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'India will overtake China's growth by 2007'

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'India will overtake China's growth by 2007'
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Gaurav Garg
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Thumbs up 'India will overtake China's growth by 2007' - December 16th, 2006

India is set to surpass China as the fastest-growing economy in Asia next year on the back of increasing consumer demand and public investment in infrastructure, a report by global research firm Credit Suisse has said.

In its December forecast, the firm upgraded India's economic growth rate to 9.5 per cent in 2006 from 8.5 per cent projected in September this year. The economy would grow by 10 per cent in 2007 and 10.5 per cent rate in 2008, it added.

"Our most significant growth upgrade for 2007 is in India from 8.5 per cent to 10 per cent, surpassing China to become the top growth performer in the region," Credit Suisse research analyst Dong Tao, said, in the report.

Besides, external liquidity in India remained a concern and interest rates could go up. The report also singled out India on external liquidity concerns and said most countries in the region maintained robust current account surpluses.

The agency also increased the projected growth rate for China in 2007 to 9.9 per cent from 9.5 per cent forecast in September and the Communist state’s economy is likely to grow at 10.4 per cent in 2006, it said.

"The overall Asian outlook for growth will weaken a little in 2007 compared to 2006, but strong domestic demand and some form of disconnect to the US demand should mean that Asia's growth stays relatively healthy," the report said.

It raised Asia's growth forecast to 7.9 per cent for 2007 from 7.4 per cent projected earlier, compared to a revised 8.2 per cent for 2006. In 2008, regional growth is pegged at 8.3 per cent, the report added.
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Re: 'India will overtake China's growth by 2007'
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Re: 'India will overtake China's growth by 2007' - October 15th, 2007

INDIA WILL OVERTAKE CHINA NO DOUBT ABOUT THAT
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Re: 'India will overtake China's growth by 2007' - October 15th, 2007

CHINNA CORRUPTION WILL MAKE THEM BEHIND INDIA SO WE WILL BE FASTEST GROWING ECONOMY IN COUPLE OF YEAR
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Re: 'India will overtake China's growth by 2007' - February 6th, 2009

yes evn i think india will overtake China's growth...
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comparison b/w bajaj n hero honda
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comparison b/w bajaj n hero honda - February 7th, 2009

PROJECT REPORT
On

CONCEIVING A STARTEGY
after conducting of A COMPARATIVE ANALYSIS of the SALES & DISTRIBUTION NETWORK of

BAJAJ
&
HERO HONDA




SUBMITTED TO: SUBMITTED BY:
GROUP NO.:
BATCH:





FOREWORD

A glance at the Indian two-wheeler industry

The two-wheeler market in India is witnessing a robust growth for the past few years, which is also likely to continue in the future as the majority of the country’s population is becoming self sufficient to own a mode of transportation. Hence every company today in the market fights in order to improve their market share, but in order to be efficient in the achievement of their pre set targets which they want to achieve, every company strives to have an efficient sales and distribution network.

EXECUTIVE SUMMARY

This project is aimed at conceiving a strategy for our two-wheeler range after closely studying and analysing the sales and distribution operations of two of the biggest names in the market today, namely, Bajaj Auto and Hero Honda.

We have analysed the sales and distribution network of HERO HONDA and BAJAJ to determine its effectiveness and it’s contribution to the achievement of the targets and low cost of operation and also how it facilitates quick delivery of their products.

The methodology primarily used for data collection was personal interviews with one dealer each of both Bajaj Auto India Pvt. Ltd. and Hero Honda Motors Ltd, which was backed by findings from the respective companies’ web sites. Also, we interviewed a past sales officer of Bajaj who now has taken a dealership with the same company after his retirement a few months back.

BAJAJ distributes its products to the dealers through the depots which the company is having in the various parts of the country, whereas HERO HONDA distributes its products directly to its dealers through the warehouse the company is having in its manufacturing plant only. The criteria for the selection of dealers are quite similar in both the companies. However BAJAJ wants its dealers to be more aggressive so as to face the current market dynamics, which are currently in the favour of HERO HONDA. The financial terms of BAJAJ are better as compared to HERO HONDA as they provide channel-financing facility to their dealers.

