IT Strategy of Bajaj Auto Bajaj Auto is a major Indian automobile manufacturer started by a Rajasthani merchant.

It is based in Pune, Maharashtra, with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal. The oldest plant at Akurdi (Pune) now houses the R&D centre Ahead. Bajaj Auto makes and exports motorscooters, motorcycles and the auto rickshaw. The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1946.[1] Over the last decade, the company has successfully changed its image from a scooter manufacturer to a two wheeler manufacturer. Its product range encompasses scooterettes, scooters and motorcycles. Its real growth in numbers has come in the last four years after successful introduction of a few models in the motorcycle segment. The company is headed by Rahul Bajaj who is worth more than US$1.5 billion.[2] Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj Trading Corporation Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it obtained license from the Government of India to manufacture two- and three-wheelers and it went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to produce and sell 100,000 vehicles in a single financial year. In 1985, it started producing at Waluj near Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single

financial year. In 1995, it rolled out its ten millionth vehicle and produced and sold 1 million vehicles in a year

Statistics: Public Company Incorporated: 1945 as M/s Bachraj Trading Ltd. Employees: 17,200 Sales: Rs 42.16 billion ($903.36 million)(2000) Stock Exchanges: Pune Mumbai Delhi London Berlin Frankfurt Munich Ticker Symbols: BAJAJAUTO 490 BJATq.L 893361.BE 893361.F 893361.MU NAIC: 336991 Motorcycle, Bicycle, and Parts Manufacturing

Company Perspectives: Our Philosophy: We approach our responsibilities with ambition and resourcefulness. We organise ourselves for a transparent and harmonious flow of work. We respect sound theory and encourage creative experimentation. And we make our workplace a source of pride. We believe in: Transparency--a commitment that the business is managed along transparent lines. Fairness&mdash all stakeholders in the Company, but especially to minority shareholders. Disclosure--of all relevant financial and non-financial information in an easily understood manner. Supervision--of the Company's activities by a professionally competent and independent board of directors.

Key Dates:

1945: Bajaj Auto is founded. 1960: Rahul Bajaj becomes the Indian licensee for Vespa scooters. 1977: Technical collaboration with Piaggio ends. 1984: Work begins on a second plant. 1998: Bajaj plans to build its third plant to meet demand. 2000: Thousands of workers are laid off to cut costs.

Company History: Bajaj Auto Limited is India's largest manufacturer of scooters and motorcycles. The company generally has lagged behind its Japanese rivals in technology, but has invested heavily to catch up. Its strong suit is high-volume production; it is the lowest-cost scooter maker in the world. Although publicly owned, the company has been controlled by the Bajaj family since its founding. Origins The Bajaj Group was formed in the first days of India's independence from Britain. Its founder, Jamnalal Bajaj, had been a follower of Mahatma Gandhi, who reportedly referred to him as a fifth son. 'Whenever I spoke of wealthy men becoming the trustees of their wealth for the common good I always had this merchant prince principally in mind,' said the Mahatma after Jamnalal's death. Jamnalal Bajaj was succeeded by his eldest son, 27-year-old Kamalnayan, in 1942. Kamalnayan, however, was preoccupied with India's struggle for independence. After this was achieved, in 1947, Kamalnayan consolidated and diversified the group,

