MINOR REPORT

ON

Title “B2B MARKETING STRATEGIES ON

SOCIAL MEDIA”
..............

In partial fulfillment of the requirement for the award of the Degree

of Bachelor of Commerce

Supervised By: Submitted By :

Mentor: Anuranjita Dixit Name : Utkarsh Verma

Designation: Assistant Class : BCOM 6TH SEM

Professor
Roll No : 2110402011046
Faculty of Commerce

Faculty of Commerce

Shri Jai Narain Misra PG College (KKC), Lucknow

(Accredited ‘A’ Grade by NAAC)

(An Associated College of University of Lucknow, Lucknow)

Session 2023-24
 Acknowledgement

The possibility to complete this I would like to express my gratitude and

appreciation to all those who gave me the possibility to complete this would
like to express my gratitude and appreciation to all those who gave me the
possibility to complete this report I would like to express my sincere gratitude to all
those who contributed to the success of this research study on The B2B
MARKETING STRATEGIES ON SOCIAL MEDIA . I have made efforts in this
project. However, it would not have been possible without the kind support and help
of many individuals and organizations. I would like to extend my sincere thanks to all
of them. I am grateful to Prof. Vinod Chandra, principal of Shri Jai Narain Mishra
P.G. College, for his blessings. I’m also deeply appreciative of the guidance and
support provided by our research Supervisor DR. ANURANJITA DIXIT whose
expertise and encouragement were instrumental in shaping the direction of this study.
Furthermore, I would like to acknowledge the contributions of fellow mates who
aided with data collection, analysis, or manuscript preparation. Finally, I express my
gratitude to my family members and friends for their understanding, encouragement,
and unwavering support throughout this research endeavor. This study would not have
been possible without the collective efforts of everyone involved, and I’m sincerely
thankful for all the people who have been involved in this project for their
contribution I would like to express my gratitude and appreciation to all those who
gave me .

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 TABLE OF CONTENTS
Page No.

Acknowledgement
Table of contents

Chapter1: Overview ……………………………………………… 1-40

1.1 Introduction
1.2 Overview of the company
1.3 Overview of the industry

Chapter 2: Research Methodology ………………………………41-43

2.1 Objectives and scope
2.2 Research design
2.3 Sources of data collection
2.4 Data analysis - tools/techniques
2.5 Sampling design
2.6 Limitations of the study

Chapter 3: Conceptual Background ……………………………44-69

Chapter 4: Data Analysis and Findings …………………………70-79
Chapter 5: Discussion and Conclusion………………………….80-81
Chapter 6: Recommendations ……………………………….......82
Bibliography ………………………………………….83-84
Annexure-Questionnaire ……………………………..85-86

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 Chapter-1
Introduction
Motherson Sumi Systems, established in 1986 is the flagship company of
the Samvardhana Motherson Group. Motherson Sumi Systems is a joint venture
between Samvardhana Motherson Group and Sumitomo Wiring Systems of Japan.

Motherson Sumi Systems is a leading automotive mirror and wiring harness

manufacturer for passenger cars. It also supplies plastic components and modules to
the automotive industry.

Motherson Sumi Systems has offices and manufacturing units in 24 international &
11 Indian locations.

1.1 Introduction
In business-to-business (B2B) commerce businesses focus on selling to other
businesses, is about three times the size of B2C, & e-commerce. For instance, total
revenues for all types of B2C e-commerce in 2001 were estimated to be about $65
billion (Dykema, 2000; Bakos, 2001), compared to an estimated $470 billion for all
types of B2B commerce in 2001 (Jupiter Media Metrix, 2001). Experts predict that
B2B purchasing will grow to $9.4 trillion by the end of 2008, or about one-third of
total inter- firm purchasing at that time (Jupiter Media Metrix, 2001).

IMPORTANT ISSUES IN B2B

B2B Market Places: Marketplace/exchanges, or B2B hubs, have garnered most of

the B2B attention and funding because of their potential market size. A
marketplace/exchange is a digital electronic marketplace where suppliers and
commercial purchasers can conduct transactions (Kaplan and Sawhney, 2000).
Gartner Group’s Dataquest reports approximately $100 billion in business was
handled by these all-encompassing industry portals in 2000, with that figure expected
to grow to $10.7 trillion by the year 2008 (Knight, 2001). For buyers, B2B hubs
make it possible to gather information, check out suppliers, collect prices, and keep
up-to-date on the latest happenings all in one place. Sellers, on the other hand, benefit
from expanded access to buyers. The greater the number of potential buyers, the
lower the sales cost and the higher the chances of making a sale. Some sites also have

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experienced higher average revenue per buyer, according to a Grainger Consulting
Services study (Grainger Consulting Services, 1999).

Marketplaces make it significantly less expensive and time consuming to identify

potential suppliers, customers, and partners, and to do business with each other. As a
result, they can lower transaction costs — the cost of making a sale or purchase. For
instance, the cost for a corporate purchasing agent to place an order typically starts at
$100. B2B hubs can also lower product costs and inventory-carrying costs — the cost
of keeping a product on hand, in a warehouse. (Morneau, 2001)

The key to success with marketplaces is size the size of the industry and the number
of registered users. If the industry that the marketplace seeks to serve is not large
enough, it is not likely that the site will be profitable. Similarly, if the site cannot
reach critical mass by attracting a large number of buyers and sellers, users will go
elsewhere, in the next few years, experts predict a sharp consolidation within
emarkdtp1aceS, with the number of such sites diminishing dramatically, leaving just a
few major B2B hubs (Wise and Morrison, 2000). In addition, the concept of a
centralized hub may slowly be replaced by direct peer-to-peer exchanges similar to
those enabled by Napster in the music market space described below (McAfee, 2000).

E-Distributor: Companies that supply products and services directly to individual

businesses are e-distributors. W.W. Grainger, for example, is the largest distributor of
maintenance,
repair and operations (MRO) supplies. In the past it relied on catalog sales and
physical distribution centers in metropolitan areas. Its catalog of equipment went
online in 1995 at grainger.com, giving businesses access to more than 220,000 items.
Company purchasing agents can search by type of product, such as motors, HVAC, or
fluids, or by specific brand name.

Whereas B2B hubs pull together many businesses, making it possible for them to do
business with other companies, e-distributors are set up by one company seeking to
serve many customers. However, as with B2B hubs, critical mass is a factor. With
redistributors, the more products and services a company makes available on its site,
the more attractive that site is to potential customers. General Electric Aircraft
Engines backed into its role as an e-distributor. GE Aircraft Engines is such a large
purchaser of aircraft engine parts that other purchasers in the aircraft industry almost

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always need the same parts GE is ordering from vendors. GE decided to make its
internal procurement system public, allowing fellow buyers of industrial products and
equipment to visit its site, geae.com, in search of needed parts and machinery. This
decision has created a new profit center for GE and reduced its own cost of
acquisition.

B2B Service Provider: Just as e-distributors provide products to other companies,

B2B service providers sell business services to other firms. “Traditional” B2B service
providers offer online equivalents to common business services, such as accounting,
financial services, human resource management, printing, and so on. Application
service providers are another type of B2B service provider. An Application Service
Provider (ASP) is a company that sells access to Internet-based software applications
to other companies. Salesforce.com, for instance, enables companies to manage their
sales forces. Businesses license Salesforce.com’s software based on the number of
salespeople who will be accessing the system. This eliminates the need for firms to
buy or install a complex sales force automation system.

B2B service providers make money through transaction fees, fees based on the
number of workstations using the service, or annual licensing fees (the method used
by Salesforce.com). They offer purchasing firms significant advantages. Services tend
to be knowledge-intensive, based on expensive professional employees. Computer-
based software management systems are difficult to build or customize to one’s
business. A B2B service provider such as Salesforce.com can build an expensive sales
force management system and then spread the cost of the system over many users —
achieving what economists call scale economies. Scale economies arise when large
fixed-cost production systems (such as factories or software systems) can be operated
at full capacity with no idle time. In the case of software, the marginal cost of a digital
copy of a software program is nearly zero, and finding additional buyers for an
expensive software program is exceptionally profitable. This is much more efficient
than having every firm build its own sales force management system, and it permits
Salesforce.com to specialize in a single type of system and offer the marketplace a
best of breed” system.

Matchmaker: Companies that make money by linking other businesses and taking a
cut of any business that occurs via a transaction or usage fee are called matchmakers.

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They are a form of the transaction broker’s familiar in the B2C area. For example,
iShip.com, acquired in May 2001 by United Parcel Service from Stamps.com, helps
businesses find the cheapest shipper for their packages. Although other companies sell
expensive multi-carrier shipping software, iShip lets companies access its Web site
free of charge to compare the rates from several major carriers, including Federal
Express, Airborne, and the U.S. Postal Service. Once a company has located the
cheapest shipper for its particular package, it pays iShip a fee in order to proceed with
the shipment.

B2B - MARKETING AND BRANDING STRATEGIES

In this section a variety of Internet marketing strategies for market entry, customer
acquisition, customer retention, pricing, and dealing with channel conflict. It is
important to note that although B2C and B2B e-commerce do have differentiating
features (for instance in B2C e-commerce, marketing is aimed at individual
consumers, whereas in B2B ecommerce, typically more than just one individual is
involved with the purchase decision, the strategies discussed in this section in most
instances can be and are, applied in both the B2C and B2B arena.

Market Entry Strategies: Both new firms and traditional existing firms have choices
about how to enter the market, and establishing the objectives of their online
presence. There are four basic market entry strategies:-

In the E-commerce era, the typical entry strategy was pure clicks/first mover
advantage, utilized by such companies as Amazon, eBay and e-Trade. Indeed, this
strategy was at the heart of the so-called new economy movement, and provided the
capital catch basin into which billions of investment dollars -flowed; The -ideas are
beguiling and simplistic: Enter the market first and experience- “first -mover”
advantages heightened user awareness, followed rapidly-by successful consumer
transactions and experiences and grow brand strength. According to leading
consultants of this era, first mover would experience a short-lived mini-monopoly;
They would be the only providers for a few months, and then other copycats would
enter the market because entry costs were so low. ‘To prevent new competitors from
entering the market, growing audience size very rapidly became the most important
corporate goal rather than profits and revenue (Teece, 1986). Firms following this
strategy typically spent the majority of their marketing budget (which in and of itself

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may have constituted a large part of their available capital) on building brand (site)
awareness by purchasing high visibility advertising in -traditional mass media such as
television (Super Bowl game ads), radio, newspapers, and magazines. If the first
mover gathered most of the customers in a particu1ar-cagozy (pets,-wine, gardening
supplies, and so forth), the belief was that new-entrants would not be able to enter
because customers would not be wiling to pay the switching costs Customers would
be locked in to the first movers interface (Ellison, 2000). Moreover the strength of the
brand would inhibit switching even though competitors were just a click away.

Another possibility for new firms is to pursue a mixed clicks and bricks strategy,
coupling an online presence with - other sales- channels. However, few new firms can
afford the “bricks” part of this strategy. Therefore, firms following this entrance
strategy often ally themselves with established firms that have already developed
brand names, production -and- distribution facilities, and the- -financial resources
needed to launch a successful -Internet business. For instance, Brain Play, Inc, an e-
Tailer of children’s goods, entered into an alliance with the established Consolidated
Stores Corporation KB Toys unit to form a new online presence called KBkids.com.

Each of the market entry strategies discussed above has seen its share of successes
and failures. While the ultimate choice of strategy depends on firms existing brands,
management strengths, operational strengths, and capital resources (Gulati and
Garino, 2000; Thdeschi, 1999), today most firms are opting for a mixed “clicks and
bricks” strategy in the hope that it will enable them to reach profitability more
quickly.

The following are the various ways in which the information supplied from a data
base such as global reference solution can be used to help with B2B marketing and
sales:-

Once a firm chooses a market entry strategy, the next task is establishing a
relationship with the customer. Traditional public relations and advertising media
(newsprint, direct mail, magazines, television, and even radio) remain vital for
establishing awareness of the firm. However, a number of unique Internet marketing
techniques have emerged that have proven to be very powerful drivers of Web site
traffic and purchases.

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Permission marketing: The phrase marketing was coined by author and consultant
Seth Godin information or promotional describe the strategy of obtaining permission
from consumers before sending them messages information or promotional messages
(Godin, 1999). Godin’s premise is that by obtaining permission to send information to
consumers up front, companies are much more likely to be able to develop a customer
relationship. When consumers agree to receive promotional messages, they are
opting-in; when they decide they do not want to receive such messages, they opt-out.
Most consumers need an incentive to spend time reading promotional material, or to
provide personal information companies can use to improve their own marketing.
Godin’s former company, Yoyodyne, pioneered the creation of online sweepstakes
and games that gathered information from participants in return for the chance to win
money and prizes. Another company, portal Iwon.com, gives users the chance to win
money each week for visiting the site; each month the company offers special bonus
prizes to users who are willing to complete a more in-depth survey about their
personal life. The site gains useful personal information and the user earn the chance
to win a free prize.

A key component of permission marketing is e-mail. In addition to being one of the

most widely used Internet applications, e-mail has become a very effective marketing
tool. Companies request e-mail addresses from customers and then send marketing
messages of potential interest; some marketers issue such messages regularly, even
weekly, while others do so only when something relevant comes up. Not only is it
inexpensive to send, but it is also targeted, measurable, and effective.

1.2 Overview of the company

Motherson Sumi Systems Limited (MSSL) the flagship company of the Samvardhana
Motherson Group, was established in 1986 in a joint venture between Samvardhana
Motherson Group and Sumitomo Wiring Systems (Japan). Samvardhana Motherson

6
Group, a global group headquartered in India, is a group with a diversified automotive
product range, while Sumitomo Wiring Systems (SWS) is a global supplier and
manufacturer of wire harness, components and wires & is one of the largest
manufacturers worldwide. MSSL is a focused, dynamic and progressive company
providing customers with innovative and value-added products, services and
solutions.

The present product range of MSSL comprises of - wiring harnesses, rear view
mirrors, moulded plastic parts including car interior and exterior parts, bumpers,
dashboards and door trims, complete modules, rubber components for automotive and
industrial applications, high precision machined metal parts, injection molding tools
and HVAC systems. MSSL’s diversity of product range coupled with sheer depth
within each product portfolio, has helped the company garner leadership in its area of
operations.

SMG is a global solutions provider offering end-to-end design and manufacturing

solutions to its customers, including product concept and product design, engineering,
prototyping and tool manufacturing, product, manufacturing, assembly and the
production of integrated modules.

The Group provides integrated full system solutions across all product verticals,
through the combination of different technologies, products and services. SMG has
strong vertical integration in each of the product verticals and horizontal integration
and synergies as well. This enables the Group to tailor solutions to fulfill the specific
and unique requirements of its customers globally and emerge as a full system
solutions provider for them.