The sales structure of BAJAJ is much more diversified and broad than HERO HONDA as they have created a separate head for each department. The functions of sales department of both the companies are also same as their all efforts of Publicity, Sales Promotion, etc. are directed towards augmenting their sales. Both the companies give only volume targets (wherever targets are set) to their dealers, which are mainly based on dealer performance and company’s market share. The profit margins of dealers for both the companies are almost same which varies as per the model and the on-going schemes. In any case, the efforts of both the companies are directed towards augmenting their sales and thereby increasing their market share.

With respect to our concern, we are a joint venture with an established global automobile company. Our aim is to establish ourselves in the market and position ourselves in such a manner that we have at least twenty percent of the market in a few years and in the long run get a major chunk of the pie (around fifty to sixty percent).

From our detailed study we notice that our advantage is the strategic geographical positioning of our manufacturing plants which will hold us in good stead with all involved from channel members to customers as it would result in quick, effective and efficient delivery of the vehicles as well as spare parts which would in turn result in satisfied smiles all round. This also results in lowering the cost as the need for depots as used by one of the majors is eliminated.



ACKNOWLEDGEMENT

We know that every success story draws its inspiration from some source and ours was primarily the orientation given by our respected faculty MRS.VEENA KUMAR. We would like to thank Madam for giving us this opportunity to gain exposure and experience in the field of sales and distribution.

We are very grateful to MR.ANKIT AGARWAL, Director, Yuva Motors, Faridabad, (Dealer, Hero Honda), for taking time off from his busy schedule and agreeing to meet and share valuable knowledge with us. We are also indebted to MR.R.K. SARNA, ex-regional manager, Bajaj Auto, (Northern India). We would also like to thank MR.R.K.JAIN, Director, PRJ Automobiles, Delhi, (Dealer Bajaj Auto).

We are thankful to all the faculty members who guided and aided us throughout. We are indebted to MR.GAURAV SRIVASTAVA for his continuous help and guidance throughout the project.

We express our heartfelt gratitude to all who assisted and supported us to accomplish our goal.

Above all we are thankful to The God Almighty for showering us with his blessings.


Ananta Ajitsaria Bharti Sharma Deepak Arora

Itika Jain Karthik Narayan Mainak Sengupta

Priyanka Bansal

TABLE OF CONTENTS


1. METHODOLOGY
2. COMPANY BACKGROUND
3. FINDINGS, DATA ANALYSIS and CONCLUSIONS
4. OUR STRATEGY
5. CONCLUSION
6. RECOMMENDATIONS
7. BIBLIOGRAPHY
8. ANNEXURE









METHODOLOGY


The methodology primarily used for data collection was personal interviews with one dealer each of both Bajaj Auto India Pvt. Ltd. and Hero Honda Motors Ltd, which was backed by findings from the respective companies’ web sites. Also, we interviewed a past sales officer of Bajaj who now has taken a dealership with the same company after his retirement a few months back. We conducted interviews to get the general overview about the company policies and system of working.

The players we chose to study in the automobile sector (two-wheeler) are Bajaj Auto and Hero Honda. We extracted our secondary data from the Internet and pamphlets and our primary data was collected through interviews of dealers of the two companies.

The tool we used for primary data collection was semi-structured interviews based on discussion guidelines.










COMPANY BACKGROUND

The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches over a wide range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance.
The group’s flagship company, Bajaj Auto, is ranked as the world’s fourth largest two- and three- wheeler manufacturer and the Bajaj brand is well-known in over a dozen countries in Europe, Latin America, the US and Asia.

Founded in 1926, at the height of India's movement for independence from the British, the group has an illustrious history. The integrity, dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth during those days of relentless devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his son. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture.

His son, Kamalnayan Bajaj, then 27, took over the reins of business in 1942. He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also diversified into various manufacturing activities.

The present Chairman and Managing Director of the group is Mr. Rahul Bajaj. Under his leadership, the turnover of Bajaj Auto the flagship company has gone up from Rs.72 million to Rs.46.16 billion (USD 936 million), its product portfolio has expanded from one to and the brand has found a global market. He is one of India’s most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit.

PRODUCT PORTFOLIO*

BAJAJ


It is a bike with four-stroke engine with a maximum power of 8.2 bhp. Has a telescopic front suspension with a swing arm type rear suspension.


