Strategic Options for Growth

Objectives
• Protect the current dominant share in the current
market
• Increase exports to 15% of total sales by 1998

Alternatives
• Remain focused on domestic market and export
opportunistic basis
• Export to developing countries with minimum
adaptation
• Promote to developed countries focusing on lower
end of moped market
 into newer territories
Recommendation : With all these advantages of going abroad we suggest moving
• Growth Opportunities in Latin America, South East Asia, Sri Lanka and
Bangladesh
Markets
• Large customer base-economies of scale
• Reduced dependence on one market
• Potentially greater profit opportunities
Global
• Stagnant(declined by 5% in 1991-92)
Market
• Stiff Japanese competition
• 1993-Indian two wheeler industry suffering from “Chronic Overcapacity”
Domestic
Why go abroad?
Basis of selecting a Market

High on Market
Attractiveness

Low Market Competitive

Risk Advantage
• Tough regulations on emissions, performance and electrical
• Quick Model Changes and Latest Features-continuous evolvement
Market Risk
required
• Technology not our strength Advantage
• Established Japanese players
• Exacting product performance requirements-weak spot Competitive
• Price-our only competitive advantage a low priority
• Mature two wheeler market
Attractiveness
• Opportunity mostly in moped-50cc segment
• Non existent 3 wheeler market
Market
Developed Countries
Which Market to enter
• Change in regulatory environment
• Changing preferences-from mopeds to fashionable
Market Risk
automatic scooters
• Considerable price advantage of Bajaj Sunny
Advantage
• Fewer features in Sunny as compared to Piaggio’s Sfera
• 125 cc scooter for a niche “nostalgia” market
Competitive
• Major segment-moped 50cc and 125 cc segment
Attractiveness
• No import duties as compared to 9% on Japanese
vehicles
Market
Europe
• Tariff barriers and import bans in south east Asia
Market Risk
• Price sensitive – matches our strength
Advantage
• Straight Extension- Less stringent performance regulations; model changes
a negative
• Used primarily for work and transportation
Competitive
• Strong and steady growth expected
• Opportunity both for scooters and three wheelers
Attractiveness
• Low consumer purchasing power and access to foreign exchange in
Africa; intense competition in china; opportunity in middle east and
Market
north Africa
Developing Countries
• Fear of a technical licensing agreement meeting a Market Risk
fate similar to Taiwan and Indonesia
Advantage
• Price and simplicity advantage over Japanese
• Japanese products considered too sophisticated Competitive
Attractiveness
• Strong and steady growth expected
• No competition in three wheelers Market
Latin America
Recommendation

Focus intensively on developing markets

• Attractive growing market
• Competitive advantage of price and low complexity
• Stable with models, model changes a negative

Low focus on developed markets

• Stagnating market
• Technology driven-Japanese holding greater competitive advantage
• Tough regulations and continuously evolving preferences
 and Japan
• Continue indirect/direct exporting
• Don’t spend on product adaptation in these markets as this entails higher costs Europe, U.S.
North Africa
• Indirect/direct export of CKD units
• Existing sales not substantial Middle East and
• High sales in Argentina and Mexico
• Go for technical licensing. Assemble CKD units
Latin America
• Recommended licensee location Argentina and/or Mexico
• Joint Ventures or Direct Investments
Bangladesh
• Reasons : Large size of the market , greater control of investment, low risk as the
market is growing
• Psychic proximity
Sri Lanka and
How to Enter/Consolidate the market?
Marketing program for Developing countries

Product Price Place Promotion

• Straight • Market Based • Focus on • Communication
Extension pricing exclusive and adaptation
• Needs similar • Lowest cost non-exclusive • Same creative
distribution
to Indian manufacturer- theme globally
• Local
consumer pricing to get • Adapt the
distributors-
• Low price and competitive better specific
low advantage understanding executions to
maintenance of market different local
• Technical markets
training to
distribution
staff
Marketing Organisation
The company has three options:
Set up an export department

Set up an International Division

Become a truly global organization

We recommend setting up an International Division under which the following

come:
• Sri Lanka/ Bangladesh
• Latin America
• Middle East and North America
• Europe, U.S. and Japan
Thank You