The Group's business portfolio covers multiple areas of the automotive value chain as
well as several non-automotive industries. The product range includes:
• Wiring harness
• Vision systems
• Modules and polymer products including assemblies, bumpers, cockpit
assemblies, door trims, automotive lighting systems, air intake manifolds,
shock absorbers supported by tool manufacturing and elastomer processing
• Technology and software

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 • Metal products including cutting tools, broaches, gear cutting tools, thin film
coating metals and aluminium die casted parts. It also includes cabins for off-
highway construction and agricultural vehicles, shock absorbers, HVAC
systems for passenger cars and commercial vehicles and bus air conditioners
and roof hatches for buses
• Retail and services including air compressors, paint coating equipment and
auxiliary equipment for injection moulding machines and automatic
manufacturing engineering services, waste recycling systems
• Aerospace, defence and security
• Logistics

Motherson Sumi Systems Ltd

Motherson Sumi Systems Limited (MSSL) is one of the world's leading, specialized
automotive component manufacturing companies for Original Equipment
Manufacturers (OEMs). With a diverse global customer base of nearly all leading
automobile manufacturers globally, the company has a presence in 36 countries across
six continents. MSSL is currently the largest auto ancillary in India. The present
product range of MSSL comprises of - wiring harnesses, rear view mirrors, moulded
plastic parts including car interior and exterior parts, bumpers, dashboards and door
trims, complete modules, rubber components for automotive and industrial
applications, high precision machined metal parts, injection molding tools and HVAC
systems.

Motherson Sumi Systems Ltd was incorporated in the year 1986 as a joint venture
between Samvardhana Motherson Group and Sumitomo Wiring Systems (Japan). The
company was incorporated with the objective of manufacturing integrated wiring
harnesses wires high tension cords and components for integrated wiring harnesses
including plastic and metal parts.

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In the year 1989, the company commenced manufacturing wiring harness components
and plastic parts as a backward integration. In the year 1991, the company through
their joint venture, Motherson Pudenz Wickmann Ltd commenced manufacturing
fuses as a backward integration. In the year 1993, the company launched wire
division, namely Motherson Sumi Electric Wires.

In October 1995, the company in collaboration with Kromberg and Schubert AG

Germany and formed Kromberg Schubert Motherson Sumi Systems Pvt Ltd for the
manufacture of integrated wiring harnesses, which is supplied to Mercedes Berz-
Telco joint venture & BMW-Hero Motors joint venture for 650 cc motor cycles. In
December 2005, they incorporated Britax Motherson Pvt Ltd in technical and
financial collaboration with Britax International UK for manufacture of Auto Mirrors.

In the year 1997, the company formed a joint venture namely Kyungshin Industrial
Motherson Ltd for manufacturing wiring harness for Hyundai. The company's joint
venture, BR Motherson Automotive Pvt Ltd set up a plant for manufacturing Blow
Moulded Auto Components and Door Panels. Also, Motherson Auto Components
Engineering Ltd, Motherson Pudenz Fuses Ltd and Motherson Global Pte Ltd
Singapore became the subsidiaries of the company during the year.

In the year 1998, the company made a technical agreement with WOCO and
commissioned manufacturing of rubber component. In the year 1999, the company
established a representative office in Austria and in the next year, they established
another representative office in Singapore.

In the year 2001, the company commissioned the silicon rubber moulding facility in
their first overseas manufacturing base in Sharjah. Motherson Automotive
Technologies & Engineering and Motherson Sumi Electric Wires were amalgamated
with the company during the year. In the year 2002, the company set up MSSL
Ireland Pvt Ltd in Ireland. Also, they established MSSL Mideast (FZE) in Sharjah
(UAE). In the year 2003, they established a representative office in UK.

During the year 2003-04, the company set up 100% subsidiaries, namely Motherson
Electrical Wires Lanka Pvt Ltd in Sri Lanka for manufacturing of wires and MSSL
Handels GmbH in Austria. Also, the company in association with Hag
Kunststofftechnik GmbH set up a subsidiary, namely MSSL Hag Toolings Ltd in

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SAIF Zone, Sharjah. In March 2004, the company set up 100% subsidiary, namely
MSSL (S) Pte Ltd in Singapore. The activities relating to the representative office of
Singapore are being transferred to this subsidiary.

In March 2004, the company entered into a joint venture agreement with WOCO
Franz Josef Wolf Holding GmbH & WOCO Industrieteknik GmbH and established a
company namely WOCO Motherson Elastomer Ltd. The company transferred their
Elastomer business to the joint venture company as a going concern with effect from
June 1, 2004.

During the year 2004-05, the company expanded their Noida facilities with a new
dedicated unit for exports. They started a new unit at Chennai to cater to the
requirements of Hyundai Motors and for exports to GM Holden, Australia. Also, the
company established a representative office in Germany.

During the year 2005-06, Motherson Advance Polymers Ltd and Balda Motherson
Info Devices Ltd became 100% subsidiaries of the company. In August 2005, the
company acquired G&S Kunststofftechnik GmbH, Germany to consolidate their
polymer business. In January 2006, the company's joint venture subsidiary Global
Environment Management (FZC) set up a 100% subsidiary, Global Environment
Management Australia Pty Ltd, Australia.

During the year, Draexlmaier & Motherson Electrical Systems (I) Ltd, a 100%
subsidiary of the company was amalgamated with the company with effect from April
1, 2005. Also, WOCO Motherson Elastomer Ltd and WOCO Motherson Advanced
Rubber Technologies Ltd ceased to be subsidiaries of the company.

During the year 2006-07, Motherson Advance Polymers Ltd, a 100% subsidiary of the
company merged with the company with effect from February 1, 2006. In August
2006, the company purchased the business and assets of ASL Systems Ltd through
their 100% subsidiary, MSSL GB Ltd. In October 2006, they incorporated MSSL
Australia Pty Ltd.

In November 2006, the company acquired a plastic injection molding company FP

Formagrau s.r.o., in Czech Republic. In February 2007, they incorporated two
subsidiaries namely Motherson Elastomers Pty Ltd and Motherson Investments Pty
Ltd through MSSL Australia Pty Ltd. These two subsidiaries acquired the business

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and assets of Empire Rubber in Australia from Huon Corporation Pty Ltd, which was
engaged in rubber mixing and manufacture of rubber extruded components.

During the year 2007-08, MSSL GmbH, the company's wholly owned subsidiary
through MSSL Mideast (FZE) entered into an agreement with Dremotec GmbH & Co
KG and Sirius Invest AG and incorporated another subsidiary Motherson Orca
Precision Technology GmbH. Subsequently, the business of Mothersonsumi Reiner
GmbH (100% subsidiary of MSSL GmbH) was transferred to the newly incorporated
entity with effect from January 01, 2008. Also, they established a representative office
in Italy during the year.

During the year 2007-08, the company set up two new plants in Noida and Pune to
meet the requirements of domestic and export market. They increased the extraction
capacity of Motherson Sumi Electrical Wires, Bangalore from 18,000 km to 26,000
km per month.

On 7 March 2009, Motherson Sumi Systems Limited (MSSL) announced that it has
completed the acquisition of Visiocorp Group on 6 March 2009, for which the
company had signed terms sheet and made announcement on 2 January 2009. MSSL
subsidiary, Samvardhana Motherson Visiocorp Solution Ltd. (SMVSL), has acquired
all the subsidiaries of Visiocorp plc (in administration) for a cash consideration of
approximately Euro 25 million and allotment of 5% consideration shares having face
value of Euro 1.5 million. The acquisition from Visiocorp plc (in administration)
comprises only assets in the form of shares of the operating companies and no debt is
being acquired from Visiocorp plc (in administration). The acquired subsidiaries also
have minimal debt. SMVSL is 95% owned by Samvardhana Motherson Global
Holdings Limited (SMGHL), a joint venture between MSSL and Samvardhana
Motherson Finance Limited (SMFL) in the ratio of 51:49. In 2008, Visiocorp Group
had a turnover of approximately Euro 660 million (USD 832 million) (unaudited).
The various operating companies include manufacturing locations at USA, Mexico,
Australia, UK, Hungary, Spain, France, China, India and Korea together with design
and engineering centers at each location and at Germany. The diverse customer
profile includes BMW, Chrysler, Daimler, Ford/Volvo, GM, Hyundai/Kia, Mahindra
& Mahindra, Maruti Suzuki, Mitsubishi, Porsche, PSA, Renault/Nissan, Tata JLR,
Toyota, Volkswagen/Audi etc.

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Visiocorp is a market leader in exterior rear view mirror systems and brings with it
cutting edge technology, covering the complete range of mirrors from low-end entry
segments to high-end luxury segments. The product range also includes specialized
unique solutions like the Telescopic Trailer Tow Mirrors and camera based Blind
Spot Detection systems. MSSL has a highly successful joint venture with Visiocorp in
India for the past 13 years and is a leading supplier of rear-view mirror systems to
automobile manufacturers in India. This acquisition will lead to significant leveraging
of business synergies as the existing business of Samvardhana Motherson Group
greatly supplements Visiocorp needs for products and services, particularly in design
engineering services, IT, injection moulded parts & assemblies, moulds and wiring
harnesses. With this acquisition, Samvardhana Motherson Group has become one of
the largest manufacturers of automotive mirrors in the world.

The Board of Directors of Motherson Sumi Systems Limited (MSSL) at its meeting
held on 29 June 2009 approved the proposal for purchase of shareholding held by
Wilhelm PUDENZ GmbH and WICKMANN Werke GmbH in Motherson PUDENZ
WICKMANN Ltd. (MPWL). On transfer of these shares, MPWL will become the
wholly owned subsidiary of MSSL. MPWL registered net sales of Rs 2.64 crore and
profit after tax of Rs 0.42 crore for the year ended 31 March 2009.

At the Board Meeting of Motherson Sumi Systems Limited (MSSL) held on 28 April
2011, the Board of Directors of the company approved the merger of Sumi Motherson
Innovative Engineering Limited (SMIEL), a company engaged in the manufacture of
components for wiring harnesses and other plastic components with Motherson Sumi
Systems Limited (MSSL). The Board also approved the merger of company's wholly
owned subsidiary, MSSL Global Wiring Limited, a company engaged in the
manufacture of wiring harnesses at SEZ Kandla with Motherson Sumi Systems
Limited (MSSL). The Board also approved the merger of India Nails Manufacturing
Pvt. Ltd., wholly owned subsidiary having mainly land and building, with Motherson
Sumi Systems Limited (MSSL). The merger of SMIEL into MSSL will add
significant value to MSSL's existing business of wiring harness and plastic molding.
SMIEL is presently subsidiary of Sumitomo Wiring Systems (SWS). The proposed
merger of SMIEL into MSSL will bring the entire business of wiring harness into one
entity. MSSL is one of the key customers (about 39%) of SMIEL. SMIEL is doing
similar business of plastic components as well.

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The Board of Directors of Motherson Sumi Systems Ltd (MSSL) at its meeting held
on 13 July 2011 in principle approved the proposal to (jointly with Samvardhana
Motherson Finance Limited) acquire 80% of the shareholding of Peguform Group,
Germany from Cross Industries AG. The acquisition would be made through a joint
venture in which MSSL would hold 51% stake and Samvardhana Motherson Finance
Limited would hold 49% stake. MSSL has through its subsidiary executed binding
agreement with Cross Industries for acquiring 80% stake in Peguform GmbH and
Peguform Iberica, SL together with 50% stake in Wethje Entwicklungs GmbH and
Wethje Carbon Composite GmbH. The total share consideration for the transaction is
Euro 141.5 million, of which MSSL share shall be Euro 72.165 million. MSSL
proposes to raise loan overseas to finance this transaction. Peguform is a leading full
service supplier off differentiated high quality interior and exterior products for the
automotive and related industries. Peguform has a strong presence in Europe,
supplying to major premium German brands. Fort the calendar year 2010, Peguform
Group registered revenue of Euro 1,355.53 million, EBITDA of Euro 66.87 million
and profit after tax of Euro 6.8 million.

The Board of Directors of Motherson Sumi Systems Ltd (MSSL) at its meeting held
on 9 August 2012 recommended the issue of bonus shares in the ratio of 1:2 (1 share
for 2 shares held) subject to the approval of the shareholders in the ensuing Annual
Genera! Meeting scheduled to be held on 10 September 2012.

The Board of Directors of Motherson Sumi Systems Ltd (MSSL) at its meeting held
on 1 November 2013 recommended the issue of bonus shares in the ratio of 1 (one)
bonus share against 2 (two) existing equity shares subject to the approval of the
shareholders.

On 10 August 2014, Motherson Sumi Systems Ltd (MSSL) announced that it has
successfully closed the deal for acquiring wiring harness business of Stoneridge Inc.
in a record time on receipt of necessary regulatory approvals. As announced
previously on 27 May 2014, MSSL had signed an agreement to acquire the Wiring
Harness business of Stoneridge Inc. through asset purchase at consideration of US $
65.7 million on no cash no debt basis. The total cash outlay of US $71.38 million
includes increase in working capital and cash/bank balances subject to post-closing
adjustments. Included in the transaction are six manufacturing facilities located in

13
Portland, Indiana (USA); Chihuahua, Mexico; Saltillo, Mexico; and Monclova,
Mexico; as well as an engineering and administrative center located in Warren, Ohio
(USA).

Stoneridge's Wiring Business designs and manufactures wiring harness products for
sale principally to the commercial, agricultural and off-highway vehicle markets, as
well as assembles entire instrument panels that are configured specifically to an OEM
customer's specifications in the commercial vehicle market. The addition of these
manufacturing facilities would enable MSSL to service the growing requirement of
the customers in the region. With this acquisition, MSSL now has over 45 plants
related to wiring harness business.

On 15 December 2014, Motherson Sumi Systems Ltd. (MSSL), through its subsidiary
Samvardhana Motherson Automotive Systems Group B.V., Netherlands (SMRP BV),
announced the signing of an agreement for purchase of assets of Scherer & Trier
group (S&T), Germany from its administrator. The consideration payable is
approximately Euro 36 million for the assets including land and building &
inventories along with the shareholding held in Mexican entities. This acquisition
includes 2 manufacturing facilities situated at Michelau (Germany) and Puebla,
(Mexico). The acquired entity develops and manufactures extrusion profiles, moulded
parts made of thermoplastics and hybrid components made of metal and plastic
catering to OEMs like Audi, BMW, Daimler, Ford, GM, VW etc. along with other
customers. It also has a strong vertical integration including state-of-the-art tool room
for injection moulding tools, process engineering and in-house material development
capabilities. This acquisition further consolidates MSSL's polymer business in Europe
& North America.

On 29 April 2015, Motherson Sumi Systems Ltd. (MSSL) announced that the
company through its subsidiary Samvardhana Motherson Automotive Systems Group
BV (SMRPBV) has received a significant set of orders for the supply of a range of
exterior and interior systems for several future Mercedes-Benz vehicle generations.
MSSL estimates these orders to generate sales revenues of approximately Rs 15400
crore (Euro 2.2 billion approx.) over its lifetime and expected to commence from
calendar year 2018. To support Daimler's expansion activities, MSSL will invest in 2
new plants, one each in the USA and Hungary which will enable SMRP BV to be

14
closer to Daimler's vehicle assembly plants, along with capacity expansion in existing
plants in Germany as well as new machines, tools and product development efforts.

The Board of Directors of Motherson Sumi Systems Limited at its meeting held on 10
June 2015 recommended the issue of bonus shares in the ratio of 1 (one) bonus share
against the 2 (two) existing shares subject to the approval of the shareholders.

