Short Term Planning

Subject Principles of Management

Course MIM – (Aug 2010 Batch)

Team Members

Sidhesh Mangle

Mahesh Surve

Nilesh Tawade

Nikhil Marne

tnilesh@godrej.com

Agenda

What is short term planning Definition

Objective

Advantages

What is Strategic Plan

How targets are Developed Methodology

Tools usage

How budgets are developed

How budgets are monitored

* What should a plan be?

Planning can be summarized in 3 easy steps: 1. choosing a destination2. Evaluating alternative routes and 3. Deciding the specific course of your plan

* Purpose of a planHelps management to clarify, focus, and research their business's or

project's development and prospects

Provides a considered and logical framework within which a business can develop and pursue business strategies over the next three to five years.

Offers a benchmark against which actual performance can be measured and reviewed.

Mr.Kamalnayan Bajaj established Bajaj Auto in 1945.

In 1950 Bajaj started importing scooters and three wheelers from Piaggio

In 1960, BAL collaborated with Piaggio to manufacture its products in India

As the import policies were in favour of Indian manufacturers , Bajaj enjoyed a high share of seller’s market for 22 continuous years

In 1975, BAL joint ventured with Maharashtra government to establish a manufacturing plant

Company Background Nikhil

2 Wheelers • Pulsar

• Pulsar - 150• Pulsar - 180• Pulsar – 220• Discover• Discover-100• Discover-150• Platina• Platina -100• Platina – 125• Avenger • Avenger - 220

Product Catalog

Passenger Carriers • RE2S• RE 2S CNG• RE2S LPG

Goods Carriers • GC Max Diesel• GC Max CNG• RE600

Challenges for the business In the 3rd Qtr of 2010, Bajaj Automobile was going through a serious competition

A big challenge for business was the R&D department & Engineers have to cope with heavy workload

Employment of further resources is not an option for the management. Therefore, the efficiency of the R&D department must be substantially improved to deliver on time

From the past experience, It has been noticed that the New Products Suffer from higher Failure due to higher cost of production , overheads, marketing & Material cost etc

Mahesh

Objective To increase the product demand and build both volume and market share Improving product quality & Efficiency Keeping costs and prices low Concentrating on 2-wheeler vehicles due to below reasons –

Used for Daily Commutation Inadequate Public Transport facilities Majority are those who are entering workforce from college Need for Personal Transport increased

Sid – Add some Images / Smart

Art

Mahesh

Strategic Plan Research on the products which has more demand in market 5% Raw material cost Reduction initiative New sales & promotion schemes

Target the existing product (Pulsar 150) as per the market demand & Enhance it using below factors

Advance technology Using Minimum resources Minimum efforts to Train the labors Same Assembly line & tools

Restructuring program Identify the resource utilization across different divisions or functional

teams & use them appropriately

Corporate rules - Headcount must not be increased by 2%.

Cutting down un-necessary costs across all departments

Sid – Add some Images / Smart

Art

Mahesh

Engine Existing Bike - Pulsar 150 Proposed Bike - Pulsar 135

EngineSingle Cylinder, air cooled, four stroke Single Cylinder, air cooled, four stroke

Displacement 149cc 134.66ccPower 15.06 bhp @ 9000 rpm 13.5 bhp @ 9000 rpmTorque 1.3 kgm @ 6500 rmp 1.16 kgm @ 7500 rmpGearbox 5-speed : 1- down, 4-up 5-speed : 1- down, 4-upFront Brake 240mm disc 240mm discRear Brake 130mm drum 130mm drumWheels 6 spoke alloy 5-spoke alloyFuel tank capacity 15 litres 8 litresGround Clearance 165mm 170mmPrice Ex-showroom Rs. 60k Rs. 51k

