Ashok Leyland - GM - In 2003 Format

8/22/2019 Ashok Leyland - GM - In 2003 Format

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Strategic Insightinto the Commercial

Vehicle Sector in

India.

1Submitted By Ashwin Menon, Section B, MBA 2008.


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2

Industry Background The industry has grown at a CAGR of 14% p.a over the last 5 years,

with sales of 9 million vehiclesin 2005-06 With the potential to emerge as one of the largest in the world. Presently, India is

2nd largest two wheeler market in the world

4th largest commercial vehicle market in the world

11th largest passenger carin the world and is expected to be the 7th largest

market by 2016 The industry has emerged as a key contributor to the Indian economy

0

1

2

3

4

5

6

7

8

Cars Commercial

Vehicles

Two wheelers Three

Wheelers

11.30%23.50%

14.30%14%

1.14

0.35

7.05

0.36

4 year CAGR

Vehicle Sales in India -2005 - 06 in million


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Role of

Govt.

Firm Strategy,

Structure and

Rivalry

Home

Demand

Conditions

Related and

Supporting

Industries

Factor

Conditions

(Skilledlabor)

INDIAs Commercial Vehicle Industry

HIGH

HIGH

HIGH

HIGH

HIGH

Glistening Diamond3


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PEST Analysis

4


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Company Background Ashok Leyland has been the technology leader in

India's commercial vehicle industry, molding the

country's commercial vehicle profile by introducing

technologies and product ideas that have gone on to

become industry norms.

From 18 seater to 82 seater double-decker buses, from7.5 tonne to 49 tons in haulage vehicles, from

numerous special application vehicles to diesel engines

for industrial, marine and genset applications, Ashok

Leyland offers a wide range of products.

Eight out of ten metro state transport buses in India arefrom Ashok Leyland. With over60 million passengers

a day, Ashok Leyland buses carry more people than

the entire Indian rail network!


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History 1948: Ashok Motors took birth in Chennai, India.

1954: Ashok Motors rechristened as Ashok Leyland throughequity stake of British Leyland.

1987: The overseas holding by Land Rover Leyland International

Holdings Limited (LRLIH) was taken over by a joint venture

between the Hinduja Group & the Non-Resident Indian

transnational group and IVECO FIAT SpA, part of the Fiat Group

and Europe's leading truck manufacturer.

2002: ISO 14001 certified.

Largest Private Sector Employers in India - with about 12,000

employees plus working in 6 factories spread over the length and

breadth of India.

The company recently announced the takeover of the Avia TruckBusiness Unit in Czech Republic to have a foothold in the highly

competitive European Truck market.

The Hinduja Group recently bought out IVECO's indirect stake in

Ashok Leyland for an undisclosed amount. Thus Ashok Leyland is

now purely a Hinduja Group Company.6


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Mission and Core Values

7

Mission:Enhancement of shareholder value -

1. Through sound business decisions, prudent financial

management and high standards of ethics throughout the

organization .

2. By ensuring transparency and professionalism in all decisionsand transactions and achieving excellence in Corporate

Governance by conforming to, and exceeding wherever possible,

the prevalent mandatory guidelines on Corporate Governance.

Core Values:1. International

2. Speedy

3. Value creator

4. Innovative

5. Ethical


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Products

CommercialVehicles

LightCommercial

Vehicles

Medium andHeavy

commercialVehicles

ENGINESDEFENCE &

SPECIALVEHICLES


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Target Market

Every type of requirement of motor-

driven vehicle used for commercial

purposes on the highways, such as

the transportation of goods, waresand merchandise and motor

coaches carrying passengers in

automotive sector.

Market under Microscope :

Commercial vehicles in Indian

Automotive Sector


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10

Porters Five Forces

Threat of New Entry

Buyer PowerSupplier Power

Internal RivalrySubstitutes

LOW MED - HIGH

LOW

HIGHLOW

Industry Attractiveness New Player LOW

Existing Player HIGH


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11

Automotive clusters in India

Delhi-Gurgaon-Noida-

Ghaziabad

Kolkata

Mumbai-Pune-Nasik

AurangabadAshok Leyland Enfield

Ford Greaves

Hindustan Motors Hyundai

Mahindra & Mahindra Tatra

Toyota Kirloskar TVS Motors

Volvo

Hindustan Motors

Tata Motors

Ashok Leyland Atul Auto

Bajaj Auto Daimler Chrysler

FIAT Force Motors

GM Greaves

Kinetic M & M

Piaggio Premier

Skoda Tata Motors

Ashok Leyland Eicher

Force Motors Hero Honda

Hindustan Motors Honda

Honda SIEL ICML

Kinetic LML

Majestic Maruti Suzuki

Piaggio Yamaha

Swaraj Mazda Tata Motors

North /

Central

West

East

South

Source: SIAM, IMaCS analysis

Jamshedpur

Chennai Bangalore Hosur

Rajkot-Halol

Hyderabad

Ludhiana Haridwar

Pitampur

Major automotive clusters - Mumbai-Pune-Nasik-Aurangabad (West), Chennai -

Bangalore-Hosur (South) and Delhi-Gurgaon-Faridabad (North)