On 7 September 2016, Motherson Sumi Systems Ltd (MSSL) informed the stock
exchanges that MSSL Manufacturing Hungary Kft., a subsidiary of MSSL GmbH
(which is a subsidiary of Motherson Sumi Systems Limited) is acquiring the
Automotive Business Unit of Abraham es Tarsa Kft. (Abraham and Co. Ltd) located
in Turkeve, Hungary on a going concern basis and would also give on lease part of
acquired assets to SMR Hungary. With this transaction, which is expected to be
completed in October 2016, MSSL through its 100% subsidiary, MSSL
Manufacturing Hungary Kft., would acquire the land, building and machinery of
Abraham es Tarsa Kft for a purchase price consideration of EUR 10.4 million.
Abraham es Tarsa is an expert for plastic processing and high quality products for car
makers across Europe. SMR Hungary a subsidiary of SMRP BV (98.5% holding),
which is ultimately held by MSSL, has for many years been the primary customer of
Abraham es Tarsa Kft.

The integration of this business would allow to generate a number of operational

synergies with SMR. This acquisition will increase the in house capability of SMR
Hungary, and therefore will support SMR's position as technology and market leader
for automotive mirrors in Hungary and Europe. The acquired unit will be further
expanded to achieve group synergies through supplies to SMR and to the new
facilities being set up by SMP in Europe to meet the demand for new orders from
customers.

On 12 September 2016, Motherson Sumi Systems Limited (MSSL) announced

allotment of 1.77 crore equity shares to Sumitomo Wiring Systems Limited, Japan,
one of the promoters of the company, at issue price of Rs 317 per share aggregating to
Rs 563.07 crore on preferential basis.

On 16 September 2016, Motherson Sumi Systems Limited (MSSL) announced

successful completion of raising funds amounting to Rs 1993.44 crore by way of

15
qualified institutional placement (QIP) issue. The QIP issue was priced at Rs 317 per
share.

On 27 March 2017, Motherson Sumi Systems Limited (MSSL) announced the deal
closure with acquisition of 93.75% stake in Finland based global auto component
major PKC Group Plc, a move that will help it expand its footprint significantly in
American and European commercial vehicle market segment. MSSL will acquire the
remaining stake in PKC Group Plc through subsequent offer/squeeze out process. The
total consideration payable for the acquisition is approximately Euro 571 million. As
announced earlier on 19 January 2017, MSSL and PKC entered into a combination
agreement pursuant to which MSSL launched a voluntary recommended public tender
offer for the acquisition of all the issued and outstanding share capital and voting
rights of PKC Group Plc (PKC). The tender offer was launched on 6 February 2017.

PKC designs, manufactures and integrates tailored electrical distribution systems and
related architecture components, vehicle electronics, wires and cables especially for
trucks and buses, light and recreational vehicles, construction equipment and
agricultural and forestry equipment. In addition, PKC designs and manufactures
electrical cabinets, power packs and electrical distribution systems for leading rolling
stock manufacturers. With the operational expertise of MSSL and technical know-
how of PKC, the company will add more value to its customers and suppliers.
MSSL's success in managing its wiring harness business with a focus on training its'
people, managing multiple plants with high degree of vertical integration from design
to modules will help unlock the full potential of PKC.

The Board of Directors of Motherson Sumi Systems Limited (MSSL) at its meeting
held on 19 May 2017 recommended the issue of bonus shares in the ratio of 1 (one)
bonus share against 2 (two) existing shares subject to the approval of the shareholders.

On 9 January 2018, Motherson Sumi Systems through its subsidiary Samvardhana

Motherson Automotive Systems Group B.V. (SMRP BV) announced the formation of
a Joint Venture (JV) with Ossia Inc., innovator of the revolutionary Cota Real
Wireless Power technology. Motherson Innovations Company Limited (MI), a
subsidiary of Samvardhana Motherson Automotive Systems Group B.V. (SMRPBV),
will hold majority share in the JV and will aim at bringing Ossia's Cota power system
into the interiors of some of the world's most popular vehicles. The newly formed

16
entity will be based in the U.S.A, supported by Samvardhana Motherson Group's
global organisation.

On 2 April 2018, Motherson Sumi Systems through its step down subsidiary
Samvardhana Motherson Automotive Systems Group B.V. (SMRP BV), announced
the proposed acquisition of Reydel Automotive Group (Reydel), a privately held
portfolio company of Cerberus Capital Management, L.P. (Cerberus) that
manufactures interior components and modules for global automotive customers. The
purchase price for the transaction is USD 201 million. This would be the 21st
acquisition from the Samvardhana Motherson Group and is intended to further bolster
Motherson's offerings in the automotive Interiors space. Reydel's Interiors Product
Portfolio includes Instrument Panels, Door Panels, Console Modules, Decorative
Parts and Cockpit Modules. Reydel's global presence spans 20 plants and 16
countries, and is supported by a workforce of approximately 5,650 associates. The
acquisition would enable both companies to capitalise on new opportunities in their
existing and new geographies, as well as within each others' customer portfolios.
Reydel's revenue for the year ended 31 December 2017 was USD 1,048 million and
EBITDA was USD 68 million (provisional, and in accordance with US GAAP). The
consideration is expected to be financed using existing cash and banking limits at
SMRPBV.

Wiring Harness Division

The nervous system of a vehicle, wiring harness, carries current and signals from one
point to another in a vehicle when connected to a power source. MSSL manufactures
customized wiring harnesses with best of craftsmanship which functions to the
desired level. Fit, function, efficiency, safety and reliability are guaranteed by more

17
than thousands of highly skilled pair of hands who work in tandem to achieve one
goal – Customer Delight.

The Brand, MSSL, is known for world-class products in wires, cables, wiring
systems, connectors, terminals and other wiring harness components. It provides
innovative solutions to its customers globally for passenger cars, trucks, buses,
motorcycles, scooters, agricultural & farm equipment, construction equipment and
other electrical equipment. The continuous focus on high quality products and
processes enables MSSL to provide the best possible connections to its esteemed
customers.

The company services its customers globally by setting up facilities in the proximity
to its customer in the regions and markets it serves. From these facilities, MSSL
provides services of design, development, proto-typing, validation throughout the
entire development period. Understanding of unique customer requirements and
delivering solutions that exactly meet these requirements is the way of life at MSSL.

A philosophy to be near its customer, MSSL has created a network of state-of-art

green field manufacturing facilities to serve customers across the globe. A dedicated
pool of cross-functional teams and trained human resources enable MSSL to set up
new facilities in small time frame.

Manufacturing Facilities
• Multi-unit, multi- location manufacturing
• Highly skilled human resources
• Specialized processes such as braiding, over-moulding, heat resistance
welding, ultrasonic welding, online printing etc.
• Training programs to build necessary skill sets for generic and special
manufacturing processes
• Conveyorised assembly lines
• 100% end of line testing

18
 • IT based online process control
• Special equipment and tool design with built in high degree of mistake
proofing

Design & Engineering

Product Design

With continuous change in customer requirements, the complexity and size of

harnesses is rapidly growing. With the emergence of new process technologies, the
handoff between harness design and manufacturing has changed from a simple
process to a multi-step process to ensure design for manufacturability.

Equipped with large resource-pool of highly trained and qualified design engineers,
MSSL provides design services & support to its customers using latest design
softwares with a focus on ease in manufacturing. Development and prototype support
are provided from multiple facilities globally.

Support Levels
• Harness routing and layout study
• Component Selection
• Benchmarking
• Wiring Harness Design
• Component Design
• Attribute and Feature Based Designs (ABR/FBR)
• Value Analysis & Value Engineering
• Onsite Engineering Support

19
 • Design Change Management

Process Engineering

The ability of manufacturing process to handle the expected variability of raw

materials, operating conditions, process equipment, environmental conditions and
human factors is the key to the robustness of any process.

MSSL has in-house capabilities for design and development of wiring harness
manufacturing processes. This allows it to have robust, stable, capable, simple, easy
and mistake proof process to ensure the desired quality levels and reduced
development lead times.

Process Capabilities
• In house Process design, development and validation
• Designing & manufacturing of jigs & fixtures and special purpose equipment
• Designing & manufacturing of Crimp parameter
• Applicator design & manufacturing
• Design & manufacturing of circuit test boards, assembly boards and material
handling equipment
• Tooling design for wiring harness process equipment, testing & assembly
equipment

The entire product mix with sales quantity & value along with percentage contribution
from each individual product for Motherson Sumi Systems Ltd.
Table 1.1: Finished Products
Product Units Installed Production Sales Sales Value
Name Capacity Quantity Quantity (Rs Cr.)
Auto N.A. 0.00 0.00 0.00 7064.5000
Electricals
Traded N.A. 0.00 0.00 0.00 455.1000
Goods
Sale of N.A. 0.00 0.00 0.00 92.2000
services
Scrap N.A. 0.00 0.00 0.00 28.8000

20
Export N.A. 0.00 0.00 0.00 15.7000
Incentives
Other N.A. 0.00 0.00 0.00 9.6000
Operating
Revenue
Job Work N.A. 0.00 0.00 0.00 1.4000
MSSL subsidiary SMRPBV will acquire 100% stake in two companies of the Reydel
Automotive Group.

Motherson Sumi Systems Limited reacted

positively to news of Reydel acquisition
and the stock was up by more than 3%
today after gaining over 4% yesterday.

Automotive component manufacturer

Motherson Sumi Systems Limited (MSSL),
the flagship company of the Samvardhana Motherson Group (SMG), is set to acquire
two companies of the Reydel Automotive Group (Reydel) for $201mn.

The acquisition will be done by MSSL subsidiary Samvardhana Motherson

Automotive Systems Group BV (SMRPBV), which will acquire 100% stake in both
entities. The acquisition is expected to be completed in the next 4-6 months and will
be MSSL's 21st acquisition.

Headquartered in Baarn, Netherlands,

Reydel is a privately held company of
Cerberus Capital Management, LP
(Cerberus) that manufactures interior
components and modules for global
automotive customers.

Its product portfolio comprises of

instrument panels, door panels, console modules, decorative parts, and cockpit
modules.

21
Reydel has 20 manufacturing facilities with a presence in 16 countries and 5,650
employees (as of January 2018). Its top customers include PSA, Renault, RSM,
Ssangyong / Mahindra and Mahindra, Volkswagen, and General Motors.

Vision & Mission

VISION: At Motherson Sumi Systems Ltd. (MSSL), they believe in being in control
of their destiny. They set ambitious targets and believe in stretching themselves to
outperform them. Therefore, one of the leadership position in the Indian market
notwithstanding, MSSL is now set to look oversees for new challenges. Nearly all
initiatives being taken at this point of time are geared to fuel this ambition. At home
and abroad, MSSL is looking not only consolidate its leadership positioning various
segments through newer, high technology products but also through consistent
organic and inorganic growth opportunities, in wires and allied products. Becoming a
leader in automotive segment is a priority. If the company continues to grow at the
current pace, MSSL is expected to reach U.S. $ 5 billion worth in less than 5 years.
Continuous focus on cost and operating efficiency remains the hallmark of the
company. Adding to all this is the fact that radicalisation in India is throwing up fresh
opportunities, as is the boom in road infrastructure and the completion of the Golden
Quadrilateral and the North-South-East-West corridor. Therefore the future is
optimistic with promises of a virtuous cycle of growth. MSSL has three automotive
manufacturing facilities and one unit for the production of tubes and flaps in four
locations based in West and South India. MSSL endeavour has been to have the
widest spread of sales and regional offices, along with stock points at locations which
allow for maximum customer research and efficient supply of chain management.
MSSL dealers or business partners are also chosen with great care. MRF’s products
are sold through a combination of outlets ranging from exclusive dealerships to multi-
brand and branded retail outlets. The continuous upgradation of dealer knowledge is
in MSSL’s interest and therefore their training is undertaken by the company. With a
dedicated field production, technical and commercial force, we feel that we are best
positioned to meet the customer specific needs.

MISSION: The mission of MSSL are its future hypothetical goals it wants to achieve
in its long term tenure.
• Enhance global presence through Acquisition / JV / Strategic Partnerships.

22
 • Deliver Enhanced Value to all stakeholders
• Motivated and Committed team for excellence in performance.
• Most profitable Wiring Company in India
• No.1 Wire Harness Brand in India
• Be a Customer Obsessed Company
• Customer First 24x7
• The mission of MSSL includes

Table 1.2: MAJOR COMPETITORS

Company Sales Current Change% P/E Market 52-Week

(Million) Price Ratio Cap(Million) High/Low
Bosch 88201.00 10900.00 2.80 35.00 332935.10 11500/8000
MothersonSumi 43041.00 261.35 -0.42 46.12 231459.74 285/123
Sys
Exide Inds 60713.70 131.25 6.71 21.46 104550.00 143/99
Amara Raja 29613.96 381.00 -0.90 18.93 65668.87 460/208
Batteries
Tube Investments 34074.30 230.80 4.86 43.73 41135.10 227/123
Wabco India 9659.24 2126.00 -0.65 36.03 40590.63 2399/1410
Amtek Auto 30193.80 179.35 -0.28 14.63 39319.48 191/59
Amtek India 22980.97 76.50 2.68 8.91 20676.33 102/49
Sundaram-Clayton 10185.60 770.00 2.60 28.30 15184.18 775/250
Bosch Chassis 12474.00 595.95 0.00 79.08 12391.59 597/593
Federal-Mogul 11369.72 195.00 6.41 48.89 10194.59 216/166
Goetze
Suprajit 4209.82 81.15 9.66 19.26 8881.48 77/32
Engineering
Fairfield Atlas 2293.36 241.00 0.00 14.93 6584.25 243/198
Wheels India 19245.02 571.00 6.35 22.74 6460.13 750/351
Banco Products (I) 4457.13 96.00 8.17 11.92 6347.28 94/33
Auto.Axle 6425.34 440.00 5.78 48.88 6285.83 445/188
Shanthi Gears 1465.30 74.30 10.16 29.97 5511.73 82/49
FiemInds 6022.15 449.10 1.56 15.19 5289.70 466/179
Igarashi Motors 2907.80 184.00 10.05 12.36 5090.48 189/55
Sona Koyo Steerg 11185.63 27.15 10.59 9.26 4879.11 26/9
Sys
Gabriel India 12053.23 38.00 14.63 11.18 4761.80 38/16
LG 9366.25 553.00 3.80 7.69 4181.08 597/152
Balakrishnan&Bros
JMT Auto 3217.48 263.30 -4.96 56.52 3988.19 308/69

23
Denso India 12186.00 142.70 0.00 18.94 3978.43 143/71
Munjal Showa 15814.27 103.45 7.82 5.24 3837.52 98/52
Phoenix Lamps 4372.61 130.10 4.67 3.77 3482.80 135/31
Minda Industries 10562.92 200.00 2.04 14.62 3109.61 237/121
Jamna Auto Inds. 8402.28 86.05 9.97 18.30 3092.18 90/50
Pricol 8738.94 33.00 2.48 4.44 3042.90 37/15
Munjal Auto Inds 7173.32 58.95 5.65 6.08 2790.00 64/26
Lumax Industries 10702.06 296.60 0.14 35.09 2768.80 385/285
ZF Steering Gear 3128.87 316.00 5.30 38.98 2722.90 325/204
(I)
Setco Automotive 3593.15 105.40 9.39 13.20 2570.43 107/62
Steel Strips 9699.33 162.60 6.41 8.08 2323.81 180/112
Wheels
Hindustan 934.52 460.00 4.55 12.33 2166.12 470/205
Composites
India Nipon 2690.05 200.00 5.01 9.22 2154.13 219/145
Electric
Rane Madras 6398.70 226.00 10.78 13.15 2144.17 250/105
Exedy India 2157.44 342.50 0.00 0.00 2057.29 343/342
Hi-Tech Gears 3733.78 112.35 19.97 10.89 1757.62 100/57
Rico Auto Inds 10470.40 14.24 9.96 17.29 1751.94 15/4
Sharda Motor 8983.33 0.00 0.00 7.62 1718.49 550/221
Inds. Ltd.

