CASE STUDY ANNOTATION

Case Study Annotation

Table of Contents

Introduction4

Industry Analysis4

Porter's Five Forces Model6

Rivalry6

Threat of Substitutes7

Buyer Power7

Supplier Power8

Threat of New Entrants and Entry Barriers8

PEST Analysis9

Key Outcome of Industry Analysis10

What is the effect of the driving forces on demand?11

Are the driving forces increasing competition?11

Will the driving forces lead to higher profitability?11

Survival and Success Factors11

SWOT Analysis12

Conclusions from SWOT and Recommendations14

References15

Annotation of Case Study:

Bajaj Auto Exiting the Scooter Segment: A Fair Decision?

Introduction

This annotation critically comments on the case of Bajaj Auto's exit from the scooter segment followed by declined demands and changed preferences. Bajaj's Chetak was considered a leader in the scooter market in India. The company enjoyed a leading position since a long time and contributed towards making India's two-wheeler market, internationally recognized. However, it was only until 2000 that Bajaj could sustain this position in the sector. Bajaj Autos faced acute decline in the sale of its scooters and people were observed to shift to motorcycles instead. According to the company owners, it could foresee better prospects in the bike market and the declining demands for scooters compelled Bajaj to switch over to motorcycles. While the company suffered from this sudden change, the overall scooter industry of India reported a growth of 10 to 15%. Hence, the company eventually exited the scooter market in 2010. This case study aims to analyze its decision of exiting the scooter segment and critically assess whether the new market segment pays off the company well.

Industry Analysis

India is the world's third leader in two-wheeler industry, after China and Japan. It holds this position due to its supreme quality of two-wheelers along with durability and enduring life. The Indian two-wheeler market is dominated by key players like Hero Honda, Yamaha, TVS, Honda and Baja Autos who enjoyed supremacy in the market and a competitive advantage over other smaller brands. The two-wheeler industry was the driving force of India's automotive sector, and it established an irreplaceable place for itself in the middle-class population of India and beyond. People belonging to the middle class opted for two-wheelers due to two significant reasons: the variety of models available and the affordability of those models. While these men enjoyed a variety of vehicles to complement their lifestyle, it was also not heavy on the common men's pocket. It was till 1990s that scooters dominated the two-wheeler industry of India and created a transcendent position for itself in the hearts of Indians. Engine performance, energy utilization and efficiency, were the reasons behind such a huge popularity for the two-wheelers (Armstrong, 1982, 197, 211).

The increase in non-urban activities further accelerated the demands for two-wheelers in India. Massive transportation from city to villages compelled the inhabitants to opt for the fuel-efficient vehicles in the forms of scooters, in order to cover their distances with convenience.

[Two-Wheeler Penetration at the Domestic Level for the Period FY09-FY17]

Penetration Percentage

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

9.0

10.0

10.4

10.8

11.3

11.8

12.3

12.0

13.5

The forecasts for the two-wheeler industry of India show great promise and opportunities for the two-wheeler sector, especially motorcycles. This promising future is possible due to increase in foreign deals, investments ...