Project Management

Launching a new car focusing on medium

class

Submitted by:
Akash
Project Management
Topic: Market and Demand analysis of new medium
segment car.
Things to be covered:
• Specification of Objectives
• Situation Analysis
• Collection of Data
• Conduct of Market Survey
• Characterisation of the Market
• Demand Forecasting
• Market planning

Objectives:
• To know the purchasing power of middle class customers.
• To know the demand of car in this particular segment.
• To find which distribution channel best suite this segment.
• To know various strategies of the competitors.
• To know the taste of middle class people regarding cars.
• To know what type of value they actually want from us.

Situation Analysis:
As today the need of car becomes a basic necessity of every class either high
class, upper middle class or middle class so there is a need to target the
customers who want car just to fulfil their necessity i.e. middle class. In
situation analysis we generate data which fulfils our objectives like in this case
the data which fulfils above objectives or we can say that we have to find the
answers of what, who, how, where, when and why?

Collection of Data:
There are basically two types of data i.e. primary and secondary data. For this
analysis we will use both type of data primary data in the sense questionnaires
and secondary data like census, survey reports, plan reports, economic survey,
guidelines to industries, techno-economic surveys, annual reports of Association
of Indian automobile manufacturers all these datas will give us the information
of market and demand of customers regarding new segment cars.

Conduct of Market Survey:

Secondary information does not provide the actual data we need for market
analysis so in this case we do the market survey. Market survey often done in
samples, it was assumed that the sample would cover the whole population
because it was not easy to do the survey by using whole population size. In this
case we take samples of about 10 to 15 middle class families in various target
cities of particular states. We will see the need and desires of those families for
a particular car their pocket size and what are their expectations and features
from the particular car for eg. TATA NANO the first question come to our mind
is how Ratan Tata come out with this decision to make car of worth 1 lac, it’s
due to market survey which he had done in various cities by watching lower
middle class families. There are various informations we have to find in sample
survey particularly for car segment:
• Demand and growth rate of cars by middle class people.
• Income and price elasticity of middle class people.
• Their motives for buying that particular car.
• Purchasing plans and their intentions.
• Their attitude towards our brand.

Steps in sample survey:

• Define the target population: We will target basically middle class
families from the whole population.
• Select the sampling scheme: We will choose our sample randomly from
particular cities out of various middle class families.
• Develop the questionnaire: We will form questionnaires on the basis of
consumer motives while purchasing a small segment car. We will use
basically likert scale in the questionnaires.
• Analyse and Interpret the Information: After gathering the whole data
we interpret the results and come on the conclusion.

Characterisation of the market:

Based on the gathered information from various primary and secondary sources
and market survey the market for car will be described in following terms:
• Effective demand in the past and present: We will find the effective
demand of middle segmented cars by using the formula:
Effective demand= Production+Imports-Imports-changes in stock level
• Breakdown of demand: To get a deeper insight into the nature of demand
we break the aggregate demand of small segment cars in three segments i.e.
nature of product, consumer groups and geographical divisions.
• Price statistics: We will divide price into further other segments like
manufacture’s price, price for imported goods, average wholesale price, and
average retail price.
• Methods of distribution and Sales Promotion: In this main things
which are covered are how to distribute cars into the market, where to open
the service station, how to promote a new car in the existing market.
• Supply and Competition: In this we decide how many cars to supply in
the market it totally depends upon the demand as competition is very much
high because of existence of other brands whose brand image is very much
high.

Demand Forecasting:
In this we forecast a particular amount of cars we had to make and to supply on
the basis of above surveys we had done. Forecasting completely depends upon
the market survey and market research.

Market planning:
Market planning is done after doing all above steps because it’s the final step of
market analysis. It’s the implementation stage of market analysis. It includes
mission, marketing research, SWOT analysis, STP analysis, competitors etc.
Financial Analysis: (Estimation and projection of
project budget)
Things to be covered:
• All direct and indirect expenses

• Means of finances

• Cost of production

• Working capital requirement and its financial instrument

• Profitability projection

Objectives:
• To select cheapest source raising fund

• To arrange the working capital requirement

• Government changing rules and regulation regarding future prospects

Direct and Indirect expenses associated:

• Direct expenses are those expenses which are directly associated with the
project and these nature of expenses are quite huge. This type of expenses
are basically associated with the Land, Machinery and various types of
state and stamp tax and duties which we have to incur in the initial phase
i.e. when we are setting the project. So, it basically the duty of finance
department to ensure or suggest the area or state where it would be
cheaper to set the project.

For the purpose of setting a new plant which incur heavy amount of
expenses it is good for firm to go for bank loan because it is cheapest and
easier source of raising huge fund.
 • Indirect expenses are those expenses which are not directly associated
with the project and are of recurring nature. For e.g. Transportation cost,
Legal charges etc. This kind of expenses not require huge fund like Direct
cost so it is paid from the previous reserve or from the pocket of the
owner because govt. is going to finance a portion of project as well as
some finance is needed to be come from the owner side too.

