An

Assignment on

Business Strategy

Submitted to:

Prof. A. K. Mitra

Submitted by:

Abhishek Rawat

09BS0000080

Sec E

ASHOK LEYLAND

About

Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. Founded in 1948, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market share of 28% (2007–08). With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment.The company claims to carry over 60 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons. The joint venture announced with Nissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (<7.5 tons).

Vision

Be among the top Indian corporations acknowledged nationally and internationally for:

Excellence in quality of its products Excellence in customer focus and service

Mission

Be a leader in the business of commercial vehicals, excelling in technology, quality and value to customer fully supported by customer service of the highest order and meeting national and international safety environments and safety standards.

SCOPE AND BUSINESS

Ashok Leyland has five associate companies that adds up to its business

Automotive Coaches & components Limited (ACCL)

ACCL is the largest Tipper Body manufacturer in the organised sector in India, with its plant at Gummidipoondi, Tamil Nadu. Since 1987, ACCL has been offering its customer in India and abroad, well engineered afterchassis solutions: bus bodies,front-end structures(FES), tankers, aluminum containers, OB vans, energy vans and the like, apart from tippers.

Over the years, through timely technology induction, ACCL has perfected the art and science of high quality body building. ACCL has built over 18,000 tippers and 24,000 FES

Lanka Ashok Leyland

Established in 1982, this is a joint venture between Ashok Leyland and the Government of Sri Lanka. Equity holding of Ashok Leyland Ltd. in the joint venture is 28%. Ashok Leyland supplies chassis in both completely built-up and knocked down conditions to Lanka Ashok Leyland, which in turn assembles the chassis and builds bodies, as the case may be, and sells them in the local market. The factory is situated at Panagoda, about 40 Kms from Colombo.

This company is fully managed by Sri Lankan professionals. Lanka Ashok Leyland has also established a fully owned subsidiary called Lanka Ashok Leyland Services, which takes care of marketing and after-sales service including sale of spares.

Hinduja Foundaries

Established in 1959, Ennore Foundries is India's largest automotive jobbing foundry with production capacity of 45,000 MT in Grey Iron and 3000 MT in aluminum gravity die castings

per annum. Certified to ISO - 9001 and QS 9000 Quality systems. Ennore Foundries is also largest manufacturers of Cylinder Block and Cylinder head castings in India catering to different segment like automobiles, tractors, industrial engines and power generators, product ranging from 10 kg to 300 kg in Grey Iron casting and up to 16.5. kg in Aluminum gravity die casting.

Capability to adapt to emerging trends and absorb new technologies, competent engineering skills and expertise, a strong metallurgy base, uncompromising quality consciousness and dedicated team work have all contributed to create a sound and solid base for Ennore Foundries in the foundry industry.

IRIZAR-TVS

Started in 2001, IRIZAR-TVS is a joint venture between Ashok Leyland, TVS & Sons Ltd and IRIZAR, the internationally reputed bus body builder from Spain. This joint venture addresses the growing demand for luxury coaches in the country. As a preferred supplier to Ashok Leyland, IRIZAR-TVS provides a platform for Ashok Leyland to introduce new bus body concepts and designs even as it heralds the pioneering concept of fully built buses of international luxury standards from an Indian vehicle manufacturer.

Ashok Leyland Project Services Limited

Ashok Leyland Project Services Limited (ALPS), spearheads the project development activities of the Hinduja Group in India. Apart from assisting the investment entities of the Group identify and implement successfully projects in India, ALPS also provides professional services to help international companies interested in projects in India. Through its pool of multi-sector professionals (in areas such as power, telecommunications and surface transport infrastructure), ALPS adds the Indian element to the multinational company or consortium. This company provides specialised services for undertaking pre-investment, project development which includes feasibility studies, appraisals, development of joint ventures, company formation

and other professional services that are designated to deliver project opportunities from concept to commissioning.