branching into cement, ayurvedic medicines, electrical equipment, and appliances, as well as scooters. The precursor to Bajaj Auto had been formed on November 29, 1945 as M/s Bachraj Trading Ltd. It began selling imported twoand three-wheeled vehicles in 1948 and obtained a manufacturing license from the government 11 years later. The next year, 1960, Bajaj Auto became a public limited company. Rahul Bajaj reportedly adored the famous Vespa scooters made by Piaggio of Italy. In 1960, at the age of 22, he became the Indian licensee for the make; Bajaj Auto began producing its first two-wheelers the next year. Rahul Bajaj became the group's chief executive officer in 1968 after first picking up an MBA at Harvard. He lived next to the factory in Pune, an industrial city three hours' drive from Bombay. The company had an annual turnover of Rs 72 million at the time. By 1970, the company had produced 100,000 vehicles. The oil crisis soon drove cars off the roads in favor of twowheelers, much cheaper to buy and many times more fuelefficient. A number of new models were introduced in the 1970s, including the three-wheeler goods carrier and Bajaj Chetak early in the decade and the Bajaj Super and three-wheeled, rear engine Autorickshaw in 1976 and 1977. Bajaj Auto produced 100,000 vehicles in the 1976-77 fiscal year alone. The technical collaboration agreement with Piaggio of Italy expired in 1977. Afterward, Piaggio, maker of the Vespa brand of scooters, filed patent infringement suits to block Bajaj scooter sales in the United States, United Kingdom, West Germany, and

Hong Kong. Bajaj's scooter exports plummeted from Rs 133.2 million in 1980-81 to Rs 52 million ($5.4 million) in 1981-82, although total revenues rose five percent to Rs 1.16 billion. Pretax profits were cut in half, to Rs 63 million. New Competition in the 1980s Japanese and Italian scooter companies began entering the Indian market in the early 1980s. Although some boasted superior technology and flashier brands, Bajaj Auto had built up several advantages in the previous decades. Its customers liked the durability of the product and the ready availability of maintenance; the company's distributors permeated the country. The Bajaj M-50 debuted in 1981. The new fuel-efficient, 50cc motorcycle was immediately successful, and the company aimed to be able to make 60,000 of them a year by 1985. Capacity was the most important constraint for the Indian motorcycle industry. Although the country's total production rose from 262,000 vehicles in 1976 to 600,000 in 1982, companies like rival Lohia Machines had difficulty meeting demand. Bajaj Auto's advance orders for one of its new mini-motorcycles amounted to $57 million. Work on a new plant at Waluj, Aurangabad commenced in January 1984. The 1986-87 fiscal year saw the introduction of the Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles. The company was making 500,000 vehicles a year at this point. Although Rahul Bajaj credited much of his company's success with its focus on one type of product, he did attempt to diversify into tractor-trailers. In 1987 his attempt to buy control of Ahsok Leyland failed.

The Bajaj Sunny was launched in 1990; the Kawasaki Bajaj 4S Champion followed a year later. About this time, the Indian government was initiating a program of market liberalization, doing away with the old 'license raj' system, which limited the amount of investment any one company could make in a particular industry. A possible joint venture with Piaggio was discussed in 1993 but aborted. Rahul Bajaj told the Financial Times that his company was too large to be considered a potential collaborator by Japanese firms. It was hoping to increase its exports, which then amounted to just five percent of sales. The company began by shipping a few thousand vehicles a year to neighboring Sri Lanka and Bangladesh, but soon was reaching markets in Europe, Latin America, Africa, and West Asia. Its domestic market share, barely less than 50 percent, was slowly slipping. By 1994, Bajaj also was contemplating high-volume, low-cost car manufacture. Several of Bajaj's rivals were looking at this market as well, which was being rapidly liberalized by the Indian government. Bajaj Auto produced one million vehicles in the 1994-95 fiscal year. The company was the world's fourth largest manufacturer of two-wheelers, behind Japan's Honda, Suzuki, and Kawasaki. New models included the Bajaj Classic and the Bajaj Super Excel. Bajaj also signed development agreements with two Japanese engineering firms, Kubota and Tokyo R & D. Bajaj's most popular models cost about Rs 20,000. 'You just can't beat a Bajaj,' stated the company's marketing slogan. The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw were