Every feature of the new Bajaj BYK maximizes its fuel efficiency to a record breaking high of 100 kilometers per litre. Right from its Microprocessor Ignition Timing System (MITS) controlled 4-stroke engine and optimally geared 4-speed transmission, to its high strength alloy frame and low friction tread tyres.


WIND 125
Seats you like a king, treats you like a king. Advanced shifting mechanism for smoother gearshift. Changing gear seems like cutting through melting butter. A long stroke hydrodynamic suspension takes care of any unpleasant surprises on the road.


This bike is the world’s first 125cc DTSi. The success of this model, which was launched replacing the Byk and Wind models and was the first of its kind to be launched internationally. It is also the first bike from the Bajaj stable to be endorsed by a celebrity, namely Jackie Chan.


COMPANY BACKGROUND



HHML belongs to the Munjal group. The group has been founded by Brijmohanlal Munjal and his three brothers in 1951. HHML is a 26:26 JV between Hero Group and Japan’s Honda Motors. The remaining stake is held by FIIs and public. It began operations with a manufacturing unit for bicycle components. Over the years, the group has become the largest manufacturer of motorcycles in the world. Besides Hero Honda, there are 4 other major companies in the group, namely
• Hero Cycles (1951), which is India’s leading bicycle manufacturer and exporter. The group worth Rs. 60 bn is set to enter hospitality business with US – based $31bn Carlson Hospitality by bidding for four properties of ITDC hotels in Delhi – Kanishka, Lodhi, Qutab and Yatri Niwas in order to explore the huge potential offered by the industry.
• Gujarat Cycles (1989).
• Majestic Auto (1978), which is one of the leading manufacturer and exporter of mopeds. It has collaboration with Steyr Daimler Puch of Austria. It has also entered into a technical collaboration agreement with BMW Germany to manufacture heavy duty 650cc motor cycles.
• Munjal-Showa (1985), which is one of the leading manufacturers of shock absorber, and other automotive component.
HHML had two plants one located at Dharuhera, Haryana near Delhi and the other at Gurgaon, 30 kms away from the existing plant. The new plant had an installed capacity of 2 million units pa on shift basis at each of the plant. The company had been taking initiatives to expand the existing capacity at each of it plant.
The Hero Honda group came into existence on January 19, 1984 and became Hero Honda Motors Limited and gave India nothing less than a revolution on two-wheels made even more famous by the 'Fill it - Shut it - Forget it’ campaign. The company is driven by over 5 million customers and has 48%of market share which makes it a veritable giant in the industry. Also its technological excellence, an expansive dealer network, and reliable after sales service, makes it one of the most customer- friendly companies.
Hero Honda Motors has net profit of Rs 810.47crore as per 31st March 2005. In 2004 company’s net income was Rs.728.32 crores, and as compared to last year, it has gone up by Rs.82.15 Crores.


PRODUCT PORTFOLIO

HERO HONDA


Designed with your comfort in mind, with a contoured low slung seat, specially designed handle-bar and a strong double-cradled tubular frame. This bike epitomises riding pleasure. Truly, the limousine of Indian two wheelers.


Contemporary style + Acceleration/ Power + Adequate fuel efficiency. A motorcycle for upgrades from 100 cc who have the ambition to move upwards. Ambition is what we make of it. Ambition is our power within. Ambition is our power to move forward.


The legend refreshed…with all new body language. The original spirit of CBZ, now with a cool, new look. A wonder bike that can take on the winds. And like you, it runs on passion. Rev up and flaunt your style.


New two-tone body colours PLUS Body colour rear view mirrors PLUS Aluminum die cast rear grip PLUS Heat protector on the muffler. All this and much more to make the biker and his bike stay married forever.


This bike - anyway you look at it - represents toughness. And the ability to handle even off road, dirt track conditions with ease. All this with the economy and comfort you have always associated Hero Honda with.

India's first 4-stroke bike is still India's foremost. And the reasons for its popularity are apparent. Economy. Reliability. And the capability to go on and on, year after year.


A smooth ride over the toughest of roads with maximum fuel efficiency and at an affordable price, now you can bid goodbye to all your commuting problems!