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Competitors in the Commercial

Vehicle Segment

Tata Motors

Eicher

Swaraj Mazda

12


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Strategic Maps

Eicher

LEYTATA

Swaraj Mazda

Distribution Network

TrackRecord


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14

Strategic Maps

Eic

her

LEY

TATA

Range of Products

ResearchandD

evelopment

Swaraj Mazda


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15

Strategic Maps

Eic

her

LEY

TATA

Service Centers and Work Bays

Techno

logy

Swaraj Mazda


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16

KSF

1. Distribution Network2. Track Record Brand Recall

3. Range of Products

4. Technology Innovative designs

5. No. of Service levels - Service Centers andWork-bays for repair and maintenance

6. Research and Development

Threshold KSF

1. Accelerated infrastructure development

2. Compliance of all emission norms.

3. Vendor Base Skill and Quality of Labor


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Weights

Tata

Motors Ashok Leyland Eicher

Swaraj

Mazda

Distribution Network 40% 10 9 7 6.5

Track Record 20% 10 8 7 6

Range of Products 10% 10 8 7 6Technology 10% 9 7 8 6.5

Service Levels 15% 9.5 6.5 5 5

Research and Development 5% 9.5 7 8 7

Total Score 100% 58 45.5 42 37

Present Market Share 62% 27% 7% 3%

Weighted Score 9.8 8.025 6.85 6.15

17

KSF Matrix


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Competencies

1. Continuous Value engineering culture through Customer

Centric Approach

2. Supply Chain Management through E-sourcing

3. R&D driven 1.5% of total turnover spent on R&D

4. Hub and Spoke Model

5. Brand6. Technical Center to train and equip with technical

knowledge to drive innovation.

7. Strategic acquisitions

8. Continuous enhanced infrastructural capacity

9. Constant employee enrichment through learning centers Empowering each employee through knowledge

and technical expertise

Industry - Academic Institute partnerships


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Limited distribution

restricted to south of India.

In-competencies

Competencies

Peripheral

Strategic

Distinctive

Threshold

Competitive Adv.

Sustainable Comp. Adv.

Resources

Global Sourcing E

sourcing

- Strategic Acquisition

- Enhanced infrastructural

capacity.

- Hub and Spoke model- Research and

Development driven

- Empowering culture- Value engineering and

customer centric culture

Competitive Advantage Model


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Value Proposition

20

- Distribution Network

- Track Record

- Range of Products

- Technology

- Service levels

- R&D

- Value engineering culture through

Customer Centric Approach

- Supply Chain Management throughE-sourcing.

- R&D driven

- Hub and Spoke Model

- Brand

- Technical Centers

- Strategic acquisitions

- Continuous enhanced infrastructural

capacity.

- Constant employee enrichment

through learning centers

Ashok Leyland will deliver throughout India, most modern range of

vehicles that are technically advanced and aesthetically designed.

Ashok Leyland will continuously seek improvement through

empowerment of employees and well distributed service centers -all adding value to the shareholders.


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SWOT

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Opportunity1.Improving GDP

2.Improving infrastructure3.Global Market

Threats1.Opening of the Indian

Market2.Spoilage of Brand Image

3.Price Wars

Strengths1.Well established for more

than 50 years

2.Big customer base

3.New technical centers

4.E-sourcing

S OLeverage on years of

experience and big customer

base to bring out new range of

cost effective and technically

advanced vehicles

S WConcentrate on marketing

to create a distinct

positioning while meeting

customer demand and

improving market share.

Weakness

1.Poor Brand Image in

comparison to TATA

2.Lack of established service

center throughout the

geography.

3.Less range of products

W O

Increase the number of service

stations throughout India.

Acquire companies and

implement changes. Improve

product image and service

levels.

W T

Full focus on marketing

through advertisements.

Increase product range

providing higher options

to customers


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Recommendations

22

1. Successful mergers and tie-ups with technology majors.

Improve Fuel efficiency and output.

2. Higher Power and Tonnage products to address emerging

market needs.

3. Strengthen in-house R&D

4. Increase in number of service centers and service work baysthroughout India.

5. Improve distribution of Spare parts.

6. Improve degree of product sophistication.

7. Improve Comfort and aesthetics hence improving brand

image.

8. Continued focus on Value engineering to improve margins in

existing products.

9. Improve operational efficiency through global sourcing

10.Improve Brand recall through upfront marketing.


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AL Share Price vs. BSE Index

Daily QASOK .BO [Line], Q.BSESN [Line]4/1/2005 - 4/27/2006 (GMT)[Professional]

A pr May Jun Ju l Aug Sep Oct Nov Dec Jan Feb Mar Apr

PriceINR

22

24

26

28

32

34

36

38

42

44

30

40

PriceINR

6500

7500

8500

9500

10500

11500

7000

8000

9000

10000

11000

QA SOK.BO , C lose(Last Trade), Line4/27/2006 48.10Q.BSESN, C lose(Last Trade), Line4/27/2006 11,858.24

Ashok Leyland - GM - In 2003 Format

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