introduced in 1997. The next year saw the debut of the Kawasaki Bajaj Caliber, the Spirit, and the Legend, India's first four-stroke scooter. The Caliber sold 100,000 units in its first 12 months. Bajaj was planning to build its third plant at a cost of Rs 4 billion ($111.6 million) to produce two new models, one to be developed in collaboration with Cagiva of Italy. New Tools in the 1990s Still, intense competition was beginning to hurt sales at home and abroad during the calendar year 1997. Bajaj's low-tech, lowcost cycles were not faring as well as its rivals' higher-end offerings, particularly in high-powered motorcycles, since poorer consumers were withstanding the worst of the recession. The company invested in its new Pune plant in order to introduce new models more quickly. The company spent Rs 7.5 billion ($185 million) on advanced, computer-controlled machine tools. It would need new models to comply with the more stringent emissions standards slated for 2000. Bajaj began installing Rs 800 catalytic converters to its two-stroke scooter models beginning in 1999. Although its domestic market share continued to slip, falling to 40.5 percent, Bajaj Auto's profits increased slightly at the end of the 1997-98 fiscal year. In fact, Rahul Bajaj was able to boast, 'My competitors are doing well, but my net profit is still more than the next four biggest companies combined.' Hero Honda was perhaps Bajaj's most serious local threat; in fact, in the fall of 1998, Honda Motor of Japan announced that it was withdrawing from this joint venture. Bajaj Auto had quadrupled its product design staff to 500. It also acquired technology from its foreign partners, such as Kawasaki

(motorcycles), Kubota (diesel engines), and Cagiva (scooters). 'Honda's annual spend on R & D is more than my turnover,' noted Ruhal Bajaj. His son, Sangiv Bajaj, was working to improve the company's supply chain management. A marketing executive was lured from TVS Suzuki to help push the new cycles. Several new designs and a dozen upgrades of existing scooters came out in 1998 and 1999. These, and a surge in consumer confidence, propelled Bajaj to sales records, and it began to regain market share in the fast-growing motorcycle segment. Sales of three-wheelers fell as some states, citing traffic and pollution concerns, limited the number of permits issued for them. In late 1999, Rahul Bajaj made a bid to acquire ten percent of Piaggio for $65 million. The Italian firm had exited a relationship with entrepreneur Deepak Singhania and was looking to reenter the Indian market, possibly through acquisition. Piaggio itself had been mostly bought out by a German investment bank, Deutsche Morgan Grenfell (DMG), which was looking to sell some shares after turning the company around. Bajaj attached several conditions to his purchase of a minority share, including a seat on the board and an exclusive Piaggio distributorship in India. In late 2000, Maruti Udyog emerged as another possible acquisition target. The Indian government was planning to sell its 50 percent stake in the automaker, a joint venture with Suzuki of Japan. Bajaj had been approached by several foreign car manufacturers in the past, including Chrysler (subsequently DaimlerChrysler) in the mid-1990s. Employment fell from about 23,000 in 1995-96 (the year Bajaj suffered a two-month strike at its Waluj factory) to 17,000 in

1999-2000. The company planned to lay off another 2,000 workers in the short term and another 3,000 in the following three to four years. Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd.

In late 2001, Bajaj Auto initiated a transformation process in an effort to transform its image from being a scooter manufacturer to a motorcycle company. At the same time, the company continued its efforts to revive the geared scooter market. The company continued to invest time and resources in the geared scooter segment even till the early 2000s when the sales of geared scooters were negligible as compared to the gearless scooters. Bajaj Auto also failed to introduce innovative products in the rapidly growing gearless scooter market. The

company lost its leadership status in the scooters segment to Honda Motorcycles and Scooter India (HMSI). The case examines how Bajaj Auto became a follower both in the scooter and motorcycle segment from being the market leader in the Indian two wheeler industry.
the company failed to visualize the structural changes happening in the Indian two wheeler industry since the early 1990s. After the Indian economy was liberalized in 1991, foreign players entered the Indian two wheeler industry with their innovative products and sophisticated technology. In spite of rising competition, Bajaj Auto neither upgraded its scooter models, nor focused on the rapidly growing motorcycle segment .

Recent news about it-------We cannot replicate Honda, but can still be the best: Rajiv Bajaj

Mr Rajiv Bajaj cites the stool as an analogy for his company's growth strategy.