The world's best-selling motorcycle just got better. The Splendor+ a bike that will stop you right in your tracks. Both by its looks and performance. Needless to add, owning a Splendor+ means a lot of other things too. Like getting admiring looks. Or the pride of riding a motorcycle that meets the pollution control standards of this decade. That's the Splendor+. The new face of trust.

FINDINGS, DATA ANALYSIS and CONCLUSIONS

CHANNEL STRUCTURE

HERO HONDA







The Company believes in a single-tier distribution network where it delivers its product directly to the customers through its dealers. Thus, the company doesn’t have any warehouse and the goods are directly delivered to the dealers from the manufacturing plant, which is further passed on to the customers. Thus, the company follows a simple level of distribution.

BAJAJ The Company tries to deliver its product ASAP to its customers through its dealers who obtain the goods either directly or through a depot, which is aimed at increased flexibility in order processing.

The most noticeable difference between the two channel structures is that while Bajaj employs a depot to facilitate easier distribution, Hero Honda purposely avoids the same.



RATIONALE FOR OPTING FOR THIS CHANNEL

HERO HONDA

The company has opted for this single-tier distribution network because of the following reasons:
 It as per the company policy not to opt for depots but to supply the goods directly to the dealers.
 The company believes that by not maintaining depots, the company saves a lot in the inventory cost.

BAJAJ

The company has opted for such a distribution network because of the following reasons:
 It as per the company policy to opt for depots and to supply the goods directly to the dealers.
 The company believes that by maintaining depots, the company saves a lot in the form of transportation cost and facilitates flexible order processing.

The difference is because Bajaj has to play catch-up with respect to the market share, which Honda is clearly having a larger chunk of.


EXPECTATIONS FROM THE CHANNEL MEMBERS

HERO HONDA

 The company expects the dealers to follow its policies and implement it for the mutual benefit of customer, dealer and the company.

Overall, the company’s policy revolves around customer satisfaction.

BAJAJ

 The company expects the dealers to incorporate its policies and implement them for the mutual benefit of customer, dealer and the company.
 The company in very particular when it comes to certain issues and gives the dealers a fixed design for the showrooms and the service centres, including the grade and colour combination to use for the tiles.

While both aim to satisfy the customers to the extent possible, the difference lies in the approach. Hero Honda is not too stringent with how the dealers achieve customer satisfaction whereas Bajaj is very stringent with its standards and wants the dealers to do exactly as directed.


FUNCTIONS PERFORMED BY CHANNEL MEMBERS

HERO HONDA

As the only channel member here is the dealer himself, he performs all the activities regarding Sales, Service and Spare parts. Also, they participate in all the promotional activities related to sales.

BAJAJ

The dealers’ activities include Sales, Service and Spares. Also, they are involved in any promotional activities related to sales. They also have the freedom to run their own promotions as “Ambe Bajaj” is currently running an offer on their own called “Ambi Bajaj Frequent Customer Card” and it is focused on customer retention for service of the vehicles.



CRITERIA FOR SELECTING CHANNEL MEMBERS

HERO HONDA

The company selects its dealers on the basis of following criteria:

• Channel member should have sound Financial Position.
• Channel member should have enough space so as to ensure proper display of vehicles and to carry out the service activities.
• He must also have a good Educational Background.
• It also depends upon the market potential of that particular area where the channel member is to be appointed.

BAJAJ

The company selects its dealers on the basis of following criteria:

• Looking at the current perception about the company’s product, the company wants its channel member to be courageous enough to withhold and make inroads on the competitors market share, given the market situation, as they are not the most preferred among customers.
• Channel member should have enough space so as to ensure proper display of vehicles and to carry out the service activities.
• He must also have a good Educational Background.
• Though there is no restriction on the number of service centres, the company decides on the number of dealers based on the potential of the area.

The criteria for selection of channel members are almost identical except that Bajaj does not have any restrictions on the number of service centres.


FINANCIAL TERMS

HERO HONDA

It doesn’t provide any sort of Credit facilities to its dealers, as all the vehicles are supplied against advance payment in the form of Post Dated Cheques. They also take securities at the time of allotting dealerships, the amount of which varies according to the market size.

BAJAJ

It doesn’t usually provide any sort of Credit facilities to its dealers, as all the vehicles are supplied against advance payment in the form of Demand Drafts. The company may under certain circumstances give a credit for about Rs. 15-20 lakhs, the credit period being a couple of days.