Samvardhana Motherson Group

Motherson is customer driven MNC
Location-Uttarakhand
Name-Nitish Gupta
Corporate mentor Name – HimanshuVarshney (marketing Manager)
The person who taught me everything about Mssl- Parvendar
Project title –A study on business to business selling process and its challenges
Customers and their locations – Tata motors(TM) and Ashok Leyland(AL)
1) TM PantnagarUttarakhand
2) TM Jamshedpur
3) TM Pune
4) AL Pantnagar
5) AL Hosur
6) AL Alwar
7) AL chennai

24
Competitor- Minda and Yazaki

Buying situations -
1) Straight rebuy
2) Modified rebuy
3) New task
Software used by mssl- Oracle, ebiz
In new task buying- (New Development of wire harness)
• STAGES
1) The customer give drawing of wire harness to the marketing department in
C.D.
2) Then marketing team gives that drawing to R&D department.
3) R&D department draws the drawing which can be understood by mssl other
departments
4) Product development- Other department starts working upon manufacturing of
wire harness.
5) Production Planning

In starting Tata motors takes 1,5,25 samples then mass production

In starting Ashok Leyland takes 5 samples then mass production takes place.

SOB- share of business(100%)

50%- Mothersonsumi systems limited
Remaining 50% is done by Yazaki and Minda

Questionaire design-Try and get information regarding their feedback-unfilled

requirements and suggestions.

Fig. 1.1 Awards and Recognition

25
Table 1.3: Market Share

Name Market Share (%)

Motherson Sumi Systems Ltd. 62
Denso India Ltd. 7
Design Auto System Ltd. 5
Hella India Lighting Ltd. 4
India Nippon Electricals Ltd. 11
Minda Industries Ltd. 2
PAE Ltd. 5
Others 4

Fig 1.2: Market Share

26
 Market Share (%)
2 4
5
Motherson Sumi Systems Ltd.

11 Denso India Ltd.

Design Auto System Ltd.
4 Hella India Lighting Ltd.

5 India Nippon Electricals Ltd.

62 Minda Industries Ltd.
7
PAE Ltd.
Others

Fig. 1.3 Organization chart of MSSL

Fig. 1.4 Functions of Various Departments

27
SWOT ANALYSIS
STRENGTHS
• High customer satisfaction.
• Established brand image around the world over the centuries.
• Continuous improvement of products and quality.
• Importance given to employee development.
• Cost reduction strategy is good.
• Good infrastructure facility.
• Leadership through innovation.
• High employee morale.
• Effective decision making, information sharing and authority distribution.
• Less employee turnover.
• High quality and eco-friendly products.

28
WEAKNESS
• Decision making is delayed because of long procedure.
• Marketing of products is given less importance.
• Adaptability towards change is low.

OPPORTUNITIES
• Continuous innovation of products.
• Bosch can foray into other line of business as it has a good brand image.
• It can produce new machineries using high technology.
• Potential to grow in power tools, packaging and security systems.
• It can produce more economical and eco-friendly products.
• It helps to compete with other companies
• Quick cost effective adaptation of product to market requirement of Indian
market.

THREATS
• Increase in competition.
• Too many substitute products available in the market.
• Brand image being diluted due to entering into many products.
• Growing bargaining power of companies & Continuous cost pressure.

1.3 Overview of the industry

The automotive industry began in the 1890s with hundreds of manufacturers that
pioneered the horseless carriage. An automobile (or automotive) is a vehicle that is
capable of propelling itself. The automotive industry involves all those companies and
activities involved in the manufacture of motor vehicles, including most components,
such as engines and bodies, but excluding tires, batteries, and fuel.

Automobiles changed the world during the 20thcentury, particularly in the United
States and other industrialized nations. For many decades, the United States led the
world in total automobile production. From the growth of suburbs to the development
of elaborate road and highway systems, these horseless carriages have forever altered
the modern landscape. The manufacture, sale, and servicing of automobiles have

29
become key elements of industrial economies. But along with greater mobility and job
creation, the auto mobile has brought noise and air pollution and accident rank among
the leading causes of death and injury throughout the world. For better or worse, the
1900s can be called the Age of the Automobile and cars will no doubt continues to
shape our culture and economy well into the 21st century. Automobiles are classified
on the basis of purpose, capacity, fuel source, type of transmission, side of drive and
number of wheels. The typical automobile, also called a car, auto, motorcar, and
passenger car, has four wheels and can carry up to six people, including a driver.
Larger vehicles designed to carry more passengers are called vans, minivans,
omnibuses, or buses. Those used to carry cargo are called pickups or trucks,
depending on their size and design. Minivans are van-style vehicles built on a
passenger car frame that can usually carry up to eight passengers. Sport-utility
vehicles, also known as SUVs, are more rugged than passenger cars and are designed
for driving in mud or snow.

Complaints about auto pollution, traffic congestion, and auto safety led to the passage
of government regulations beginning in the 1970s, forcing auto manufacturers to
improve fuel efficiency and safety. Auto companies are now experimenting with cars
powered by such alternative energy sources as natural gas, electricity, hydrogen fuel
cells, and solar power.

AUTOMOBILE INDUSTRY AN OVERVIEW

The Indian auto industry became the 4th largest in the world with sales increasing 9.5
per cent year-on-year to 4.02 million units (excluding two wheelers) in 2017. It was
the 7th largest manufacturer of commercial vehicles in 2017.
The Two Wheelers segment dominates the market in terms of volume owing to a
growing middle class and a young population. Moreover, the growing interest of the
companies in exploring the rural markets further aided the growth of the sector.
India is also a prominent auto exporter and has strong export growth expectations for
the near future. Automobile exports grew 15.54 per cent during April 2018-February
2019. It is expected to grow at a CAGR of 3.05 per cent during 2016-2026. In
addition, several initiatives by the Government of India and the major automobile
players in the Indian market are expected to make India a leader in the two-wheeler
and four wheeler market in the world by 2020.

30
Market Size
Domestic automobile production increased at 7.08 per cent CAGR between FY13-18
with 29.07 million vehicles manufactured in the country in FY18. During April 2018-
January 2019, automobile production increased 9.84 per cent year-on-year to reach
26.26 million vehicle units.
Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-
18 with 24.97 million vehicles getting sold in FY18. During April 2018-January 2019,
highest year-on-year growth in domestic sales among all the categories was recorded
in commercial vehicles at 22.79 per cent followed by 14.79 per cent year-on-year
growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. During January-
September 2018, BMW registered a growth of 11 per cent year-on-year in its sales in
India at 7,915 units. Mercedes Benz ranked first in sales satisfaction in the luxury
vehicles segment according to J D Power 2018 India sales satisfaction index (luxury).
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-
18.
Investments
In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months. The
industry has attracted Foreign Direct Investment (FDI) worth US$ 20.85 billion
during the period April 2000 to December 2018, according to data released by
Department of Industrial Policy and Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile sector in
India are as follows:
• Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$ 155.20
million) to launch 20-25 new models across various commercial vehicle
categories in 2018-19.
• Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC Motor has
also announced to invest US$ 310 million in India.
• Mercedes Benz has increased the manufacturing capacity of its Chakan Plant to
20,000 units per year, highest for any luxury car manufacturing in India.
• As of October 2018, Honda Motors Company is planning to set up its third factory
in India for launching hybrid and electric vehicles with the cost of Rs 9,200 crore
(US$ 1.31 billion), its largest investment in India so far.

31
• In November 2018, Mahindra Electric Mobility opened its electric technology
manufacturing hub in Bangalore with an investment of Rs 100 crore (US$ 14.25
million) which will increase its annual manufacturing capacity to 25,000 units.
Government Initiatives
The Government of India encourages foreign investment in the automobile sector and
allows 100 per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -
• The government aims to develop India as a global manufacturing centre and an
R&D hub.
• Under NATRiP, the Government of India is planning to set up R&D centres at a
total cost of US$ 388.5 million to enable the industry to be on par with global
standards
• The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in
the country for introduction of electric vehicles (EVs) in their public transport
systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and
Electric Vehicles in India) scheme. The government will also set up incubation
centre for start-ups working in electric vehicles space.
• In February 2019, the Government of India approved the FAME-II scheme with a
fund requirement of Rs 10,000 crore (US$ 1.39 billion) for FY20-22.
Achievements
Following are the achievements of the government in the past four years:
• Number of vehicles supported under FAME scheme increased from 5,197 in June
2015 to 192,451 in March 2018. During 2017-18, 47,912 two-wheelers, 2,202
three-wheelers, 185 four-wheelers and 10 light commercial vehicles were
supported under FAME scheme.
• Under National Automotive Testing And R&D Infrastructure Project (NATRIP),
following testing and research centres have been established in the country since
2015
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance & Training (NIAIMT),
Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai

32
• SAMARTH Udyog – Industry 4.0 centres: ‘Demo cum experience’ centres are
being set up in the country for promoting smart and advanced manufacturing
helping SMEs to implement Industry 4.0 (automation and data exchange in
manufacturing technology).
Road Ahead
The automobile industry is supported by various factors such as availability of skilled
labour at low cost, robust R&D centres and low cost steel production. The industry
also provides great opportunities for investment and direct and indirect employment
to skilled and unskilled labour.
Indian automotive industry (including component manufacturing) is expected to reach
Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers are
expected to grow 9 per cent in 2018.
References: Media Reports, Press Releases, Department of Industrial Policy and
Promotion (DIPP), Automotive Component Manufacturers Association of India
(ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2015-
16, Union Budget 2017-18

In India, as in many other countries, the auto industry is one of the largest industries.
It is one of the key sectors of the economy. The industry comprises of automobile and
the auto components sectors and encompasses commercial vehicles, multi utility
vehicles, passenger cars, two-wheelers, three-wheelers, tractors and related auto
components. The industry has shown great advances since deli censing and opening
up of the sector to foreign direct investment (FDI) in 1993. It has deep forward and
backward linkages with the rest of the economy, and hence, has a strong multiplier
effect. This results in the auto industry being the driver of economic growth and India
is keen to use it as a lever of accelerated growth in the country.

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the
Automobile Industry of India has come a long way. During its early stages the auto
industry was overlooked by the then Government and the policies were also not
favorable. The liberalization policy and various tax reliefs by the Govt. of India in
recent years have made remarkable impacts on Indian Automobile Industry, which is
currently growing at the pace of around 25% per annum, has become a hot destination

33
for global auto players like Volvo, General Motors, Ford, Hyundai, Tata motors and
other big players who are emerging slowly.

Today Indian automotive industry is fully capable of producing various kinds of

vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy
vehicles. A well developed transportation system plays a key role in the development
of an economy, and India is no exception to it. With the growth of transportation
system the Automotive Industry of India is also growing at rapid speed, occupying an
important place on the ‘canvas’ of Indian economy.

During the early stages of its development, Indian automobile industry heavily
depended on foreign technologies. However, over the years, the manufacturers in
India have started using their own technology evolved in the native soil. The thriving
market place in the country has attracted a number of automobile manufacturers
including some of the reputed global leaders to set their foot in the soil looking
forward to enhance their profile and prospects to new heights.

At present about 75 percent of India’s automobile industry is made up by small cars,

with the figures ranking the nation on top of any other country on the globe. Over the
next two or three years, the country is expecting the arrival of more than a dozen new
brands making compact car models. The automobile sector of India is the seventh
largest in the world. In the year, the country manufacturers about 2.6 million cars
making up an identifiable chunk in the world’s annual production of about 73 million
cars in a year.

EVOLUTION OF THE AUTOMOBILE INDUSTRY IN INDIA

In India, since the early 1940s when the auto industry rolled out first passenger car, its
significance in the economy has progressively increased. However, from its early
days until the mid-1980s for two-wheelers and LCVs, and until the early 1990s for
passenger cars, the focus of development of the automotive industry has been on
import substitution. The current low penetration levels in India in all three segments
of the industry, namely commercial vehicles, passenger cars and two wheelers and
under-exploitation of the potential of this industry to foster.

34
The growth of the economy have resulted in the auto industry contributing a relatively
low (nearly 5 per cent) share of industrial output in India compared to the 8-10 per
cent range in other developing countries such as Mexico and Brazil and much higher
(15-17 per cent range) in developed countries such as the United States and Germany.
Even the share of employment is low at 2.5 per cent for the auto industry in India
compared to 3-7 per cent in developing countries and around 15 per cent in mature
economies.

The economic liberalization that dawned in India in the year 1991 has succeeded in
bringing about a sustained growth in the automotive production sector triggered by
enhanced competitiveness and relaxed restrictions prevailing in the India soil. A
number of Indian automobile manufacturers including Tata Motors, Maruti Suzuki,
Mahindra and Mahindra, and TVS motors have dramatically and internationally to
attain its rightful place in the world trade. A global recession for last two year
notwithstanding, the industry has shown appreciable resilience and adjusted to the
challenges of the environment.

There are at present 13 manufacturers of passenger cars and multi utility vehicles, 7
manufacturers of commercial vehicles, 11 of 2 or 3 wheelers and 10 tractors besides 4
manufacturers of engines. The industry has an investment of a sum exceeding US$ 10
billion. During 1999-2000 the turnover of the automotive industry as a whole was
US$ 12.5 billion approximately. The industry employs 500,000 people directly and
more than 10 million people indirectly and is now inhabited by global majors in keen
competition.

The Automobile industry in India is the seventh largest in the world with an annual
production of over 2.6 million units in 2009. In 2009, India emerged as Asia’s fourth
largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050,
the country is expected to top the world in car volume with approximately 611 million
vehicles on the nation’s roads. Indian automobile industry has matured in last few
years and offers differentiated products for different segments of the society. It is
currently making inroads into the rural middle class market after its inroads into the
urban markets and rural rich.

35
In the recent years Indian automobile sector has witnessed a slew of investments.
India is on every major automobile player’s radar. Indian automobile industry is also
fast becoming an outsourcing hub for automobile companies worldwide, as indicated
by the zooming automobile exports from the country. Due to rapid economic growth
and higher disposable income it is believed that the success story of the Indian
automobile industry is not going to end soon. Automobile industry in India also
received an unintended boost from stringent government auto emission regulations
over the past few years. This ensured that vehicles produced in India conformed to the
standards of the developed world.