Any stool needs three legs to be stable. Likewise, in our case, these legs are sales, profitability and brand image, the Managing Director of Bajaj Auto told Business Line. The company wrapped up 2011-12 with sales of 4.35 million motorcycles and commercial vehicles of which exports accounted for 1.58 million units. While it plans to maintain the 15 per cent growth rate this fiscal, the eventual goal is to be the best motorcycle manufacturer in the world'. Honda is, of course, the world leader in motorcycles and is rapidly gaining market share in India too after its recent split with the Munjals of the Hero Group. The Japanese automaker is a brand that is synonymous with quality and Bajaj Auto, likewise, believes that it find its own identity. Obviously, we cannot replicate Honda but can still be the best by being different. We cannot ape them but are trying to have our individual brands established strongly, Mr Bajaj said. GLOBAL MARKET It is here that the three-legged stool business model is critical to making this dream a reality. From the viewpoint of sales, Bajaj Auto has a ten per cent share of the global motorcycle market. I believe we can double this to 20 per cent, he said. Profits, on the other hand, have pretty much peaked' given that it is not going to be simple surpassing a consistent 20 per cent EBITDA posted over many quarters now. As for brand, which represents the third leg of the strategy, Mr Bajaj is of the view that the company is halfway there. With the new Pulsar 200 NS, we can go even further while the new Discover to be launched this fiscal will take the story to the next level, he said.

In addition, the Boxer has established itself in Africa over the last 6-7 years. The more recently launched KTM brand (Duke 200) is fairly new but the market response has been encouraging with monthly sales averaging 1,500 units. Ideally, the company like to have the Pulsar embedded in the customer's mind as a great sports bike, the Discover as a (great) commuter bike and the Boxer as the ultimate workhorse. Over the last three years, Bajaj Auto's comeback story was built around this brand strategy. We worked with the same products but the focus was sharper in terms of effective positioning. The next step is to enhance their positions from this fiscal, Mr Bajaj said. Simply put, the first three years involved more learning while the future will be more experience-based. There was a lot of headwind in the first phase while the tailwind is stronger now in terms of sales, profitability and brand position, he added.

Bajaj Auto is creating a new brand strategy focusing on 4 brands and dropping the parent name What do you think are the pros and cons of this strategy? Bajaj Auto is looking to style itself, as a garage of independent brands like Hindustan Unilever wherein marketing and branding focus is limited to four motorcycles Boxer, Discover, Pulsar and KTM as well as the autorickshaw, while the parent brand takes

a back seat. The entire organization will also be realigned, along these brand verticals, as part of the radical change in strategy.To quote the current CEO Rajiv Bajaj The Bajaj brand is very diffused, covering everything from heaters and hair-oil to insurance and financial services. Correcting that problem is the biggest opportunity for the company. His father Rahul Bajaj ( Chairman of the Board) but with no executive responsibilities reportedly opposes this strategy. As a background, Bajaj is one of India's well known Business Houses. The scooters from Bajaj Auto monopolised the market for motorized 2 wheelers from 1950 to 1990. They also manufacture the iconic 3 wheeler which is a mainstay of public transport in many South Asian cities.

Bajajs game plan is simple: While Pulsar focuses on the market for sports motorcycles, Discover is positioned for the market for sporty commuters. Then there is a market for utility bikes, especially in the African markets, for which the company has launched Boxer. For the niche markets, Bajaj Auto acquired a 39.8 per cent stake in KTM. Today, the KTM Duke 125, which has 99 per cent localisation, is a class leader across Europe. The most challenging task of course was changing the mindset of people in the company when the young engineering graduate from Warwick decided to take the bull

by the horns and get away from scooters (even his father Rahul Bajaj was initially uncomfortable with the idea). Everybody in the company and its dealers were used to a 10-year waiting period for scooters and the idiom of now you have to chase customers was Greek to them. Apart from the people factor, Bajaj had to change everything research and development specifications, engineering processes, manufacturing standards and even many in the top management.