Both of them collect before delivering and the difference lies only in the mode of payment. Also there is no difference in their credit policies.


EVALUATION OF THE PERFORMANCE OF CHANNEL MEMBERS

HERO HONDA

• Method and tools
They evaluate on the basis of spare parts lifted, service reporting, spare parts lifting in a year, infrastructure support, and customer tools.
• Frequency
It is done on regular basis. Company officials keep on visiting the dealers to evaluate their performance.
• Both qualitative as well as quantitative methods are used to evaluate the dealers performance for example spare parts lifted and service reporting is quantitative while customer satisfaction is a qualitative tool

It is normally done by the sales / area manager at sales levels while it is done by service engineer at service level.

BAJAJ

• Method and tools
They evaluate on the basis of sales volume, service reporting, spare parts lifting in a year, infrastructure support, customer tools and importantly the adherence to company policies and instructions.
• Frequency
It is done on regular basis. Company officials visit the dealers to evaluate their performance.
• Both qualitative as well as quantitative methods are used to evaluate the dealers’ performance for example sales volume and service reporting is quantitative while adherence to company policies and instructions is a qualitative tool.

It is normally done by the sales / area managers at sales levels while it is done by service engineers at service level.

While Hero Honda focuses its appraisal on customer satisfaction standards and measures, Bajaj focuses on the maintenance and adherence to company policy.


TRAINING PROGRAMMES

HERO HONDA

• Dealers: It doesn’t undertake any training process for its dealers except when a new model is being launched in which case one individual from each dealer is sent for training (the individual is selected by the dealer).
• Service Team: Some of the mechanics and supervisors of the Service Centre has to undergo compulsory training.
• Sales Team: Normally company gives training to the salesman at the time of the launch of the new vehicle.

BAJAJ

• Dealers: It doesn’t undertake any training process for its dealers except when a new model is being launched in which case one individual from each dealer is sent for training (the individual is selected by the dealer).
• Service Team: Most of the mechanics and supervisors of the Service Centre has to undergo compulsory training at institutions and are mostly diploma holders from institutes like ITIs.
• Sales Team: Normally company gives training to the salesman at the time of the launch of the new vehicle.

The similarity is that training usually happens when a new model is launched and also they both ensure that the service team is knowledgeable and competent enough to rectify problems.

PROCESSING OF ORDERS

HERO HONDA

The order for a particular month is to be placed 15 days in advance, which is usually an estimate based on previous years’ figures and the time of the year (eg. marriage season). In one lot the assortment is decided at random by the company but the total ordered vehicles would be dispatched through the course of the month. Each dispatch is a truck of sixty-two vehicles in the case of all models except the Karizma, which occupies the space that would normally be sufficient to hold 2 bikes.


BAJAJ

The order for a particular month is to be placed 15 days in advance, which is usually an estimate based on previous years’ figures and the time of the year (eg. marriage season). In one lot the assortment is decided at random by the company but the total ordered vehicles would be dispatched through the course of the month. Each dispatch is a truck of forty-two vehicles in the case of all models. This is if the order is placed directly to the Company and loading is to be done at Pune. If the order is being placed with one of the depots then a minimum of ten bikes is to be ordered.

Bajaj is able to offer flexibility as it makes use of depots and also there is no vehicle in it’s stable that occupies extra space, which results in a more cost efficient distribution of vehicles


MEANS OF TRANSPORTATION IN DISTRIBUTION NETWORK

HERO HONDA

Goods of the company are sent to the channel members through trucks, which normally take 7-8 days to reach the dealers depending on their location. The company has approved transporters through which they distribute their goods. However, recently for southern India, they have started the transportation through trains in order to speed up the process of delivery. The transportation cost has to be borne by the dealer.

BAJAJ

The only means of transportation used is the roadways. Goods of the company are sent to the channel members through trucks. Physical loading at Pune takes about eight hours and the truck is normally sent with one driver, which travels around 1500kms (Delhi) in about three-and-a-half days. Under unusual circumstances two drivers could be sent on a single truck, which implies that the truck travels the distance in half the tie. The company has approved transporters through which they distribute their goods.