Means of finances:
• There are basically three means of finance available for setting up a
project i.e. in the form of Equity, Preference or Debenture, Loans both
from public as well as private.

• Equity and other borrowing in the form of Debenture and preference are
available only if you are listed in the stock exchange otherwise loan is the
only source of medium for the project financing.

• But if an existing company incorporated under the Indian company act

and listed on the stock exchange they may call for the Equity, Preference
and debenture borrowing which is much better for long term borrowing
because there is not rate of interest which is to be payable.

Cost of production:
• Material cost: Material cost includes all the cost arising from the raw
material to the transportation cost i.e. it include all the direct as well as
indirect expenses.

• Labour cost: Labour cost is the cost which is again of direct as well as
indirect nature. If the productivity of labour is directly associated with the
productivity of project then it comes under direct cost and if it is
otherwise for e.g. freight charges it comes under indirect cost.

• Factory overhead: These charges include all the charges that are arising
from factory. All the charges like electricity consumption comes under
the factory overhead.
 • Utility charges: The charges which are essential for the purpose of
working in a factory is termed as utility charges. For e.g. electric, water
supply charges are termed as utility charges.

So, for the purpose of calculating the cost of production we have to

calculate all the charges and then sum up all the charges.

It is necessary to calculate all the charges before coming to the selling

price conclusion and deciding the profit margin.

Working capital requirement and its financial

instrument :
• Working capital refers to the short term finance which is necessary for the
purpose of financing day to day activity of the business.

• Component in working capital:

1. Stock of raw material.

2. Stock of work in progress

3. Stock of finished good.

• Sources of working capital finances: The sources of working capital

finances are Bank loan, Commercial paper, Debtors etc. As there are
different sources available but it depend upon the firm reputation as well
as goodwill through which the firm raises the amount. The commercial
papers are only allowed to those firms which is high net credit worth.

Profitability projection: If after conducting all the financial

aspects the project is found profitable then only the financial decision is given
acceptance and on the other hand it is not profitable the proposal is rejected.
Technical analysis of new car for middle class
As per the analysis of technical and engineering aspects is
done continually when project is being examined and
formulated.

The broad purpose of technical analysis is:

Our business to making and launching a new car for medium

class includes all the parts related to manufacture a car.

On the basis of adding input of our product on the basis of

technology we prefer market analysis of launch a new car.

Inputs and technologies are to launch a new car:

Engine: 2 cylinder petrol with Bosch multi-point fuel

injection(single injector) all aluminium 33 horsepower
(25 kW) 624 cc (38 cu in)

Value Motronic engine management

platform fromBosch

2 valves per cylinder overhead camshaft

Compression ratio: 9.5:1

bore × stroke: 73.5 mm (2.9 in) × 73.5 mm (2.9 in)

Power: 35 PS (26 kW; 35 hp) @ 5250 rpm

Torque: 48 N·m (35 ft·lbf) @ 3000 +/-500 rpm

Layout and Rear wheel drive

Transmission

4-speed manual transmission

Steering mechanical rack and pinion w/o servo

 Turning radius: 4 metres

Performance Acceleration: 0-60 km/h (37 mph): 8 seconds

Maximum speed: 105 km/h (65 mph)

Fuel efficiency (overall): 23.6 kilometres per litre

(4.24 litres per 100 kilometres (66.6 mpg-imp; 55.5 mpg-
US))

Body and Seat belt: 4

dimensions

Trunk capacity: 150 L (5.3 cu ft)

Suspension, Front brake: 180 mm drum

Tires & Brakes

Rear brake: 180 mm drum

Front track: 1,325 mm (52.2 in)

Rear track: 1,315 mm (51.8 in)

Ground clearance: 180 mm (7.1 in)

Front suspension: McPherson strut with lower A arm

Rear suspension: Independent coil spring

12-inch wheels
To facilitate the most optimal formulation of the
project in terms of technology, size, location.
Under the topic formulation of project we introduced a new
technology like engines, CNG, suspension, tyres and breaks,
alternative-energy engines etc.

The location of the project near Ludhiana and the benefit of this
location are:

1. Availability of labours,

2. Availability of raw materials easily like tyres, glasses,

belts, etc

MANUFACTURING PROCESS/TECHNOLOGY
1. Manufacture process are done by machines through
labours

2. Labours are necessary for coloring and assemble the

parts of the car.

3. Latest machine and equipments are necessary for

making new shape for body parts of the product.

4. Steel can be made through either Bessemer process or

open hearth process

5. Knowledgeable staff is also important in manufacturing

process of new product.

