel out hinderriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers substructure catego spring up them using the PESTEL model. This classification distinguishes amidst (Anon., 2011)Politica l factors-These refer to government policy such as the arcdegree of intervention in the economy. What goods and services does a government want to contribute? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many decisive areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. scotch factors-These include inte recline rates, taxation changes, economic exploitation, inflation and exchange rates. As you will see throughout the Foundations of Economics book economic change can have a major impact on a firms behaviour.Social factors-Changes in social trends can impact on the beg for a firms products and the availability and willingness of individuals to work. In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pensi on payments for their employees be former their staffs are living longer. It in addition means almost firms such as Asda have started to recruit older employees to tap into this festering labour pool. The ageing population also has impact on exact for example, choose for sheltered accommodation and medicines have increased whereas demand for toys is falling. expert factors-New technologies create new products and new processes. MP3 players, computer games, online gambling and lavishly gear definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided number are all improvements to the counseling we do business as a result of better(p) engineering science. applied science can reduce costs, improve quality and lead to innovation. These developments can expediency consumers as well as the organisations providing the products.Environmental factors-Environmental factors include the digest and climate change. Changes in temperature can impact on many industries including farming, touristry and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being displace on air travel and the success of hybrid cars) and the general strickle towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. lawful factors-These are related to the court-ordered environment in which firms operate. In juvenile years in the UK there have been many significant legal changes that have affected firms behaviour. The introduction of age dissimilitude and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recyc le are examples of relatively re centime laws that affect an organisations actions. Legal changes can affect a firms costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the give carelihood of customers buying the good or using the service). (Anon., 2011)SWOT ANALYSIS efficiency-Bajaj Auto is LEADING railroad carmobile manufacturing confederation in India. It is one of the Indias bank two wheelers producers. It is an operative subsidy of the Bajaj Group. Bajaj Auto happens to be the largest two and three wheeler manufacturing business in India and also ranks in this field across the globe. This automobile company was established on 2 November 1945. The company was so known as M/s Bach raj Trading Corporation Private Limited. The company made a modest beginning by importing and then selling two and three wheelers in India. directly Bajaj Auto has become synonymous with two and three wheelers in the country. around of its popular two wheelers are Pulsar 220DTS and Kawasaki Ninja 250R.Bajaj have bluely experienced management. alliance mainly focus on RD and fulfil of customer needs and requirements. (Ashwin, 2010)Bajaj Auto has been sitting on a cash pile for over quintette years now. Over the next couple of years, challenger in the two-wheeler market is set to intensify. TVS Motors and Hero Honda are on a product involution binge. To fight this battle and retain its hard-earned market share in the wheel segment, Bajaj Auto will need its cash muscle. A look at its own story over the past five years provides worth(predicate) insight. (Anon., n.d.)Earlier, most of the products that Bajaj exported were icebreakers and some motorcycles. How incessantly, in its target markets, like in India, the breakage was towards motorcycles. With the expansion in Bajajs 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 fis cal, 60 per cent of its exports were two-wheelers and the rest three-wheelers. Of the two-wheeler exports, close to 90 per cent were motorcycles. Bajaj has identified certain key markets, which make believe potential. Its first overseas office established at the Jebel Ali free trade zone has been the focal point for exports to middle Africa and the Saharan nations. Egypt and Iran also move on to be strong markets for Bajaj. The other market, which would be a focus area, is southwestern America, where the company feels it is fairly well re bowed in most countries, pull out in Brazil, the largest market. The company recently participated in a large auto exhibition in Brazil and found good consumer acceptance to products like Pulsar and Wind 125.Thus, in India, Bajaj would see swanky four wheels jostling with our ever reli adequate to(p) and sturdy steed the two wheeler India is the second largest producer and manufacturer of two-wheelers in the worldly concern. It stands next onl y to japan and China in terms of the number of two-wheelers produced and domestic sales respectively. Indian two-wheeler industry has got spectacular maturation in the last few years. Indian two-wheeler industry had a microscopical beginning in the early 50s.The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. In the initial stages, the scooter segment was dominated by API it was later overtaken by Bajaj Auto. (Anon., 2007)WeaknessThe promotions and ads of Bajaj are very less as compared to its competitors. Some of the products of Bajaj like Pulsar require proud maintenance. It expected that by 2020 scrap generated by end of life vehicles in India would be about 2.5 million tonnes and 40% of it will come from two wheelers. But Bajaj is not cap satisfactory enough to recycl e the scrap generated and whitethorn impose environmental threat.In Bajaj group there is no form labour union and family members of employees find ready employment within Bajaj. The ism with regard to labour management is Bajaj is growing, grow with Bajaj. Bajaj workers receive a coherent allowance, as well as House Rent Allowance (HRA) and tolerate Travel Allowance (LTA). Extra benefits include medical check- ups not good for workers, but also for the immediate family members. For the majority of the production workers, who are engage through contractors, these benefits are out of reach. This and other problems lead to a call off and factory occupation by 4,000 temp workers in the pune plant in spring 2006 (Ashwin, 2010)Bajaj Hasnt