The mode of transportation is similar except that Hero Honda has introduced the usage of railways to cater to the increasing demand of South India.


WAREHOUSING IN DISTRIBUTION NETWORK

HERO HONDA

The company has a warehouse at its factory only from where the goods are transported to the respective dealers.

BAJAJ

The company has warehouses and depots from where the goods are transported to the respective dealers.

The only difference is that Bajaj makes use of depots as discussed earlier.


INVENTORY MANAGEMENT

HERO HONDA

The company maintains 15 days paid up stock of its monthly retail sale, which is calculated by dividing the retail sale of the month by two.

BAJAJ
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CUSTOMER FEEDBACK

HERO HONDA

Every second year the company undertakes a survey in order to get customer feedback. These surveys are normally carried out by an outside research agency like IMRB. The head offices normally appoint research agencies. It is done on an all India basis. Company tries to incorporate those suggestions that are relevant and necessary for customer satisfaction.

BAJAJ

Similar to Hero Honda, the company undertakes surveys at regular intervals through agencies such as AC Nielson. The head offices normally appoint the research agencies and the survey is done on an all India basis. The company then tries to incorporate those suggestions that are feasible and plausible.

Both companies make use of research agencies and both of them are floating clients which means that neither of them are a permanent client of a particular agency.


STRUCTURE OF SERVICE NETWORK

HERO HONDA

Most of the service stations of the companies are at dealerships only. The company does not have any company owned authorized service stations. They also appoint independent service stations in areas where they feel it is required.

BAJAJ

The company is quite liberal in setting up service centres and besides all the dealers, they also allow others to have services centres which are authorised by the company.

Bajaj is looking to increase its market share by having a quantitatively larger service network.


DECISION ABOUT THE NUMBER OF SERVICE STATIONS

HERO HONDA

The company decides the number of service stations on the basis of capacity constraints at existing service stations. Also, it depends upon the number of vehicle in that particular area.

BAJAJ

The company is lax on the number of service stations and authorises parties who are non-dealers also to open service centres.

While Hero Honda is quite particular about the number of its service centres, Bajaj on the other hand seem to be at the other extreme being very lax on this matter.


TARGETS FOR SERVICE STATIONS

HERO HONDA

It is decided on the basis of following factors

• Previous year’s achievement.
• Sale of the number of units (Spare Parts).
• Company’s future plans.

BAJAJ

The factors considered are
• Previous year’s achievement.
• Sale of the number of units (Spare Parts).
• Company’s future plans.
• Market share and the growth of the industry.

Both companies set targets which are primarily driven by last year’s figures and the expected and desired growth of sales (vehicles).


PARAMETERS FOR EVALUATING THE SERVICE STATIONS

HERO HONDA

The company evaluates its service centres on following parameters:
• On the basis of targets given to service centres.
• Customer complaints received in respect to the service centre.
• Upkeep of the service centre.
• Company’s policy.

BAJAJ

The company evaluates its service centres on following parameters:
• Company’s norms and policy.
• On the basis of targets given to service centres.
• Customer complaints received in respect to the service centre.
• Upkeep of the service centre.

The evaluation is pretty similar except that the focus is different as seen earlier with respect to dealers.


FREQUENCY OF EVALUATION OF SERVICE CENTRES

HERO HONDA

The service engineers do it on the regular basis.

BAJAJ

Service engineers on a regular basis carry out appraisal.

The frequency of visits may vary in both cases, as the number of service centres is large.


STRUCTURE OF SALES DEPARTMENT

HERO HONDA












BAJAJ
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FUNCTIONS OF SALES DEPARTMENT

HERO HONDA

The main functions as performed by the sales department are as follows:

 At zonal level they mainly look after the 3 aspects i.e. Sales, service and spares. These departments perform all the activities to these ‘3S’s’.
 They also undertake the publicity, promotional and advertisement related activities.

Area development is also another area, which they look into, this, mainly includes the development of dealer.

BAJAJ

The main functions as performed by the sales department are as follows:

 At zonal level they mainly look after the 3 aspects i.e. Sales, service and spares. These departments perform all the activities to these ‘3S’s’.
 They also undertake the publicity, promotional and advertisement related activities.

They also focus on area development as they are looking to increase their market share and hence there are on the look out for new areas and possible dealers.