Table 1.4: Current status of the automotive industry

The industry over a period of time has installed a robust capacity as given below:
SEGMENT INSTALLED CAPACITY

COMMERCIAL VECHICLES 41000

CARS AND MULTI UTILITY VECHICLES 1146000

TWO AND THREE WHEELERS 5696000

GRAND TOTAL 7252000

SEGMENT KNOWHOW
Among the two-wheelers segments, motorcycles have major share in the market. Hero
Honda 50% motorcycles to the markets. In it Honda holds 46% share in scooter and
TVS makes 82% of the mopeds in the country. 40% of the three-wheelers are used as
goods transport purpose. Piaggio hold 40% of the market share. Among the passenger
transport, Balaji is the leader by making 68% of the three-wheelers contribution to the
market. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52%
share in passenger cars and is a complete monopoly in multipurpose vehicles. In
commercial vehicle, Tata Motors dominates the market with more than 60% share.
Tata Motors is also the world’s fifth largest medium & heavy commercial vehicle
manufacturer. The passenger car and motorcycle segment in India auto market is
growing by 8-9 per cent. The two-wheelers segment will close 11.5% rise by 2007.
Commercial vehicle to grow by 5.2%. passenger vehicle exports have grown over

36
five times and two-wheelers exports have reached more than double. Exports of auto
components, whose manufacturing costs are 30-40 per cent lower than in the West,
have grown at 25% a year between 2000 to 2005.

FACTS ABOUT THE AUTOMOBILE INDUSTRY

• The first automobile in India rolled in 1897 in Bombay.
• India is being recognized as potential emerging auto market.
• Foreign players are adding to their investments in India auto industry.
• Within two-wheelers, motorcycles contribute 80% of the segment size.
• Unlike the USA, the Indian passenger vehicle market is dominated by cars (79%).
• Tata Motors dominates over 60% of the Indian commercial vehicle market.
• 2/3rd of auto component production is consumed directly by OEMs.
• India is the largest three-wheeler market in the world.
• India is the largest two-wheeler manufacturer in the world.
• India is the second largest tractor manufacturer in the world.
• India is the fifth largest commercial vehicle manufacturer in the world.
• The number one global motorcycle manufacturer is in India.
• India is the fourth largest car market in Asia – recently crossed the 1 million mark.

CURRENT SCENARIO OF THE AUTOMOBILE INDUSTRY

According to Commerce Minister Kamal Nath, India is an attractive destination for
global auto giants like BMW, General Motors, Ford and Hyundai who were setting
base in India, despite the absence of specific trade agreements.
• On the cost front of Indian automobile industry, OEMs are eyeing India in a
big way, investing to source products and components at significant discounts
to home market.
• On the revenue side, OEMs are active in the booming passenger car market in
India.
• By 2011, India is expected to witness over Rs 40,000 crore of investment.

The automobile industry in India is on an investment overdrive. Be it passenger car or

two-wheelers manufacturers, commercial vehicle makers or three-wheelers companies
– everyone appears to be in a scramble to hike production capacities.

37
EMERGING TRENDS IN THE AUTOMOBILE INDUSTRY
Globalization is pushing auto majors to consolidate, to upgrade technology, enlarge
product range, access new markets and cut costs. They have resorted to common
platforms, modular assemblies and systems integration of component suppliers and e-
commerce. The component industry is undergoing vertical integration resulting into
emergence of ‘ systems and assembly suppliers’ rather than individual component
suppliers. Thus, while most component suppliers are integrating into tier 2 and tier 3
suppliers, larger manufacturers and multinational corporations (MNCs) are being
transformed into tier 1 companies.
To meet the concomitant testing and certification activities relating to higher safety
and emission norms, testing infrastructure in the country is being overhauled. A
substantive state funding is being planned in upgrading the testing infrastructure with
participation of industry. Environmental pollution and the need to conserve existing
supply of fossil fuels have led to search for alternative fuels. In addition to supporting
Greenfield research in this area, an ambitious phased programme to upgrade carbon
fuel quality commensurate with higher emission norms is also being undertaken.
Breakdown of services based on total dollars spent on total purchasing dollars are
listed below.
1. Crash Parts – 31%
2. Paint – 21%
3. Refinishing Materials – 15%
4. Repair Materials – 8%
5. Mechanical Parts – 8%
6. Tools – 7%
7. Capital Equipment – 6%
8. Other – 4%

Customer Base
1. Household members = 75% of industry revenue
2. Customers age 45+ = 35% of industry revenue
3. Customers age 35 to-44 = 14 % of revenue
4. Commercial and business customers = 22%
5. Government customers = 3% of revenue

38
Federal and State Regulations Governing Aftermarket Sector

Prior to purchasing an automobile franchise it's important that you understand federal,
state and municipal regulations in your area so you can be in full compliance and
avoid any fines or suspension of service.

Car Parts

While car parts are manufactured by auto manufacturers, it's useful for aftermarket
franchise owners to understand that most car parts are regulated by the by the
National Traffic Safety Administration (NHTSA) based on safety requirements.
Generally, the regulations cover equipment that is mandated to be installed on every
new vehicle produced. An aftermarket part can be directly regulated (e.g. air bags,
lights, tires and brakes) or indirectly regulated, such as a new part installed as an
accessory or add-on but which will not take the car out of compliance (e.g. GPS). In
all cases, the NHTSA can regulate any part that poses or may pose a safety issue.

Wrapping Up: Important Considerations:

Industry Considerations
• Electric and hybrid cars are introducing new revenue streams to the market so that
service and parts replacement shops will need to expand to meet demand. Only
those aftermarket shops that remain current with industry trends will continue to
remain competitive in the aftermarket sector. The increased sophistication of these
systems requires technicians who have undergone specialized and costly training.
However, there is currently a shortage of this talent pool resulting in the need to
offer higher pay rates than in the past.

• Advances in technology have enabled service shops to introduce increased

efficiencies in their processes. For example, auto-generated reminders of oil
change or state vehicle inspections have provided opportunities for increased
revenue.

• The advances in technology are enabling new cars to run for longer periods of
time resulting in less need for service and consequent less spending in the
aftermarket sector. Some auto manufacturers recommend longer time periods
between routine maintenance, such as oil changes or brake repairs. However, there
will likely continue to be a subset of the customer base (mostly those age 45+)

39
 who will continue to pursue regular auto care to better ensure the longevity of
their vehicle.

• It's important to perform adequate market research so that you become familiar
with local competition, their services and customer base of your territory. This
research will help you decide how best to position your auto franchise to be
competitive.

General Franchising Considerations

Franchise Advantages
There are many attractions to owning an automotive franchise which we list below:
1. You will be buying into a proven concept that already has brand recognition and
customer loyalty which reduces the risks typically associated with a new business
are greatly decreased;

2. Your franchisor will work with you to define an attractive territory offering a
good customer base.

3. Costs are a known entity to potential lenders making it easier to obtain funding
than if you were to apply for a bank loan on behalf of a private start-up;

4. You receive training and on-going support from franchise organization staff who
will assist with site selection, marketing and recruitment. You can also seek help
from experienced franchisees who have been through the steps you are now taking
and can provide an insider's perspective. This may be particularly valuable in the
automotive industry given the significant changes in technology, equipment and
regulations.

5. The franchise system has already been tested and improved via the experiences of
those franchisees who were early adopters of the concept;

6. The franchise is able to bring buying power by leveraging its size to negotiate
costs.

40
 Chapter- 2
RESEARCH METHODOLOGY

2.1 Objectives and scope

➢ To study on B2B selling process and its challenges at Motherson Sumi System
Ltd.
➢ To know why marketing through internet has become essential for any
business today
➢ To find out the benefits of internet services to the marketers and to the
potential buyers at Motherson Sumi System Ltd.
➢ To study the sales promotional activities of Motherson Sumi System Ltd.
➢ To study the post liberalization scenario of the automobile industry in India
and the existing marketing strategies being adopted by the car manufacturers.
➢ To study the effectiveness of these marketing strategies by analyzing the
impact on consumer in terms of their brand choice, satisfaction and loyalty
intention.
➢ To explore and suggest marketing strategies in regard to the current scenario
for the car manufacturers and marketers.
➢ Understanding as to how internet can be used as a media of sales promotion
and a channel of distribution of goods

SCOPE OF THE STUDY

The scope of the study extends to the customers of the NCR Delhi and their behavior
towards online retail and personal selling at Motherson Sumi System Ltd. auto parts
manufacturing industry.

2.2 Research design

A Research Methodology defines the purpose of the research, how it proceeds, how to
measure progress and what constitute success with respect to the objectives
determined for carrying out the research study.
This is a descriptive research as it will clarify the doubts about online advertising. It
would give us a clear picture on the effectiveness and reliability of online advertising
compared to the traditional form of advertising.

41
2.3 Sources of data collection
The data required for understanding will be collected from various online customers.
In order to conduct the study digital survey was conducted through online internet
marketing and e-mail. And those responses are collected in a spreadsheet and further
analysis was done.

The data collection method in this particular research comprises of two forms: namely
primary and secondary data. One needs to be careful while using secondary data as
maybe the collected data may be biased as the collector of that original data might
have highlighted only a partial picture or another aspect may be that data may be quite
old and also the data quality could be unknown.

Primary data: Questionnaire, Personal Interview, Interview with Marketing

Professional, Primary data has been collected through
interviewing those users of internet which use this medium for
the purpose of buying and selling goods on-line

Secondary data: Secondary data has been taken from the below mentioned
sources of secondary data Online reports related to advertising
Books, Magazines, Journals, Articles, Reports in the field of
internet marketing and Internet.

2.4 Data analysis - tools/techniques

Simple statistical tools like tables, pie charts and bar diagrams have been used to
analyse the data collected through interviews and questionnaire survey.
Judgmental Non Probability sampling can be used to select the individual units for
better productivity of the questionnaire. A well educated person may be able to reason
out the questions in the better way.

2.5 Sampling design

Sample Size: 40-Employee and 10 manufacturing distributor dealers at
Motherson Sumi System Limited were interviewed in the
selected auto parts manufacturing automotive industry they

42
 were interviewed about their on-line shopping behavior and
preferences
Sampling method: Random sampling method has been employed to collect the
samples for this study.

Survey area: NCR Delhi

2.6 Limitations of the study

Every study will have its problems and limitations at some point during the project.
This study is no different. The use of a non-probalistic sample in the research was a
major limitation because there was no way to make sure that the sample taken
represented the total population of the Internet users. A non-probability sample lacks
the accuracy and precision that a probability sample might offer. Though this samples
provided a better insight about the online shoppers but there could be a possibility that
a respondent may have done online shopping but is not a regular Internet user. It was
seen that some respondents were biased towards some questions. Another major
limitation encountered doing the research assignment was the issue regarding the
time.
➢ The survey cannot be termed 100% accurate due to lack of time and cost.
➢ The scope of study is limited in terms of no. of respondent.
➢ The lack of candidness of respondent towards answering the questionnaire in
few cases and may have reduced the accuracy of survey to some extent.
➢ Despite the unbiased opinion and efforts the possibility of technical exceptions
cannot be ruled out.
➢ The statistical analysis with various automated tools might have computational
errors.

43
 CHAPTER-3
CONCEPTUAL BACKGROUND
3.1 Introduction

A literature review is an evaluative report of information found in the literature

related to the scholar selected area of study. The review describes, summarizes,
evaluates and clarifies this literature. It gives a theoretical base for the research and
help the scholar determine the nature of the research. Works which are irrelevant were
discarded and those which were peripheral were looked at critically. All works
included in the review are read, evaluated and analyzed. In writing the literature
review, the purpose is to convey to the reader what knowledge and ideas have been
established on a topic, and what their strengths and weaknesses.

The growth of e-commerce, especially within the area of B2B, was discussed in the
previous chapter. It also was pointed out that trade through e-marketplaces contributes
largely to this growth, and that the adoption of B2B e-marketplaces has strategic
implications for different market actors (i.e., buyers, suppliers, and intermediaries).
As indicated in the previous chapter, the B2B e-marketplace phenomenon is relatively
new and is undergoing rapid development, which leads to an increased need for e-
marketplace operators to understand the field of B2B e-marketplaces. Based on this

44
notion, and the lack of research within the field, we formulated the problem area for
this thesis as: “assessment of B2B e-marketplaces.”

Evidence from existing literature on e-marketplaces indicates that all related critical
issues have not been researched extensively. With this in mind, we have had to use
the available literature within a broader area, especially literature concerning the
assessment of issues related to business strategy and business models.

This chapter presents and evaluates an overview of previous research related to the
problem area. Based on this overview we will formulate the research problem and
relevant research questions for this study in Chapter Three. The literature overview
will also be used for the development of the frame of reference.

Research concerning the overall assessments of B2B e-marketplaces (e.g., Bruun et

al., 2002; Bakos, 1998; Bloch & Catfolis, 2001; Kaplan & Sawhney, 1999 and 2000)
indicates that there are a number of issues and concepts that are crucial for
understanding of B2B e-marketplace phenomenon (i.e., e-marketplace characteristics,
roles and benefits; value creation; business models and business strategy; challenges;
critical success and failure factors). Hence, these issues will be the major focal points
in this literature review.

Apart from this introduction, section provides a comprehensive background for this
study; it comprises various definitions associated with e-marketplaces, a presentation
of different ways to classify these, a presentation of their roles, as well as a discussion

45
on how buying and supplying organizations benefit by using B2B e-marketplaces.
Subsequently, section deals with values that can be created by B2B e-marketplaces,
focusing on market inefficiencies, and how these can be reduced by using B2B e-
marketplaces. Since value proposition and value creation can be described in terms of
business models, and due to the inevitable relation between the concepts of business
models and business strategy, section assesses issues related to these two concepts, as
well as differences and relationships between them. The section also deals with the
issue of business models related to e-marketplaces. Despite the fact that B2B e-
marketplaces create undoubted value for buyers, suppliers, and intermediaries, setting
up and running an e-marketplace is associated with substantial challenges, which is
the focus of section. To gain a better understanding of why only a few B2B e-
marketplaces are managed successfully and adjust competently to these challenges,
while others fail, section 2.6 analyzes critical factors influencing success and failure.
In section 2.7, the ways in which e-marketplaces are working are presented, along
with emerging trends. Section provides a short summary of the chapter.

In general, the process by which raw materials are transformed into finished products
that are delivered from suppliers to customers (known as forward logistics) is the
focus of most supply chain management studies (Daugherty et al., 1996). However, in
recent years, reverse logistics that deals with returns of end-of-life (EoL) products
from end-users to retailers, manufacturers, and suppliers for refurbishment,
remanufacturing and recycling, has gain a great attention and emphasis (Chan &
Chan, 2008; Li & Olorunniwo, 2008, Rogers & Tibben-Lembke, 2001; and

46
Srivastava, 2008). The compliance of environmental regulations becomes one of the
important reasons for paying excessive attention on reverse logistics.

Economic benefit from recycling does contribute to the booming reverse logistics in
developed countries like USA on one hand, the high cost of reverse logistics compels
the firms to look at the issue seriously from a long term strategic perspective on the
other hand. Therefore, reverse logistics has become a critical strategic issue for many
firms like the electronics industry. Major manufacturers in many industries in
developed countries have implemented reverse logistics to various extents. The
practice can be explained using transaction cost economics (TCE) theory (Maltz,
1993; Skjøtt-Larsen, 2000) and resource-based view (RBV) of a firm (Halldorsson et
al., 2007; and Rungtusanatham et al., 2003).

3.2 Reverse Logistics Management:

An Overview In a distinction, reverse logistics in developing countries like China,

despite having a global manufacturing base, still appears to be at an infant stage in
most industry sectors. Despite having an extensive domestic researches and a general
consensus that reverse logistics can help maintain sustainable development and
generate additional profits (Yuan, 2006) only a few manufacturers in the electronics
industry of China have implemented reverse logistics while others remain
uninterested. It is therefore necessary to investigate whether the current firm based
theories on reverse logistics, such as TCE and RBV that have successfully explained
the practices of companies in developed countries, are totally applicable in developing
countries. In addition, external macro environment factors affecting reverse logistics
implementation in developing countries would also need to be examined and
compared with those identified in developed countries.