TURNOVER AND PROFITABILITY OF THE COMPANY

Ashok Leyland registered a sales turnover of Rs.7729.12

crores during 2007-08

compared to Rs. 7168.17 Crore in 2006-07 showing an

improvement of 7.8%

After a sluggish start in 2008, the sales turnover improved by

21% touching

Rs.7244.71 crores in 2009-10 compared to Rs.5981.07 crores

in the 2008-09.

The net profit rose by 6.4% in 2007-08 to touch Rs.469.31

crores compared to Rs.441.28 crore in 2006-07.

Similarly the net profit improved to 123% to touch 423.67

crores in 2009-10

against Rs.190 crores in 2008-09.

PESTEL ENVIRONMENT

There are many factors that affect any organization. Tax

changes, new laws, trade barriers, demographic changes

government policy changes etc. are all examples of

macroscopic changes. To help analyse these factors we

categorize them using the PESTEL model. This classification

distinguishes between political, economical, social,

technological, ecological and legal factor. By PESTEL analysis

we can know about extended environment and key drivers of

change of an organization.

Political:

These refer to government policy such as the degree of

intervention in the economy. What goods and services does a

government wants to provide, to what extent does it believe in

subsidising firms, what are its priorities in terms of business

support.

The political factors related to automobile industry are:

Indian government auto policy aimed at promoting an

integrated, phased and conductive growth of the Indian

automobile industry.

Promoting multi-model transportation and the

implementation of mass rapid transport system.

Changes in taxation policy.

Foreign equity investment up to 100% in the automotive

sector and there is no minimum investment criteria.

Economical:

These include interest rates, taxation changes, economic

growth, inflation and exchange rates. Economic change can

have a major impact on a firm's behaviour.

The economics factors related to automobile industry are:

Weighted tax deduction of up to 150% for in-house

research and R&D activities.

Govt. has granted concessions, such as reduced interest

rates for export financing.

Several Indian firms have partnered with global players.

Rise in price of the raw materials.

Increase in petrol price.

Cost of automobile in India is the cheapest in world .The

cost of a finished vehicle here is as much as the cost of

gear box in developed countries. Hence there exists

tremendous scope for exports.

Deteriorating foreign exchange situation in western

country, poor buying capacity and comparatively cheaper

import of second hand automobile from developed country

reduces the export of automobile from India in recent

days.

Social:

Changes in social trends like population increase can impact on

the demand for a firm's products and the industry as a whole.

The social factors related to automobile industry are

Indian customers are highly price sensitive and put a lot of

emphasis on value for money.

Changed lifestyle of people has lead to increased

purchase of automobiles. So the company has a large

customer base to serve.

Upward migration of household income levels.

Preference for fuel efficient vehicles with lower running

cost.

Growth in urbanization.

Technical:

New technologies create new products and new processes.

Technology can reduce costs, improve quality and lead to

innovation. These developments can benefit consumers as well

as the organizations providing the products. Sometimes the

technology reduces the life cycle of products. The technological

factors related to automobile industry are

Accelerated acquisition of technology capabilities to raises

productivity in agriculture.

Continuous technological innovation.

Renewable energy development. Ex, coal gas renewable.

Environmental:

The ecological factors related to automobile industry are

Physical infrastructure such as roads and bridges affect

the use of automobiles.

Global warming.

Legal:

These are related to the legal environment in which firms

operate. In recent years the changes legal factors of developed

countries affected firms' behaviour in other countries due to

globalization. Legal changes can affect a firm's costs if new

systems and procedures have to be developed and demand if

the law affects the likelihood of customers buying the good or

using the service. The legal factors related to tractor industry

are

Collaboration with government which shapes policy issues.

Legal provision relating to environmental pollution by

automobiles.

Legal provisions relating to safety measures.

PORTER’S FIVE FORCES (P5F) ANALYSIS

A Porter's Five Forces Analysis explores five principal industry

factors to determine the attractive of a given industry in a

given market. In this, we look at the automobile industry in

India. This is independent of any manufacturer. As such, it

applies to every Indian car manufacturer.