employed the excess cash for long. Bajaj has no established strike out to match Hero Hondas Splendor in commuter segment not a global player in spite of huge volumes. Bajaj non a globally recognizable brand (unlike the JV partner Kawasaki) (Ano n., 2011)OpportunitiesDouble-digit harvest-time in two-wheeler market. Untapped market above 180 cc in motorcycles. More maturity and movement towards high-end motorcycles. The growing gearless trendy scooters and scooterette market. Growing world demand for entry-level motorcycles especially in emerging markets.The Inevitable ChangeBajaj on internal analysis found that it lacked The technological expertise to deliver combative goods.The design know-how.And the immediate inability to support the onslaught of competitors.All these coerce Bajaj to look for an international partner who could bring in technology and also offer some basic platforms to be manufactured and marketed in India. Kawasaki of Japan is a world-renowned manufacturer of high performance bikes. Bajaj entered into a strategic point of view with Kawasaki in late 1990s to enhance its product line and noesis up-gradation to support long-term strategies.This served the purpose of sustaining the market competition for a while. From 1996 to 2000, Bajaj invested staggeringly in infrastructure while simultaneously developing product design and innovation capabilities, which is the prime reason behind the energetic Bajaj of 21st century. Bajaj introduced a slew of products right from entry-level motorcycle to the high premium segment right from 2001 onwards, and since then its raining success all the way for Bajaj. (Anon., 2007)Last quarter, Bajaj had awing performance growing at a rate of 20%+ when the largest manufacturer grew at just 6%. This stands a testimony to the various burning(prenominal) strategic decisions over the past decade.The focus of BAL off late has been on providing the best of the class models at competitive prices. Most of the Bajaj models come steamed with the latest features within the price band acceptable by the market. BAL has been the lead up in stretching competition into providing latest features in the price segment by updating the low price bikes with the lat est features like disk-brakes, anti-skid technology and dual suspension, etc.NCAER data for top 24 cities in India shows migration to higher income levels growing at over 40 per cent per annum. Prosperity in rural India is also a significant phenomenon, with 43 per cent of households in middle and the high income groups coming from rural India. More incomes per person, more persons will lead to a quadrupling of Indias consumer markets in the next two decades, a 2007 study by McKinsey Global institute has projected. And this will provide caller-out the ballast to sustain and consolidate its leadership position.Good will of the company If the company utilizes the good will they have gained so far from their customers, they can increase the sales performance by economizing the cost and few technical renovation of the product. With new launch they can be benefited at largess market scenario like Pulsar, Ninja has huge attraction towards the younger generation because of its style, br assy look, and high accelerating power and is stable at its feet even at high speeds. (Ashwin, 2010) banesThe 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)Finance assistance Easy availability of finance is the main cause of sales growth and any restriction will hamper its growth prospects.Inflation If inflation increases cost of raw material used in production will go high and selling price may go high that may decrease demand of the two wheeler. adept renovation aspect Competitor bike like Karizma splandar and apache are threat to Bajaj product like Pulsar Discover in respect to fuel economy. So if they dont short out in the new launches and give something extra in its engineering performance it may affect in demand of this company product. (Ashwin, 2010)For PESTEL analysis refer AppendixRECOMMENDATIONS1) Use excess capacity present to produce ungeared scooters for women. The female population constituting around 50 per cent of our addressable population contributes less then 10 percent of the fit two-wheeler demand. With urban markets with addressable male population getting saturated, players will have to aggressively target the women population for expansion.2) Review product mix, focus on RD to bring new products in marketDemographics show increased offspring populationYoung people fashion savvy3) Focus on Rural market Rural markets currently contribute around 45 per cent of the industrys demand. However, going forward, with urban markets getting saturated, analysts expect a rise in demand from rural markets. To address the changing dynamics, BAJAJ would have to restore to aggressive rural-centric sales and promotional activities. BAJAJ would have to alter marketing strategies by focusing on rural oriented adverting on mass media, educative road shows and create aspiration values for the products, and expand their sales di stribution cyberspace.Introduce low cost modelsDevelop sales distribution network which is currently weaker than other playersFor rural youth, introduce low cost trendy vehicles4) Increase focus on exports and hue new marketsWith domestic demand for two-wheelers slowing down, it would be increasingly important for BAJAJ to look beyond boundaries to part mitigate the slowdown. BAJAJ would accordingly have to develop products suitable for different markets high investments are required for setting up manufacturing facilities and for building a liable level of brand equity. Till now BAJAJ focussed only on economy class and developing country markets, but now in those segments it is facing competition from cheap Chinese players. Therefore need arises to penetrate new markets like USA and UK.CONCLUSIONBajaj auto faces stiff competition from the Market leader Honda and closest rival Suzuki. It is because they are not able to create reliable brand image among their customers. They need to focus on developing their products that can give better experience to their consumer.1. From the survey, it is seen that Bajaj is only able to somewhat satisfy their costumers from their products. They need to create a great aesthesis of joy in their customers by offering unmatched product features and service that will make their customers loyal to the brand and this will greatly help Bajaj in increasing its market share.2. Bajajs product prices are in compare with its leading competitors. The problem is that consumers do not think that Bajaj has that much value and hence prefer to buy other brands. Bajaj need to offer more competitive pricing and better promotions to sell their motor cycle better.