Knemeyer et al. (2002) proposed conceptual model of factors affecting the reverse
logistics system to recycle and/or refurbish end-of-life computers that are deemed no
longer useful by their owners which examines both the internal and the external
factors responding directly to the need for future research asserted by Carter and
Ellram’s (1998). This conceptual model shows that external environment comprises
of four sectors namely input, regulatory, output and competitive. Internal environment
comprises of strategic factors (strategic costs, overall quality, customer service,
environmental concerns etc.) and the operational factors (cost-benefit analysis,

47
transportation, warehousing, supply management, packaging as well as refurbishing
and dismantling). The findings of this study indicates that companies are willing to
use recycled or refurbished products but unwilling to accept these products only for
their environmental benefits.

Sharma et al. (2006) acknowledged that bullwhip effect is an old phenomenon

described by Forrester et al (1961) and a new term defined by Lee et al. (1997). The
researchers reported that information distortion and the so-called bullwhip effect has
been discussed by many researchers (Disney & Towill, 2003; Jose & Barajas, 2005;
and Towill & Mccullen, 1999) using analytical model and control theory including.
Sharma et al. (2006) strongly recommended the implementation of a centralized
information sharing strategy irrespective of any demand-inventory policy in the
reverse supply chain in order to reduce the bullwhip effect.

Brito et al. (2004) have summed up the crux of over sixty case studies and divided
this collected literature into five broad categories namely reverse logistics network
structure, reverse logistics network relationship, inventory management, planning and
control of recovery activities and IT for reverse logistics. In case of reverse logistics
network relationships, researchers listed many tools available in literature like refund
options, buy-back options, fees, take-backs, trade-ins, lease or rent contracts, bring-up
systems, timely and clear information, power, environmental responsibility, social
responsibility and acquisition price. On the basis of their observation, they said that
almost all the case studies described tools for stimulating the acquisition of goods for
recovery with the exception of Farrow and Johnson (2000).

Researchers felt that inventory issues were twofold; first what should happen with the
returned items and second how is the reordering influenced by returns. For service
returns, repair chain is considered as a closed loop often with multiple echelons,
where time is a critical element. They also found that one or more planning and
control issues are very globally described. Their observation reveals that for data on
processes, costs and earnings, IT applications are necessary in all the phases of life
cycle of a product. They maintained that all these case studies provide in one way or
the other an evaluation on the benefits of IT.

Tonanont (2009) studied reverse logistics as a part of Closed Loop Supply Chain
(CLSC). The researcher added that CLSC is composed of five main components

48
which are supplier, manufacturing plant, distribution center/warehouse,
retailers/customers and recovery facility. Singh et al. (2011) believed into two types
of reverse logistics systems namely open-loop reverse logistics systems and closed
loop reverse logistics systems. In case of open-loop reverse logistics systems, the
manufactured products do not return to the original manufacturers or suppliers. The
products are taken away by the third party logistics party for the purpose of waste
reduction, resale etc. In case of closed loop supply chains, products get returned to the
original manufacturers or suppliers, by any means, for the purpose of repair,
renovation or reuse. Reuse of glass bottles falls under this category.

3.3 Issues related with Reverse Logistics Management

As discussed earlier also, there are several issues related with the supply chains of
every industry sector; be it manufacturing or service. Besides these industry or sector
related issues, there are certain issues related with a particular program which are
considered very critical for the success of the program. The issues related with the
reverse logistics management include the activities to be part of, drivers, facilitators,
barriers, outsource (self vs. others), network and inventory management. In this
section, researcher has reviewed the literature relevant to some selected issues of

49
reverse logistics namely reverse logistics activities, drivers for the implementation
and the barriers hindering the desired outcomes.

Li and Olorunniwo (2008) tried to investigate the reverse logistics practices with a
goal to identify the reverse logistics process flow that may be considered as generic.
They also tried to identify the key strategic issues that may be used by a firm for its
competitive advantage. Brito and Dekker (2002) explored the fundamentals of reverse
logistics by analyzing the issue from four essential viewpoints; why, what, how and
who. Why the things are returned, what is being returned, how reverse logistics works
in practice and who is executing the reverse logistics activities?

Breen (2006) has put forward specific facilitators influencing effective returns
behavior in B2B and B2C relationships. These facilitators include the contracts,
penalties, incentives, deposit systems, trust, goodwill, legal obligation, corporate
obligation and long term alliance aspects. These many options are given by the
researchers to the practitioners in managing their returns effectively. Fleischmann et
al. (2003) suggested that greater opportunities could emerge if companies used
information for actively managing their returns. Advances in information technology,
including data logging, radio frequency identification, and remote sensing provide
ever more powerful means for pursuing this road.

Dowlatshahi (2000) emphasized upon the strategic and operational factors affecting
the implementation of reverse logistics. These strategic factors include strategic costs,
overall quality, customer service, environmental concern and legislative concerns
while the operational factors include cost benefit analysis, transportation,
warehousing, supply management, remanufacturing, recycling and packaging. Factors
affecting reverse supply chains include legislation, customer demand, strategic
cost/benefit, environmental concern, volume and quality, incentive, resource,
integration and coordination (Rahman & Subramanian, 2011).

Recycled volumes, recycling costs, total manufacturing costs, increase of sales

volume for new products, environmental regulations & directives, consumers
environmental awareness, pressures with stakeholders, reverse logistics management
information system, corporate social responsibility, competitive pressures, advertising
promotion of image, good recycling management system and recycling service are the

50
factors that are to be taken into consideration while implementing reverse logistics
program (Chiou et al., 2012).

Guo (2009) classified the reverse logistics of an enterprise into rejecting goods
logistics and recovery logistics. Enterprises’ internal reason to rejecting goods
logistics and the supply chain reason to rejecting goods logistics are the two main
reasons for rejecting goods logistics of enterprises. Recovery reverse logistics can be
categorized into four groups namely direct reuse, repair, recycling and
remanufacturing. Returns logistics activities that the companies have include returns
flow, remanufacturing, remarketing, recycling, and land-filling. Most returned
products are processed to put back to stock shelf without or with a little re-kit,
repackage, repair, or refurbish while others are to sell to secondary market, dismantle
to harvest components, recycle, or landfill (Li & Olorunniwo, 2007).

3.4 Drivers for Reverse Logistics Management

Brito and Dekker (2002) have developed a general framework of reverse logistics
where they asserted that there might be different reasons as to why the sold items
come back or return for different categories of products like customer’s return,
distributor’s return or the manufacturer’s return. Customer’s return may include B2C
commercial returns (reimbursement guarantees), warranty returns, service returns
(repairs, spare-parts), end-of-use returns and end-of-life returns. Distribution returns
may include product recalls, B2B commercial returns (e.g. unsold products,
wrong/damaged deliveries), stock adjustments and functional returns (distribution

51
items/carriers/packaging). Manufacturing returns include raw material surplus,
quality-control returns and production leftovers/by-products.

There is a long list of reasons for products’ return. These include repair / Service
Codes (factory repair, service /maintenance, agent order error, customer order error,
entry error, shipping error, incomplete shipment, wrong quantity, duplicate shipment,
duplicate customer order, not ordered and missing part), damaged /defective
(damaged, dead on arrival, defective), contractual agreements (stock excess, stock
adjustment, obsolete) and other (freight claim and miscellaneous) (Zuluaga, 2006).

3.5 Literature review of whole industry

The emergence of Internet-based business-to-business (B2B) e-marketplaces in

various industries is claimed to have opened up “real opportunities for online
transactions” (Dai & Kauffman, 2002a, p. 41). In sectors such as industrial metals,
chemicals, energy supply, food, construction, and automotive, “e-marketplaces are
becoming the new business venues for buying, selling, and supporting customers,
products, and services” (Raisch, 2001, p. 1). In the year 2000, the number of B2B e-
marketplaces soared, and in the spring of 2001, Forrester Research estimated that
there were 2,500 B2B e-marketplaces worldwide (Turban & King, 2003). According
to Stockdale and Standing (2002), it is not possible to accurately assess the number of
e-marketplaces on the Internet. However, a network of mainly European trade
promotion organizations, eMarket Services,4 provides a directory of e-marketplaces
that host a platform for many-to-many interactions. While this directory covered data
on more than 1000 B2B e-marketplaces in 2003, it currently includes data on about
800 B2B emarketplaces (eMarket Services, 2006). The proliferation of e-
marketplaces peaked in 2001. A period of consolidation began (Stockdale &
Standing, 2002) and there is a common belief that e-marketplaces will eventually
dominate the B2B e-commerce landscape (Grieger, 2003). Researchers predicted that
transactions through B2B e-marketplaces would account for more than 50 percent of
all B2B activities by the year 2004 (Knight, 2000; Turban & King, 2003).

The content involves everything related to the commerce of non-production goods

and services, such as office supplies, industrial supplies, electronic components, spare
parts, and computers. In addition, there are also services that can be configured in
catalogues. Although the main focus currently is on non-production goods and

52
services, the company is stepping into strategic goods and production as well. This is
mainly because buyers ask for such services, but there is also a trend of horizontal e-
marketplaces moving into strategic goods and services so these companies can
provide a more complete service. Elaborating further on this trend, the respondent
explained: “From the beginning, we knew that we would go there. But, we wanted to
stick to, and very much focus on, indirect goods, because this is already very difficult,
even if it doesn’t seem so and look so. But, we knew that the service levels and
requirements for strategic goods are much higher than what we need to provide for
indirect goods. So we waited for three to four years, but we knew that one day we
would go there. Then, when we saw our first customers asking for it… in a way we
have followed the trend, but we did not push it.”

3.6 INDUSTRY AND MARKET DATA

Information included in this Placement Document regarding market position, growth

rates and other industry data pertaining to our businesses consists of estimates based
on data reports compiled by government bodies, professional organisations and
analysts, data from other external sources and knowledge of the markets in which our
Company operates. Unless stated otherwise, statistical information included in this
Placement Document pertaining to the various sectors in which our Company
operates has been reproduced from trade, industry and government publications and
websites. We confirm that such information and data has been accurately reproduced,
and that as far as our Company is aware and is able to ascertain from information
published by third parties, no facts have been omitted that would render the
reproduced information inaccurate or misleading. In this context, please note that we
have relied on reports on automotive industry and the economy, namely, International
Monetary Fund, World Economic Outlook, April 2016; LMC Automotive; CRISIL
Database – Economy Section, Cars & Utility Vehicle, and Auto Component; and
Monthly Economic Reports, Ministry of Finance. This information is subject to
change and cannot be verified with complete certainty due to limits on the availability
and reliability of the raw data and other limitations and uncertainties inherent in any
statistical survey. In many cases, there is no readily available external information
(whether from trade or industry associations, government bodies or other
organisations) to validate market-related analysis and estimates, so our Company has
relied on internally developed estimates. Neither our Company nor the Book Running

53
Lead Managers have independently verified this data, nor does our Company or the
Book Running Lead Managers make any representation regarding the accuracy of
such data. Similarly, while our Company believes its internal estimates to be
reasonable, such estimates have not been verified by any independent sources, and
neither our Company nor the Book Running Lead Managers can assure potential
investors as to their accuracy. The extent to which the market and industry data used
in this Placement Document is meaningful depends on the reader’s familiarity with
and understanding of the methodologies used in compiling such data.

Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation and
accumulated impairment losses, if any, except tangible assets of the Component
Division of erstwhile Motherson Auto Components Engineering Limited (MACE)
and erstwhile India Nails Manufacturing Limited (formerly India Nails Manufacturing
Private Limited, subsidiary which has been merged with the Company w.e.f. April 1,
2011) which have been revalued on December 31, 1998 and on March 31, 2005
respectively and except assets costing less than ` 5,000 to ` 350,000 each charged to
expense, which could otherwise have been included as tangible asset, in accordance
with Accounting Standard 10 -‘Accounting for Fixed Assets’, because the amount is
not material. Revaluation in respect of certain tangible assets of the Component
Division of erstwhile Motherson Auto Components Engineering Limited (MACE)
and erstwhile India Nails Manufacturing Limited (INML) was done as under: a) Land
at the prevailing market rates as certifi ed by approved valuation experts as on the
date of revaluation. b) Building, plant and machinery and other assets of MACE at
their replacement values as certifi ed by approved valuation expert Subsequent

54
expenditures related to an item of fi xed asset are added to its book value only if they
increase the future benefi ts from the existing asset beyond its previously assessed
standard of performance. Items of fi xed assets that have been retired from active use
and are held for disposal are stated at the lower of their net book value and net
realizable value and are shown separately in the fi nancial statements. Any expected
loss is recognized immediately in the Statement of Profi t and Loss. Losses arising
from the retirement of, and gains or losses arising from disposal of fi xed assets which
are carried at cost are recognized in the Statement of Profi t and Loss. Depreciation is
provided on a pro-rata basis on the straight-line method over the estimated useful
lives of the assets or the rates prescribed under Schedule XIV to the Companies Act,
1956, whichever is higher, as follows:

In respect of revalued assets, depreciation is being provided on the revalued amounts

over the remaining useful life of the assets at the SLM rates.

Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and
accumulated impairment losses, if any. Intangible assets are amortized on a straight
line basis over their estimated useful lives. A rebuttable presumption that the useful
life of an intangible asset will not exceed ten years from the date when the asset is
available for use is considered by the management. The amortization period and the
amortization method are reviewed at least at each fi nancial year end. If the expected
useful life of the asset is signifi cantly different from previous estimates, the
amortization period is changed accordingly. Gains or losses arising from the
retirement or disposal of an intangible asset are determined as the difference between
the net disposal proceeds and the carrying amount of the asset and recognized as

55
income or expense in the Statement of Profi t and Loss. The amortization rates used
are:

Goodwill generated on consolidation in respect of subsidiaries is being carried at cost

less impairment (if any).

Therefore, within the DS department, several units operate which categorically divide
the businesses based on the aforementioned parameters and form a revenue pyramid
structure. Corporate clients are referred to as accounts and GP representatives
handling accounts are called Account Managers. Account managers are involved
throughout the entire customer life cycle starting from search and acquisition to
relationship building and retention. The following diagram shows the organizational
structure at DS.

Re Engineering & Migration

56
With the rapid pace of changes in the industry over last decade, MIND offers
specialized solutions for migrating applications from legacy systems to the latest
platforms using well-defined steps that involve understanding business which defines
current state, gap analysis envisions the next level.

Even though 44 per cent of Motherson Sumi’s revenues come from the Volkswagen
group, the recall is not a risk to the company, he explained. Audi accounts for 21 per
cent, Volkswagen 12 per cent and Spanish brand Seat accounts for eight per cent of
Motherson’s revenues.

Sehgal said Volkswagen was paying a penalty and replacing parts free of cost, which
would have negligible impact on the component suppliers.

He went on to say Motherson’s exposure to the US was limited, with Europe being a
much larger market for the component maker. As a result, Volkswagen suspending
sales of diesel vehicles in the US would be limited on the component maker.