In any P5F analysis, one must examine the following:

1. The threat of new entrants.

2. The bargaining power of buyers/customers.

3. The threat of substitute products.

4. The amount of bargaining power suppliers have.

5. The amount of rivalry among competitors.

The threat of new entrants:

In most markets, the capital and expertise needed to setup

an auto or parts manufacturing facility would be a great

enough barrier to entry to prevent many new entrants from

setting up.

However, given India's incredible growth forecasts,

infrastructure progress (especially new and better roads),

and ever-expanding financing options to rural residents, the

market is attractive. As such, we expect the threat of new

entrants to be high.

The bargaining power of buyers/customers:

Buyers in India have a wide variety of choice. There are more

than 20 foreign manufacturers selling in India (including ultra

high-end such as Rolls-Royce and Lamborghini). Of course

there are also a plethora of incredibly cheap choices, like the

famous Tata Nano.

The threat of substitute products

India is famous for its two-wheelers (bikes and mopeds) and

three-wheelers. These are very real and obvious threats to

auto manufacturers

The amount of bargaining power suppliers have:

It is likely that the suppliers to the manufacturers have

considerable bargaining power. They are not held ransom by

one single manufacturer as they can market their products

to any of the others in India.

The amount of rivalry among competitors:

The amount of rivalry amongst competitors in India is high.

The industry is not yet in its shake-out phase and is still

struggling to find the up-and-coming stars and possibly

topple the leaders.

COMPETITION OF ASHOK LEYLAND WITH OTHER AUTOMOBILE SECTOR

COMPETITION WITH TATA MOTORS:-

Ashok Leyland Ltd. will introduce 15 new truck models as India's biggest truck makers by sales seek to beat growing competition from Tata motors. The new truck models under its new U-Truck platform by March 2011,The trucks will be between 16 tonners and 49 tonners. To Compite with Ashok Leyland Tata motors will also introduce three new heavy trucks in India by March from its Prima range of so-called world trucks.As,we had seen that Ashok Leyland low floor buses giving tide competition to Tata motors low floor buses in Delhi.

COMPETITION WITH EICHER:-

Eicher is also one of competitor of Ashok Leyland,Eicher began its business operation in 1959 with Tactor,but now Eicher had expanded it self with Truck’s,Buses,Gear box,etc.Eicher is giving competition to Ashok Leyland with Truck’s and Buses,Eicher small trucks are making there good market in India.

COMPETITION WITH MAHINDRA:-

Mahindra had also launched a truck in collaboration with Navistar Inc. USA on Indian roads known as Mahindra Navistar,which is going to give tuff competition to Ashok Leyland.

With a commanding strength of the about 12,000 employees the company is looking forwards to enhance the scope of its action. It is aiming at expanding its production operation overseas to make it a more globally accessible company. It is looking to acquire a small to medium sized commercial vehicle manufacturers in China and other developing nations, which have an established product line. An example would be the 2007 acquisition of the Czech based Avia’s truck business rechristened Avia Ashok Leyland Motors.

CUSTOMER BASE AND SEGMENTATION

Ashok Leyland, over five decades in the transport solution industry, offering a world class range of trucks, buses, special application vehicles, and engines, touching millions across 40 countries world wide. Ashok Leyland has a good customer base

most of the customer who comes to Ashok Leyland become a loyal customer.

Ashok Leyland is Brand name with the flagship of Hinduja group. To sell is to know your customers. Ashok Leyland has built-up a data base of 130,000 customers. The information captures the business nuances of the customers and shows Ashok Leyland precisely where and how the customer would use trucks. The company today knows much more about its customers today than earlier.

Ashok Leyland has a large customer base for public transport buses, commercial vehicles, defence and special vehicles for special purpose.it caters to different class of society which includes individual buyer, industrial buyer, government buyer and defence also.

Segmentation of Ashok Leyland can be done on the basis of it’s user:-

Segmentation

Industrial user Defense user

Public user Government user

INDUSTRIAL USER:- Industrial user includes transporter, logistics company, coal and mining industry and other industries etc.

PUBLIC USER:-Public user includes individual or passenger transport .

GOVERNMENT USER:- Government user include state and central transport like DTC,UPSRTC and other.

DEFENSE USER:- Defense user include Indian army trucks, tanks and transport buses.