Target Pulsar 150 to Enhance

Mahesh

Market Survey - Applying Feedback Analysis

Analyze customer's feedback to understand the requirement for 2 wheeler as per

Income group Customer age group Historic Sales Product Positioning Product Price

Targeting Methodology

Sid – Add some Images / Smart

Art

Sid

Targeting MethodologyIncome Group Analysis

Annual Income % Users

<1.5 58

<3 27

<4.5 10

<6 3

>7 2

Age - Group Analysis

Sid – Add Notes

Sid

Historic Sales - Competitor Analysis

Targeting MethodologySid

Product Life Cycle Stages

Product development

Introduction

Growth

Maturity

Decline

Sid – PDLC Chart of Pulsar 150,160, 135 +

Notes

Raw Material - Spend Analysis 2009-10

Eng

ine

Kit

Met

al C

ompo

nent

s

Gea

r B

ox K

it

Ele

ctro

nics

Ite

ms

Ele

ctric

al I

tem

s

Ligh

ting

Sys

tem

Tub

e C

ompo

nent

s

Pla

stic

Com

pone

nts

PU

Cus

hion

s

Leat

her

Sea

ts

Har

dwar

e It

ems

Mec

hani

sms

Pac

king

Mat

eria

l

Rub

ber

Com

pone

nts

0

200

400

600

800

1000

1200

975

750650

420 375 345 324220

140 95 85 70 45 30

Item Group

Pu

rch

as

e

va

lue

0

9-1

0

(cr)

65%

25%Conversion Cost

Material Cost

5%Transport & Packing Cost

25%

60%

5% 5% RM Cost Reduction Initiative

Co

st E

lem

en

ts

Renegotiation with existing vendor Global Sourcing Bulk Buying Alternate Vendors Subcontracting Tracking Trends Of Major Raw

Material Establish Best RM Benchmarks

Projection For “Q4”- (2010-11) Based On Previous Sales

Category(Sales Lacs)

2006-07 2007-08 2008-20092010-11

Projected Actual till Q3 Targeted for Q4

Pulsar 2 3.8 6 10 6 4

Discover 1.1 1.9 3 5 3 2

Platina 0.85 1.5 2.4 4 2.2 1.8

Avenger 0.2 0.35 0.7 1 0.6 0.4

Avenger

135 150 180 100 150 100 125 220

SP In (Rs) Till Q3 55000 62000 68000 48000 52000 44000 48000 82000

3% Discounted SP For Q4 (Rs) 53350 60140 65960 46560 50440 42680 46560 79540

Pulsar PlatinaDiscover

Model

Sales Initiatives: Sales target is not achieved till Q3 end, product discount of 3% to be given across all models. New sales & promotion schemes on Group Booking. This discounted price will be covered through 5% RM Cost Reduction initiative. Also discounted sales price will lead to increased sales volume which will help to achieve target sales.

Selling Price for in Q4 will be as follows:

Financial Projections:

Val (Cr) % Val (Cr) % Val (Cr) %

Sales 5600 0 8700 0 11400

Material Cost 3,360 60% 4,524 52% 6,270 55%

Value Added 168 3% 435 5% 456 4%

Manpower Labour 112 2% 435 5% 627 6%

Manpower Management 56 1% 174 2% 182 2%

Total Manpower 168 3% 609 7% 912 8%

One time cost 280 5% 261 3% 143 1%

Other Mnf Cost 56 1% 131 2% 114 1%

Mrktg Cost 112 2% 218 3% 336 3%

Total Other Costs 56 1% 109 1% 131 1%

Contribution 280 5% 522 6% 114 1%

I nterest 112 2% 218 3% 314 3%

Overheads 112 2% 218 3% 342 3%

Profit 896 16% 1,457 17% 2,269 20%

2008- 09 2009- 10 2010- 11Budget 2010- 11

Sales Target for FY 2010-11 - Rs.11400 Cr with business growth of around 24% Estimated Profit – Rs.2269 Cr (20% of annual sales)

Budget – Realistic estimate of gains & expenses done for specific period with help of historical data.

__________________________________________________________

Develop Monthly Reports

Review with Team Meeting with Functional Manager

Continue Monitoring

How Budgets are Monitored

Nilesh to Update – Add Some Notes/ Comments

Reporting Templates

Screenshots______________________________________________________________

Thank you…..