Analysts believe the

impact of the recall
would be to the tune of
three per cent of
Motherson's revenues.
JM Financial says in its
note: “The models
impacted by this
incident account for
less than three per cent
of Motherson Sumi’s
consolidated top line
(assuming 60 per cent
of its US exposure
comes from Volkswagen group and half of that comes from other Volkswagen
brands).” He added that Volkswagen was not the largest carmaker in the US and that
North America accounted for merely 1-1.5 per cent of its total sales.

57
The Motherson Sumi stock was down almost 15 per cent since Friday, but analysts
claim the impact on the company will be limited as the firm has a higher exposure to
Audi than Volkswagen and its US exposure is modest.

Sehgal also said in case of recalls, the original equipment maker (OEM) and the
vendors were protected by way of insurance. He said: “In most cases, OEMs and
vendors are covered by insurance under product liabilities.”

Even if the demand for diesel engines decline after this development, Sehgal said it
would not impact Motherson Sumi. Refuting rumours on plant shut-downs, Sehgal
said: “No orders have been cancelled. The option of buying diesel, CNG (compressed
natural gas) or petrol engines is the decision of the customer. There is no harm if the
OEM chooses to stop buying diesel engine and buys petrol.”

While speaking to Business Standard, Motherson Sumi’s chief financial officer G N

Gauba said: “We are not present in North America. We do not have any major
facilities in the US. We do mirrors in the US and wiring for CV (commercial vehicle)
business. Importantly, the recall is not a safety aspect; so, a change in customer mind-
set is unlikely.”

Despite the reassurance given by the management, Motherson Sumi’s shares fell eight
per cent on Tuesday. Analysts believe while the near-term impact on the company
might not be much, the Volkswagen event would be closely monitored for long-term
impact on the component maker. Motherson Sumi has, on its part, laid out a vision
plan under which no geography or company would account for more than 15 per cent
of its revenues.

The Current Market Situation of Automotive Parts and Accessories

By definition, “the automotive industry is a wide range of companies and

organizations involved in the design, development, manufacturing, marketing, and
selling of motor vehicles, some of them are called automakers. It is one of the world's
most important economic sectors by revenue” (Pinkse, Bohnsack & Kolk, 2014).

Overall, the material opposition in the market of the automotive industry has been
conventionally rigorous. For many years, steel has been the prominent material,

58
especially in the 1920s. However, what type of automotive materials is most likely to
dominate in the twenty-first century? The manufacturers’ decision on the usage of
material in the automotive industry is generally complex and is determined by a
number of factors. The cumulative requirement in order to improve fuel economy is
backed by concerns of global warming, and the usage of energy has a major impact on
the choice of materials. The automotive industry at present and also in the past has
been intensive and complicated, which is why competition has been tough.

One research study says that the U.S. government has made regulations in order to
enhance fuel economy and ensure occupant safety by putting out a mandate to
decrease the amount of emissions in vehicle exhaust.

In order to achieve such efforts, the automotive industry is making heavy

contributions in boosting the conventional efficiency of the engine so it can develop
the newly functioning power trains, such as the most major ones, that “reduce vehicle
weights and full engine electrical system or electric motor.” The power of an electric

59
engine or an electric motor is that the company can receive subsidiaries from the
government just for being environmentally aware. Electric cars are a new concept in
the automotive industry; they have more batteries than a usual gasoline engine, which
makes it a better technology and a consumer’s preferred investment (Nian, Peng &
Zhang, 2014).

Companies in the automotive industry manufacture and produce motor vehicle parts
and accessories that are other than “engines, engines parts, batteries, tires, bodies and
chassis.” Moreover, the assembling of motor vehicles is not included as a part of this
industry. Basically, the manufacturers generally supply and produce accessories and
parts to the original equipment manufacturers (OEM) for the usage of manufacturing
a proper, complete means of transportation or motor vehicle, or for the replacement
parts in dealerships of the OEM. They also source parts to the aftermarket.

Some of the ongoing, continuously manufactured products are electrical and

electronic components, suspension and steering, brake systems, exhaust systems,
HVAC parts, auto-body wheels and parts, radiators, filters, transmission and other
components. Some of the current needs of the automotive industry are motor vehicle
electric and electronic components, steering and suspension part of motor vehicles,
brake system of motor vehicles, transmission and power train part of motor vehicles,
seating and interior trim part of motor vehicles, and metal stamping of motor vehicle
parts. These are some of the globally manufactured products and accessories that the
automotive industry offers, and some of the activities that it performs. In terms of
expected benefits and cooperation costs, the authors of different researches have
objected the notion of “calculative trust,” which is its assessment. The authors further
stated that the trust comes from the monitoring of manufacture and production of
automotive parts and accessories; however, this is currently lacking at the moment.
Also, the governance structure and hierarchy of the companies in this industry has
been in a downslide; this was suggested by a study that carried out a survey of
Japanese and American-based automotive companies on their organizational practices
and norms. For example, in Japan the suppliers in this industry immensely trusted
their customers and had more customer commitments than the other countries. They
had a simple relationship of trust that led to customers depending on the
manufacturers and suppliers for technical assistance over a very long period of time.
This occurred in Japanese manufacturers more than the U.S.-based manufacturers and

60
suppliers, thus the trustworthy behavior of the Japanese automotive industry makes it
highly successful as compared to other countries in terms of spreading value and
satisfying a large number of customers. Many attempts have been made by U.S.
companies to mimic and imitate the Japanese automotive industry, their business
norms, and their customer-supplier relations. Thus, as per as the current trends, the
Japanese automotive industry and its suppliers certainly have more loyal customers
than U.S. companies as they entertain a larger level of trust towards their clientele.

Current Sales of Automotive Parts through Online Businesses

In terms of maintaining current sales, the automotive parts and accessories industry
earned quite a large profit and number of sales online via B2C sales. By 2020, it is
expected that the automotive industry alone in North America and Europe will make
around $20 billion. It is forecasted that the market of Western countries will drive the
volume of transactions up. Emerging markets in the global automotive industry will
also display a great amount of development, progress and growth through online parts
purchasing. For example, some of the localized online retailers that sell auto parts and
accessories like “the U.S. Auto Parts Network (U.S.) and Oscaro (France) came into
the market from nowhere, slowly carving out a niche.”

Moreover, the contribution of companies like Amazon has battered the sales of such
retailers. Although Amazon is in no way a proper and conventional automotive online
retailer company, it has nonetheless played its part. Car manufacturing and selling
companies like BMW have already started online retailing across a number of digital

61
marketplaces such as TMall and eBay, and some other online shops as well. The
major point of this discussion is to convey the point of the contribution that the major
online shops make. They do assist in increasing and boosting the sales and profits of
auto parts and accessories.

Other mediums of selling auto parts include the click-n-post model, click-n-fit, click-
n-collect, or a mobile van that will visit your home to deliver the product. Online
businesses have always proven to be the most convenient form of purchasing, and this
is why it has raised the game of auto part selling as well. It has not only boosted the
sale of auto parts and accessories, but also driven the industry to a higher level. As per
as the different statistics provided by researchers, it has been found that online
businesses have attracted new buyers to buy auto parts and accessories in the major
countries of Europe, such as Germany. Within Europe, sales of the automotive
industry have increased by 14 percent from 2000 to 2012.

The impact created by brochures, test reports, ads and commercials has not been
greater than the influence of the Internet and online retailing. It is further stated that
even highly amateur users of the Internet, as well as the offline established players,
are pushing themselves into buying automotive parts and accessories through online
shops.

Success will need a rigorous niche and focus on developing the customer base, and a
perfect alignment like “Customer-Product-Channel Fit” is a must-execute approach.

62
New businesses have also used online retailing seriously when it comes to selling
their auto parts, and hence their business models will be based on a high service
cooperation network and modulating the service offers as per the terms of online
retailing.

The Current Sales of Automotive Parts through B2B & B2B2C

B2B and B2B2C is another way that has had a major influence and involvement in
raising the sales and profits of the automotive industry, its parts and accessories
specifically. It is stated that the China-based online shop Bosch Automotive Products
(Suzhou) Co. Ltd. launched its ecommerce site, TMall, and its success is highly
overwhelming. It generated estimated sales of $9 million USD in just its first year of
existence, and moreover, after watching its success many other car companies have
started following its example and ended up creating and setting up shops on
TMall.com with the major objective of increasing sales, helping users to receive the
product by direct selling, and expanding their businesses. Very few emerging
countries have followed this example, but Western countries found it more inspiring
comparatively. The reason developing countries did not find the approach to be a top-
notch selling medium is because of their less-structured aftermarket, and this is why

63
they didn’t consider it as an example to follow. However, the companies on the top of
the value chain found it to be a flexible approach to revive their system of
distribution, specifically via digital channels. And it shouldn’t make a marketer
assume that Western countries want to remain untouched. Several companies are
already going direct to their customers, and hence Goodyear can be taken as one of
the examples that gains maximum profits by selling through direct mediums (Bergek,
Berggren & KITE Research Group 2014).

Goodyear has set up a portal where their end users can buy the automotive parts and
accessories directly with fulfillment from a dealer. This is an interesting and user-
friendly approach to raise sales through an online distribution system. However, it
may be an interesting sight when OEMs and suppliers react, and learn how to
navigate the “the tricky waters of channel conflict in established markets,” as stated
by a research journal (Townsend & Calantone, 2014).

The Current Sale of Automotive Parts and Accessories through Other Channels

One of the other most-used methods of selling auto parts and accessories are
importing and exporting. It is stated that importers are looking forward to making this
medium a more favorable and effective one by increasing the number of materials that
are innovative, sustainable and lightweight. The adoption of new materials by this
business is highly important, and this is the only way this industry can make better
sales and profits. Thus, this medium is a strong contributor in the automotive industry.

64
Innovation in auto parts will serve as an important driver for the progress, growth and
implementation of new industrialized technologies (Schöggl, Baumgartner & Hofer,
2017).

Due to the import-export medium, the production and consumption of newly launched
cars is growing in the European Union. In addition, opportunities are highly abundant
especially in Central and Eastern Europe, also in the aftermarket. Due to this factor,
an increase of 1.8 percent has been seen in 2015, and the demand for newly launched
cars has also increased. Another explanation is that import-export is a large-serving
method in the growth rate of automotive industry, as evident by the fast progress in
emerging countries like China, India and Brazil. This medium has opened up a new
market for the automotive industry, especially for exporters based in developed as
well as developing countries.

How the New Marketing Trends Are Transforming the Automotive Industry

Some current trends that could transform the automotive industry on a global level
include the rise of a new channel. Like stated earlier, the “Customer-Product-Channel

65
Fit” is a new marketing strategy that could possibly increase the sales and profits of
the automotive industry. Also, online purchasing criteria has increased the number of
customers and will continue to do so (Paul, Darkow & Kotzab, 2017).

Creating further innovation in materials, usage of new materials, and pursuing engines
that are highly efficient will increase fierceness in the rivalry of the European
automotive industry against the world. There are three major opportunities that need
to be explored by the automotive industry of European countries: the establishment of
new technologies, manufacturing parts that are sustainable, and finally, supplying
materials that are environmental friendly.

These three market trends could take the automotive industry to a new level. In the
case of social market drivers, the ever-changing socio-demographic arrangement shall
produce several opportunities in the niche market. In the U.S. and European
automotive industry, the population will always increase and hence the number of car-
drivers will increase too. Thus, some issues that are being currently faced by drivers,
if solved, can actually become a solid and sustainable marketing strategy for creating
further sales. For instance, as per the IBM big data and analytical hub, it is stated that
motor vehicles must be self-integrating, self-healing, self-configuring, self-learning
and self-driving. Basically, the car should be fully automated, as per the viewpoint of
the current generation (Christensen, 2013).

66
Also, improvement and modification in such technologies could bring a positive
change in the sales of the automotive industry (Wiengarten, Humphreys, McKittrick
and Fynes, 2013).

Immigrants are a huge contribution in enhancing the population; thus, introducing

features that are region-specific could actually help the countries to increase their
profits, and even the value of their brand image.

Another marketing trend such as changing the attitude of people towards car
dealerships and ownership suggests that manufacturers need to find new strategies to
sell motor vehicles. The attitude of people towards owning cars is changing with time.
Hence, reasons like aspirations, new pressure, environmental concerns, demand for
differentiation, and urbanization are doing the job. To illustrate, for modern
consumers a motor vehicle or car serves more as a means of transport than a prized
possession. Consumers now look for mobility rather than simply owning a car, and
therefore the customers will look for something environmentally friendly, ethical in
manufacturing, and sustainable, that can actually function in the long term. Basically,
consumers now look for stronger and automated cars, which is a good change for
aftermarket sales. Therefore, this is a major marketing trend that needs to be
considered while building a future for the automotive industry and its sales.

A challenge that is especially faced by the European automotive industry is that

consumers are less inclined towards buying new cars. Therefore, this will probably
result in shorter cycles of products, and in a wider and more customized range (such
as factors like different colors, functionalities and shapes).

Another trend that is important to ponder is the increase in engine efficiency. Thus,
increased engine efficiency along with consideration for environmental concerns will
drive a modern customer to buy car. Therefore, it is important for the automotive
industry to focus on promoting electro-mobility that serves as better way to avoid
exhaust gases, because electrical is a cleaner alternative to oil. Environmental
concerns like creating a favorable climate for technologies should be introduced as
well, and from this perspective electric works better (Nord & Cortes, 2013).

Moreover, increasing efficiency of engines, especially electric engines, is an

important strategy that could increase the market of the automotive industry.

The Future of the Automotive Industry on a Global Level

67
In order to increase sales, it is predicted that the automotive industry will execute
some new strategies in its manufacturing process, as well as the contribution it is
trying to make to a country’s economy. It is expected that the automotive industry
will start manufacturing products that fulfill the customers’ needs of safety and
comfort. It will specialize in niche components that are demanded by different
segments. Moreover, it is stated that components that provide maximize comfort and
sustainability are more likely to have a greater margin in sales and profits than
standardized parts.

It will be essential for the automotive industry to conduct further market research or
develop contacts with companies to gain excellent market knowledge. The variety in
terms of shape, color, functionality, and cost-effective specialized products will
increase by a great number. Developing auto parts and accessories particularly for
ultra-low and small cars will generate further profits for the industry, especially the
European platform (Calabrese, 2016).

In order to increase sales in the next decade, the automotive industry should develop
brilliant expertise in areas like “electro mobility, swarming of vehicles, and
autonomous function in restricted environments, direct fuel injection, self-
optimization, and aerodynamics and semi-electric power trains.” Besides that, the
R&D departments of the industry should introduce new inventions that could develop
cognitive abilities in motor vehicles (Andre, Kim, Lamp, Lux, Maglia, Paschos &
Stiaszny, 2015).

Moreover, the market could be further expanded by creating technologies,

components and parts that are highly fuel efficient. Specializing in parts related to
engines like internal combustion and PHEV vehicles could be considered a creative
marketing strategy for the European market. Moreover, by entering into strategic
partnerships, the capability of the European market could be increased. The European
automotive industry has always been highly powerful and therefore it should consider
executing such ideas. Another important strategy that the European industry could
take is creating partnerships with American and Chinese companies that will help it to
gain knowledge and knowhow regarding potential suppliers and maybe expand the
European companies to international countries. This will also help it to create
investment in bulk for controlling the quality of the production line.