Both carry out similar if not same tasks and they are both looking to widen their horizons by looking at newer markets which could be developed.


PROFIT MARGIN FOR THE DEALERS

HERO HONDA

The profit margin on per unit of product varies among various models. However, the company also gives incentives to the dealer, which depends upon the sales level. On the service side, they have categorized every work for which the charges are fixed on which the profit margin is about 15% to 16%.


BAJAJ

A profit margin of around 3% is the norm with around 15% to 20% margin on spare parts.

While Hero Honda has a fixed margin for each model, Bajaj on the other hand plays the percentage game which in turn reflects that all they are bothered about at the moment is sales figures and are intent on increasing their market share.


SALES PROMOTION SCHEME

HERO HONDA

The “Hero Honda Passport programme” is the largest and only successful programme of its kind in the industry. Hero Honda Passport holders get a lot in return including a life insurance policy and gifts based on their actions relating to Hero Honda and this scheme is a magical way of customer retention and has worked wonders for the company. The company stresses to its’ dealers that every sale should result in a Passport issue.

Cost-wise, all sales promotions are shared equally between the company and the dealer.

BAJAJ

The cost of all sales promotions is shared equally between the company and the dealer. The dealers have the freedom to run their own promotions as “Ambe Bajaj” is currently running an offer on their own called “Ambi Bajaj Frequent Customer Card” and it is focused on customer retention for service of the vehicles.

While Hero Honda’s long running “Hero Honda Passport programme” has been a super-hit, Bajaj currently has no such programme.

Our firm

With respect to our concern, we are a joint venture with an established global automobile company. On market analysis we realised that the consumption of two-wheelers was more in South India than in North India and hence we had decided to set up our factories in geographically strategic positions. Our largest plant is set up in South India, quite close to the Hyundai plant near Chennai, on the highway that connects Chennai and Bangalore, two primarily large markets. One of our smaller plants is situated in the state of Haryana, which would cater to the demands of the North Indian market. Our aim is to establish ourselves in the market and position ourselves in such a manner that our short term aim of having at least fifteen percent of the market and in the long run get a major chunk of the pie (around thirty five to fifty percent). Also we intend to use the brand equity of out partner to help us gain a foothold in the industry and establish ourselves.

Our channel structure is similar to that of Hero Honda’s where the only channel members are the dealers who will perform functions of Sales, Service and Spare Parts. Later based on the feedback from customers, research for which would be outsourced, we will decide on the policy for deciding the number of service centres.

Our expectations from our channel members would be to implement company policies to the best of their effort maximising customer satisfaction. Also realising the importance of dealers, we will initially be lax in terms of selection of such channel members and would bear a part of the initial cost involved in setting up both showrooms and service centres, which would be recovered over time (for which there may arise a need for some sort of security). As is the practice among the leaders in the industry, initially no credit will be allowed to the channel members and over the years we may relax our credit policy based on past records.

We would have a special task force whose sole purpose would be to visit our channel members on a regular basis and appraise them based on set standards, which primarily focus on customer care and satisfaction, which would include hospitability, query handling regarding the models, explanation of the problems and efficiency of service.

Also training camps would be conducted regularly in each zone and training with respect to sales and service would be given.

Our order processing would be along the lines of the two market leaders studied both of whom have a policy of orders made 15 days in advance.

Our chosen mode of transportation is primarily roadways and in case of a heightened demand, we may consider using railways to cover the farthest areas. We will not be using depots as we feel that depots would increase the overall cost of the company by increasing inventory costs and anyway as our factories are strategically placed, the need for such depots is eliminated.
Targets would be set for both sales and spare parts and this would depend on the companies objective for that year and the number of vehicles sold respectively.
Our sales organisation structure is very similar to that of the market leader, simple and hierarchical with each level having a clear distinct role to play.









The profit margins would be set similar to that of Bajaj as we are new entrants and our focus is on playing the number game namely sales volume.

Sales promotions would be conducted regularly, the cost of which will be shared between the company and the dealer. Also the company bill be brandishing the brand equity of our established partner to enhance the overall sales as well as attitude of the target audience towards the company.