MATERIAL INPUTS AND UTILITIES

1. Processed industrial material and components:
Base metals are metals help in the formation of making cars
i.e. its part like body, engine etc.

Semi processed materials includes mirror, rubber, seat belt etc.

Manufactured parts like suspension, horn and many more

which are quite useful for cars.
Other components like music system, key locker and breaks
which plays a major role in completion of cars.

Subassemblies include rods which not only give look to car but
also strength to it.

2. Auxiliary material and factory supplies:

Chemical include engine oil, break oil.

Additives include carpet, interior look, space, handling and

many more.

Packaging material depends totally on interior design and look

of the car.

Paint is the major part of giving finishing touch to the car; it

also helps to give attractive look to it.

Varnishes, oils, grease and cleaning material helps to move

cars smooth, freely and easily in respectively all directions.

3. Utilities:
Power is something which adds speed and efficiency to the car.

Water, steam, fuel are the part which plays major role in
running the car in proper way making its life longer.

PLANT CAPACITY
Plant capacity may be defined in two ways:
1. Feasible normal capacity: Capacity that is attainable
under normal working conditions. It also based on
quarterly basis and on increase in demand we forecast for
the next three months. But in the first three month our
target is to produce 15000 cars by our company.

2. Nominal maximum capacity: Capacity that is

technically attainable and this often corresponds to the
 installed capacity guaranteed by the supplier of the plant.
In such situation we try to achieve more in the specified
time with better result i.e. best out-put by minimizing
errors too less as in normal situation.

Several factors have a bearing on the capacity

decision.
• Technological Requirement:- under this we prefer to
higher well skilled labour who are familiar with the new
equipments, but in case of old employs we need to mentor
them and also can provide training but it seems costly so
we prefer mentoring to our employees.

• Input constraints: - In order to know our output, profit

we must know our input utilized in order to produce
specific output.

• Investment cost: - It includes total investment on

particular area or a new segment of cars results to profit
after specified time.

• Market conditions: - It includes all other competitors in

the market and focused customers also inflation and
depration plays major role.

• Resources of the firm: - Resources include raw

material, labour, machines and all those which help in
making output.

• Government policy: - Policy of government also plays a

vital role in the profit and generating income from our final
product and purchased by our customers.
 ENVIROMENTAL ANALYSIS OF SMALL
MOTOR CAR
PEST Analysis
Pest analysis represents Political, Economical, Social and Technical factors of an
organization.

Political factors explain about taxation, employment laws, internal trade

regulations and competitor trade regulations.

Economical Factors explains about economic growth by industry, policy

towards

Unemployment, inflation and influence of exchange rates

Social Factors explains about income distribution, labour, life style changes,
health & Welfare, attitude to work and living conditions.

Technical Factors explain about Technological efficiency, technological

transfers, rate of spending in R&D, Energy use cost and New Invention
Political Factors-

Exchange rates, oil prices & free trade flows which influence the consumer
to invest on the vehicles.

Foreign ownership regulations and technological cooperation’s between

countries

helping the small car in raising the funds and building the advanced models
which can cope with the current scenario.

Introduction of new business laws Impacts the small car to change its rules
and regulations which are necessary to producing a quality vehicle.

Forced Groups (Labour unions) who plays a major role in the production of a
vehicle in a small car manufacturing organization. The labour unions should work
according to the rules and regulations amended by the business laws.

Investor’s climate- In most of the company’s investors had a premier role to

play in the growth and development of the company
Economical Factors-

Growth potential of target market - The growth potential of target market

will determine the purchasing power of the buyer. That is the major reason small
car is operating in the countries like America, India and Brazil where the growth
potential is high when compared to the other market

Target Market Size –Again the sales of the small car was influenced by the
Market size where it is operating its business. When the target market GDP
growth is high the consumers will show more interest to have a vehicle.

Economic Development – Economic development is the major part which will

determines the development of a particular economy as a whole and which will
influence on individual GDP.

Oil Price Fluctuations- The oil fluctuations influence the sales of the small car
company. If the oil prices are more it will difficult to sell the cars. Cost conscious
customers may not show interest to buy the cars which provides low mileage.
Altogether the mentioned economical factors will determines the growth of the
potential markets, margin cost of the operations, return rate on the investment,
and strategy to provide the price of the vehicle.

Social Factors

Social factors plays a role in trend in demand based on the various factors like
attitudes,demographical,beliefs of the consumers in that particular market
region Some of social factors of small are given below

Geographical Changes - The consumers of small car had changed from one
geographical region to another geographical region Eg- The US for consumers
will use the cars or commercial vehicles which have large engines. But the
Brittan consumers are habituated to use the cars or commercial vehicles
which are designed by small engine

Consumer Attitude – Consumer attitude plays a role in selecting car model and
design, If the consumers are favour about sport they will select the sports model
car for their usage. But if the consumers are cost and safety concerned them
probably will choose a normal car which will provide mileage and better safety.