ISO TS/16949 and ISO 9001 are often necessities, and therefore they must be used as
a target to work on. European markets should consider these ISOs as a driving force

68
for their industry. This is why partnering with companies is highly suggested,
especially internationally.

The use of new materials such as ultra-high-strength steels, aluminum and carbon
fiber in the technology could help the industry to be more creative in terms of
producing innovative auto markets for consumers. Thus, the combination of these
materials is also an important strategy to approach for the increase in sales and profits.
U.S.-based automotive companies should partner with companies in Europe, as it is a
huge market that will provide immense assistance for them (Al-Oqla & Sapuan,
2014).

69
 CHAPTER -4
DATA ANALYSIS AND FINDINGS
1. Company generally approached for automotive parts.

Tyre company No. of responses %

MSSL 40

India Nippon Electrical Ltd. 20

Denso India Ltd. 05

PAE Ltd. 15

Others 20

Table 4.1: Preference of Wire Harness Company

Preference of Wire Harness Company

45
40
40
35
30
25
20 20
20
15
15
10
5
5
0
MSSL India Nippon Denso India Ltd. PAE Ltd. Others
Electrical Ltd.

Fig. 4.1: Preference of Wire Harness Company

Interpretation

➢ MSSL is considered to have the majority of the market share.

70
2. For how many years you are years using MSSL Products e-
commerce?

Particulars No. of responses %

Less than one year 32

One year but<five year 36

More than five year 15

Do not know/ cannot say 17

Table 4.2: Years using MSSL Products

Years Using MSSL Products

40
36
35 32
30

25

20 17
15
15

10

0
Less than one year One year but<five year More than five year Do not know/ cannot
say

Fig. 4.2: Years using MSSL Products

Interpretation
➢ MSSL has acquired the loyalty of customers earlier. Some customers have also
joined in the recent year.

➢ As regards the user profile of our respondents, it may be stated that 36 per cent of
the respondents are using the years using MSSL Products e-commerce facility for
a period of more than one year but less than five years, followed by 32 per cent of
the respondents who are users for less than one year and 15 per cent of the
respondents have been using this facility for more than five years.

71
3. Frequency of buying MSSL Products

Time period No. of responses %

Under 1 month 20

1-6 Months 50

More than 6 months 25

Can’t say 5

Table 4.3: Frequency of buying MSSL Products

Frequency of buying MSSL Products

60
50
50

40

30
25
20
20

10
5

0
Under 1 month 1-6 Months More than 6 months Can’t say

Fig. 4.3: Frequency of buying MSSL Products

Interpretation

➢ MSSL products are industrial in nature so mostly companies purchase the

product in bulk and hence re-buying period of the products in generally 1-6
months or more than 6 months.

72
4. From the various types of e-commerce, what according to you has the largest
market share?

Particulars No. of responses %

B2B Commerce 22

B2C Commerce 35

B2G Commerce 20

Others 23

Table 4.4: B2B Commerce

B2B-Commerce
40
35
35

30

25 22 23
20
20

15

10

0
B2B Commerce B2C Commerce B2G Commerce Others

Fig. 4.4: B2B Commerce

Interpretation

➢ MSSL products are industrial in regards the various types of e-commerce and
their utilization and applicability in India, the respondents are of the opinion
that B2C Commerce is more prominent and visible in the e-business discourse
than B2B Commerce, B2G Commerce and other various forms of e-
commerce.

73
5. According to you how is e-commerce helpful to the consumer in the e-
business domain?

Particulars No. of responses %

Broadens consumer choice 30

Encourages price transparency 26

Fastens business process 35

Do not know/ Cannot say 09

Table 4.5: Consumer in the e-business domain

40
35
35
30
30
26
25

20

15

10 9

0
Broadens consumer Encourages price Fastens business Do not know/ Cannot
choice transparency process say

Fig. 4.5: Consumer in the e-business domain

Interpretation

➢ MSSL products are industrial in manufacturing spare auto parts As regards the
utility of e-commerce for the consumers in India, 38 per cent of the
respondents are of the opinion that application of e-commerce has made
processing quicker and faster, 30 per cent of the respondents are of the opinion
that e-commerce utilization has broadened consumer choice followed by 26
per cent of the respondents who feels that price transparency has been
increased with the application of e-commerce.

74
6. According to you how e-commerce is helpful for the business discourse?

Particulars No. of responses %

Effectively caters to customers’ demands 30

Smoothens business by creating customer and 35

businessman network
Ensures guarantee of payment 27

Do not know/ Cannot say 08

Table 4.6: Business discourse

40
35
35
30
30 27
25

20

15

10 8

0
Effectively caters to Smoothens business by Ensures guarantee of Do not know/ Cannot
customers’ demands creating customer and payment say
businessman network

Fig. 4.6: Business discourse

Interpretation

➢ MSSL products are industrial in manufacturing spare auto parts as regards the
utility of e- commerce to the business domain, 35 per cent of the respondents
are of the opinion that with the application of e-commerce or on-line business,
the business process has been smoothened as its application has enabled to
create a network of those who want to buy the products and services and those
who want to sell them. It also creates a network of buyers, sellers and the
distributors.

75
7. Do you think that the application of e-commerce has increased over the years
in India?

Particulars No. of responses %

Yes 87

No 06

Do not know/ Cannot say 07

Table 4.7: Application of e-commerce

100

90 87

80

70

60

50

40

30

20

10 6 7

0
Yes No Do not know/ Cannot say

Fig. 4.7: Application of e-commerce

Interpretation

➢ MSSL products are industrial in manufacturing spare auto parts as regards the
growth pattern of e-commerce application in India is concerned, the response
is quite clear that it has increased considerably over the years. 87 per cent of
the respondents have agreed to this proposition against only 06 per cent of the
respondents who thinks otherwise.

76
8. Future of MSSL in India?

Scope No. of responses %

Very Good 60%

Good 20%

Not so good 05%

Do not have future in India 10%

Cannot Say 05%

Table 4.8: Scope future of MSSL in India

70%
60%
60%

50%

40%

30%
20%
20%
10%
10% 5% 5%

0%
Very Good Good Not so good Do not have Cannot Say
future in India

Fig. 4.8: Scope future of MSSL in India

Interpretation

➢ Customers thinks that there is a good scope of MSSL prevailing in the Indian
market.

77
9. Do you agree that e-commerce as commercial means has its advantages over
the traditional commercial methods?

Particulars No. of responses %

Agree 54
Disagree 36
Do not know/ Cannot say 10
Table 4.9: e-commerce as commercial means has its advantages over the
traditional commercial methods

60
54

50

40 36

30

20

10
10

0
Agree Disagree Do not know/ Cannot say

Fig. 4.9: e-commerce as commercial means has its advantages over the traditional
commercial methods

Interpretation

➢ When compared with the traditional commercial methods, 54 per cent of the
respondents are of the opinion that e-commerce is comparatively more
advantages to traditional commercial methods but a considerable 36 per cent
of the respondents still consider traditional commercial methods as more
effective than the new modern e-commerce. With this, we may consider to
think that e-commerce exists with the traditional commercial methods in India
and has not replaced of MSSL prevailing in the Indian market.

78
10. What measure would you recommend for promotion of e- commerce in
India?

Particulars No. of responses %

Promotion of internet 31

To increase the awareness level of people 32

An integrated promotional approach 36

Other measures 01

Table 4.10: Promotion of e- commerce in India

40
36
35 32
31
30

25

20

15

10

5
1
0
Promotion of internet To increase the An integrated Other measures
awareness level of promotional approach
people

Fig. 4.10: Promotion of e- commerce in India

Interpretation

➢ As regards the measures for promotion of e-commerce in India, 36 per cent of

the respondents are of the opinion that an integrated and comprehensive
approach on the part of the government is what is required, whereas 32 pr cent
of the respondents feel that we must increase the awareness level of our people
for better promotion of e-commerce and 31 per cent of the respondents feel
that internet which is the via-media of e- commerce needs to be promoted of
MSSL in the Indian market.

79
 CHAPTER- 5
DISCUSSION AND CONCLUSION

1. Electronic commerce, commonly known as e-commerce or E-commerce, consists

of the buying and selling of products or services over electronic systems such as
the Internet and other computer networks. The amount of trade conducted
electronically has grown dramatically since the spread of the Internet. While some
use e-commerce and e-business interchangeably, they are distinct concepts. In e-
commerce, information and communications technology (ICT) is used in inter-
business or inter-organizational transactions (transactions between and among
firms/organizations) and in business-to-consumer transactions (transactions
between firms/organizations and individuals).

2. The supply of raw materials is very complex in nature and is also undertaken with
very rigid rules. The supply of raw material is met on “day plan” basis. If the
supply can be met then the factory produces the compounds by itself. But if the
supply can’t meet the demand of that day then the raw material is bought from
only two already selected suppliers. These suppliers charge a higher rate than the
market price of the raw material and the company also does not request for tenders
for the same which leads to increased manufacturing cost.

3. The demand chain is very well lit off with many well known automotive brands.
But if the company focuses more on domestic automotive brands then there is a
better chance of increasing their domestic earnings.

4. The main customers of MSSL who responded to the questionnaire were very
much satisfied by the goods provided by the company. They also considered
MSSL to be an important company for the procurement of required products. The
companies also considers that MSSL products are a value for their money and also
has a good scope in the Indian market in the future

5. The effects of e-commerce are already appearing in all areas of business, from
customer service to new product design. It facilitates new types of information
based business processes for reaching and interacting with customers-online
advertising and marketing, online, order taking and online customer service etc. It

80
can also reduce costs in managing orders and interacting with a wide range of
suppliers and trading and trading partners, areas that typically add significant
overheads to the cost of products and services. As regards the implementation
challenges to the application of e-commerce in India, the respondents have
identified the following challenges: security concerns (26 per cent), slow
penetration of internet (25 per cent), low consumer awareness level (25 per cent),
lack of trust (15 per cent) and other factors (09 per cent). E-commerce is still in
its nascent stage in India. However, smart companies are realizing that e-
commerce offers cost effective, time saving and profitable solutions in many
functional areas. Though companies have taken a long-term perspective, e-
commerce would eventually be the way Indian companies also conduct business.

81
 CHAPTER -6
RECOMMENDATIONS

1. The New Telecom Policy and Internet Service Providers' Policy, which have
already been announced, must be implemented in full. Any remaining hitches
must be immediately sorted out by meeting all stakeholders so that the
government's intentions in expressing these two policies are effectively translated
into reality.

2. From Supply side: Due to company’s rigid policies regarding the supply of the
required compounds for the manufacturing of the products the company does not
request for tenders. It has only two external suppliers and the supplier’s charge a
higher price than what is offered in the market.

3. From demand side: The company has no doubt acquired a good market share of
automotive industry’s demand but it has not targeted much of the Indian
automotive sector. Most of the automotive industries are those for which the
product is exported outside India. If Indian automotive manufacturing brands are
targeted then the company could very well increase their domestic earnings.

4. Based on the Department of Electronics' Bill and the inputs from the ministry of
commerce, a legal framework can be worked out. An ordinance can be issued, if
necessary, so that a legal background for developing e-commerce is created.

5. A promotional approach must be adopted for e-commerce and a zero tax regime
for e-commerce should be announced for the first decade of next century up to
2018.

6. Banks and financial institutions must computerize their operations fully so that
once the legal framework and networks are in place; e-commerce does not suffer
because of paperbound banks, swathed in yards of red tape.

82
 BIBLIOGRAPHY

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Vol. 8; pp 42-50.
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3. “Electronic Commerce, Networked Readiness, and Trade Competitiveness.” In
Geoffrey Kirkman et al. eds. Global IT Readiness Report. Harvard University and
World Economic Forum. 2002.
4. “Electronic Commerce, the WTO, and Developing Countries.” In Hoekman,
Aaditya Mattoo, and Philip English, eds. Development, Trade, and the WTO: A
Handbook. Washington DC: The World Bank.October 2000.
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17, 2000. “Global Electronic Commerce: Macroeconomic Benefits and Policy
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Quaderni No. 11, Rome. An English version is available as IIE Working Paper
no. 007, October 2000. August 2000.
7. Amy E. Cortes “Good-Bye to Fixed Pricing?” Business Week, May 4, 2014 pp.
71-84;
8. An IBM Guide to Doing Business on the Internet. U.S.A.: McGraw-Hill. Cronin,
Mary J. 2000.
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Technology, Trade and Opportunity.
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Overlap in the Global Electronic Marketplace: The UCITA Example.”
Washington University Journal of Law & Policy. 2002.

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13. Conquering the Wireless World: The Age of m-Commerce. United Kingdom:
Capstone Publishing Inc. Plant, Robert. 2000.
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Services Industry in Asia: The View from the US. A report prepared for the
Center for Internet Studies, University of Washington.
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Microsoft, and Oracle, and …” Fortune, February 23, 2014, pp. 92-100.
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Brealey Publishing. Young, Patrick and Thomas Theys. 1999.
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18. E-commerce/Internet: B2B:2B or Not 2B? Version 1.1, Goldman Sachs
Investment Research (November 1999 and September 14, 1999 issues)
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Internet Website Links

➢ http://www.motherson.com/motherson-sumi-systems-limited.html
https://en.wikipedia.org/wiki/Motherson_Sumi_Systems
➢ https://www.indiainfoline.com/article/research-leader-speak/mr-v-c-sehgal-
chairman-samvardhana-motherson-group-vice-chairman-motherson-sumi-
systems-ltd-113111402075_1.html

84
 ANNEXURE-QUESTIONNAIRE
1. NAME : _________________________________

2. AGE :___________________________________

3. COMPANY : _____________________________

4. POSITION HELD : ________________________

5. WHICH COMPANY IS OFTEN APPROACHED FOR AUTOMOTIVE

PRODUCTS?

 Motherson Sumi Systems Ltd.

 India Nippon Electricals Ltd.
 Denso India Ltd.
 PAE Ltd. Others

6. FOR HOW MANY YEARS YOU ARE YEARS USING MSSL PRODUCTS
E-COMMERCE?

 Less than 1 year

 1-3 years
 3-5 years More than
 5 years Can’t Say

7. FROM THE VARIOUS TYPES OF E-COMMERCE, WHAT ACCORDING

TO YOU HAS THE LARGEST MARKET SHARE?

 B2B Commerce
 B2C Commerce
 B2G Commerce
 Others

8. According to you how is e-commerce helpful to the consumer in the e-business

domain?

 Broadens consumer choice

 Encourages price transparency
 Fastens business process
 Do not know/ Cannot say

85
9. HOW OFTEN DO YOU BUY MSSL PRODUCTS?

 Under 1 month
 1 month to 6 months
 More than 6 months
 Can’t say

10. HOW MUCH SATISFIED ARE YOU WITH MSSLPRODUCTS?

 Excellent
 Good
 Average
 Not up to the mark

11. WILL YOU SHIFT TO ANOTHER COMPANY?

 Yes
 No
 Can’t Say

12. DO YOU THINK MSSL PRODUCTS ARE VALUE FOR MONEY ?

 Yes
 No
 Can’t say

13. WHAT ACCORDING TO YOU IS THE FUTURE OF MSSL IN INDIA?

 Very good Good

 Not so good
 Do not have future in India
 Cannot say

*****Thank You*****

86