CONCLUSION

From our detailed study we notice that our advantage is the strategic geographical positioning of our manufacturing plants which will hold us in good stead with all involved from channel members to customers as it would result in quick, effective and efficient delivery of the vehicles as well as spare parts which would in turn result in satisfied smiles all round. This also results in lowering the cost as the need for depots as used by one of the majors is eliminated. Also realising the importance of dealers we will initially be lax in terms of selection of such channel members.


RECOMMENDATIONS

To Hero Honda:

We feel that Hero Honda is running on past glory and brand equity, which is driving customers to their products. Given the increasing competition, and the fact that Honda has entered the market on their own, they should pull up their socks and do more in terms of promotions and move to reach the customer rather than wait for him to come.

To Bajaj:

The success of the Pulsar has been attributed to their pricing strategy and the training given to their sales force. If Bajaj continues at this rate, they would definitely put pressure on Hero Honda to take some initiative. It would do them good to cut down on their inventory cost by decreasing the number of depots. Also given that they are going global, they should ensure that they do not lose focus on garnering market share in India.

BIBLIOGRAPHY

Hero Honda


CONTACT PERSON:

HERO HONDA:

MR.ANKIT AGARWAL,
DIRECTOR,
YUVA MOTORS (DEALER, HERO HONDA),
FARIDABAD.

BAJAJ:

MR.R.K. SARNA,
EX-REGIONAL MANAGER, (NORTHERN INDIA),
BAJAJ AUTO,
NEW DELHI.


ANNEXURES


QUESTIONNAIRE
DISTRIBUTION NETWORK
1. What are the various levels through which your distribution network operates?
2. What were the basic influencing factors that made you to opt for this channel?
3. What do you expect from your channel members?
4. Out of the parameters mentioned above, which ones you consider as a most important and the reasons for the same?
5. What are the various functions being performed by channel members?
6. What are the criteria’s on the basis of which you select your channel members?
7. What are your financial terms regarding:
 Credit Policy/ Limits/ Securities
 Credit Period normally extended to channel members
 Implication if credit policy conditions not being fulfilled.
8. How do you evaluate the performance of your channel members?
 Methods and tools
 Frequency
 Qualitative v/s. Quantitative

 Who is the appraiser?
 Format
9. What are the training programmes conducted by you to train the channel members?
10. How do you process the orders of your channel members?

11. What are the various means of transportation involved in distribution of product? (Ownership, size of fleet)
12. What are the various levels of distribution at which you undertake warehousing?
13. What are your policies regarding the inventory management?
14. What are the various types of the marketing research carried out with respect to your customers and channel members for getting the requisite information? Who does it (name of the agency)? How often do you get it done?

SERVICE NETWORK
15. What is the structure of your service network? Is it mainly company owned or company has appointed Authorized Service Stations?
16. How do you decide the size or the number of service stations to be opened?
17. What is the process through which you provide the service to your customers (e.g. Help lines, 24hr Service Network, Service)?

18. How do you set the targets for your service stations?
19. What is the normal time taken to service the vehicle?
 Acknowledgement of problem
 Accidental
 Warranty
20. What are the various parameters on which you evaluate the service stations?
21. How often you evaluate it? What are the various methods or procedure followed for evaluating your service stations?
22. What is the feedback mechanism to know the satisfaction level of the customers? Has any formal MR being undertaken in this respect?

SALES FUNCTIONING
23. What is the structure of your Sales Department?
24. What are the functions performed by your sales department?
25. How do you determine the size of your sales force?
26. How do you determine the effectiveness of your sales department?
27. What are the various factors that are taken into consideration while determining the sales target as well as territories?
28. What are the various types of targets given to your sales personnel as well as to your dealers?

29. What is the profit margin you give to your dealers?
30. What are the various responsibilities of the Sales person?
31. What is the methodology you adopt to train your sales person? Who does the training?
32. What is the role of sales person in the distribution channel?
33. How do you evaluate the performance of your sales personnel?
 Methods and tools
 Frequency
 Qualitative v/s. Quantitative
 Who is the appraiser?
 Format
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Re: 'India will overtake China's growth by 2007' - February 7th, 2009

hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhhhhhhhh
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Re: 'India will overtake China's growth by 2007' - February 9th, 2009

according to Goldman sachs reports , they forecast that India could overtake China after 2020
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