Travel Habits – The small car company is designing the cars based on the
travel habits of the consumers. Small car is a medium cost car which can be
affordable by the medium class people. It is providing the facilities based on the
travel habits of the whole family

Technological Factors

Technological factors of the small motor company are very advanced when
compared with
their competitors. The technological factors of the automobile company will
influence on
most of the things like sales percentage of the cars, consumer satisfaction which
leads to the
automatic growth in the sales figure.

Supply chain collaboration – It is the Initial and too crucial factor in the small
motor

Company, because the consumers of car are more concerned about the ordering
and when the
company is going to deliver the car. The small Company is having strong supply
chain
collaboration which is in more than thirty countries.

Product Development small Motor Company is providing the consumer to

customize the

car and its needs. So small motor had gained a chance to innovate a new car
based on the most of the customer’s selection and preferences. The small motor
company cars manufacturing will be influenced based on the consumer
customization needs.

Swot Analysis of small Motor Company

Strengths of small motor company –

Online Marketing capability – small motor company is one of the new

automobile company which is providing the online consumer selection of cars
through its website. In online the consumer is allowed to customize the engine,
colour, interiors and exteriors.

More consumer choices – small motor company is one of the automobile

company which is providing the consumer more variety of cars and commercial
vehicles. .

Employee are assert - small motor car company recruits a qualified and skilled
employees in

all its functions. Small motor will maintain good relation with the employees by
paying them better wages in automobile industry. Small motor is more
concerned about the working environment and safety aspects of the employee

Weakness of small car –

Recession -The sales figure of the other company was declined from the year
2008 to

2009 due to global recession in the world financial market. Recession is one of
the major
factor for decline of sales and one more important factor is ford will manufacture
the standard
cars which are not able to cope up with current market automobiles.

Huge unfunded pensions and other obligations –small motor is one of the
automobile company which takes more responsibilities in the health and safety
of the employee. Small motor invests more money on maintaining a good
working environment.

OTHER SMALL CAR IS AVAILLABLE IN THE MARKRT LIKE FORD

Opportunities of small motor car –

Production of the fuel efficient cars – At present small motor car is
producing the cars with low mileage and pick up. Small motor car is having a
great opportunity to produce fuel efficient cars and commercial vehicles. The
automobile industry is having one more fuel efficient types like, cars which can
run on renewable energies like solar power and bio fuels.

Production of Hybrid Vehicles –small motor car had one more option in
designing the cars and commercial vehicles based on electric engines. If the cars
are designed based on electricity engines the consumers will show more interest
to buy the cars, the reason is the car
maintenance charge will low when the car is run on electricity.

An opportunity in India and China markets - small motor car is having the
market opportunities in India and china countries because two countries are
having huge geographical market and population. The most of the people in
these two countries are more interested to own a four wheeler for their family.
That is the reason small motor car is a most successful car in these two markets

Threats to small motor car

Price Rise in raw material prices – Raw material prices like hard steel and
rolling steel cost

will influence the margin price of the car. As a whole it will influence the profit
margin of

the small motor because of low margin price.

Rapid growth of competitors –small motor growth and development may

effected by rapid growth in no of competitors in the automobile industry. From
the beginning America demanded automobile industry. Small motor car main
competitors are General motors, Toyota, Honda, BMW, ford etc.

Less Capital spending – small motor is spending low on its operations and
research development activities, when compared to its competitors. The
competitors are spending huge amount on R&D programmes

Potter five force model

Threat of new entrants – Threat of new entrants will be low for the small
motor because the small motor is one of automobile which is providing the best
services with low cost of price, small motor provides customers to choose their
vehicles. Small motor is having cost advantage because it is providing the
vehicles with low cost when compared to the other competitor

Bargaining power of suppliers –small motor company enhances the relations

with sixteen

new suppliers to gain the bargaining power of suppliers. Small motor is having
good relations with suppliers for the output of quality cars.

Bargaining Power of customers – Customers of small motor are comfortable

with ford way of providing the vehicles customization and way of delivering the
products within the specified time. The bargaining power of customer is low
when compared to the other automobile.

Threat of substitute – Substitutes for small motor company are less but there
are some

Substitutes which the cars are running on the electricity and other bio fuels. eg –
riva one

small car which runs on electricity.

Rivalry among existing companies -The important competitors of small

motor company is

Genral motors, Toyota, Honda and BMW. All the above mentioned forces will lead
to the
rivalry among these companies to provide the customer with competitive
advantage and
provide the customer with quality cars and commercial vehicles.

Competitor analysis

The Core Competencies of small motor car are it is very innovative in using the
high technology in the manufacturing the cars & commercial vehicles. Small
motor company is more concerned about safety and more over ford is gave the
opportunity to its customers to customize their interiors and exteriors of Cars