CUSTOMER’S VALUE

Ashok Leyland believe that our impressive strides in the marketplace stem in equal parts from our proactive approach and our customers' unstinting support, earned the only way Ashok Leyland know: by giving our customers the most appropriate transport solutions for each of their applications, and by backing them up with consultancy, finance, driver training and a responsive after-market network. Ashok Leyland are conscious of the fact that vehicles are more than just a means of transporting people and goods; Ashok Leyland understand that they have a deep and far-reaching impact on society, the national economy and the environment.

Ashok Leyland have, therefore, always endeavoured to engineer products and systems that promote progress on all these fronts. Ashok Leyland firmly believe that this honest approach will make the Ashok Leyland marquee the symbol of the very best in transportation, today and tomorrow.Ashok Leyland care for there customer,they try to give best quality engineering as well as best quality service to there customer. The major characteristic through which Ashok Leyland give the best quality to there customer are:-

* Reliability

* Maintainability

* Safety

* Strength

* Performance

* Features

* Conformance

* Durability

* Service

* Response

*Aesthetics

* Reputation

Ashok Leyland is committed to achieve customer satisfaction by anticipating and delivering superior value to the customer in relation to their own business, through the products and services offered by the company and comply with statutory requirements.The quality assurance of Ashok Leyland is to make continual improvements in the processes that constitute the quality management system, to make them more robust and to enhance their effectiveness and efficiency in achieving stated objectives leading to

(1). Superior products manufactured as also services offered by the company.

(2). Maximum use of employees potential to contribute to quality andenvironment by progressive up gradation of their knowledge and skills asappropriate to their functions.

(3). Seamless involvement from suppliers and dealers in the mission of thecompany to address customers changing needs and protection of theenvironment.

For the Quality assurance Ashok Leyland completed journey towards global standards of quality, history to win the ISO 9002 certification. The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001.

SWOT ANALYSIS

Strength of the company

1. Good Training System.

2. Good Organisational Climate.

3. High Market Share

4. Skilled Employees

5. Strong Functional Structure

6. Standard Quality Product

Weakness of the company

1. Low margin

2. High price

3. Sales representatives are less

4. There is no proper mechanism to handle the grievance of the

customers

Opportunities for the company

1. Due to liberalization, demand for heavy vehicle have steeped

up all over the globe.

2. National market through good advertisement.

3. Company provides better credit facility to dealers.

4. Company introduces promotional programmes

Threats faced by the company

1. High competition

2. Liberal credit policy of other brand

3. Promotional programmes of other brand

4. Complicated national market

5. Good replacement facility if other brands.

STRATEGIC GAPS AND OPPORTUNITIES FOR THE COMPANY

As we know through this assignment that Ashok Leyland is also one of the leading automobile manufacturer in the world and it also came to know that:-

Provide World class technology:-To offer world-class technology that is relevant and affordable to the Indian customer is the philosophy that drives R&D at Ashok Leyland. Over the years, this philosophy has been translated time and again into products that seamlessly integrate international technology with local needs. "The role of R&D is central in fulfilling the company-wide commitment to total customer satisfaction" states Mr. R. Seshasayee, Managing Director, and adds that the increased infrastructural and financial support expresses the company's determination to become self-reliant in R&D.

Provide Value to the customer:-The immediate R&D priorities are to pro-actively address safety and environmental issues, harness and adopt technologies that provide value to the customer in an atmosphere enabling

creativity and innovation. Powering those who "engineer tomorrows" with an enabling infrastructure has been top priority for the company.

Keep innovating there product:-Ashok Leyland product development successes have come from a keen sense of anticipation and attentiveness. The company initiated research into alternative fuels well before legislative debate had even begun in the country. The result was the implementation of CNG technology ahead of the rest promising a breath of fresh air for polluted cities.

The company should concentrate more on the luxury truck

segments to keep a strong hold in the market

The company should earmark more money for the

advertisement and sales promotion of its products. It helps to

increase the brand awareness and image.

The company should concentrate on markets in the

international arena where its competitors are less powerful.