Strategic Analysis of TVS Motors: Market Position and Growth Plan

This term paper provides a comprehensive strategic analysis of TVS Motors, a prominent player in the Indian two-wheeler industry. It begins with an overview of the global and Indian two-wheeler market, highlighting trends and key players. The paper then delves into the history and operations of TVS Motors, including its focus on quality, TQM, and cost management. It analyzes TVS Motors' mission, vision, and strategies for growth, utilizing frameworks like the BCG matrix and Ansoff model. The analysis covers market penetration, product development, and diversification strategies. Furthermore, the paper discusses the competitive landscape, including Suzuki's view of TVS as a major competitor, and concludes with suggestions for improving service offerings and sales promotion. The study emphasizes the challenges and opportunities facing TVS Motors in a dynamic and competitive market environment.

TERM PAPER
ON
TVS MOTORS
Subject: -
STRATEGIC
MANAGEMENT
SUBMITTED TO:
SUBMITTED BY:

Mr. Manish Rajput
Karan veer Singh
Se
c:-S1902
Ro
ll no:-B41
ACKNOWLEDGEMENT
History of all great works is to witness that no great work
ever done without either the active or the passive support
of a person’s surrounding and one’s close quarters. Thus it
is not hard to conclude how active assistance from seniors
could prohibitively affect the execution of a project .I am
highly thankful to our learned faculty Mr. Manish Rajput for
her active guidance throughout the completion of project.
Last but not the least, I would also want extend my
appreciation to those who could not mentioned here but
here well played their role to inspire the curtain.
Ka
ran veer Singh

Table of content
 INTRODUCTION OF TWO WHEELER INDUSTRY
• Global two wheeler market – 2009-2010
• Two-wheelers Purchase Trend
• Two-wheelers on a roll
 INTRODUCTION OF TV Sundaram Iyengar and Sons Limited (TVSs)
 OPERATIONS REVIEW
• Quality
• TQM
• Cost management
• Going forward-
 Suzuki sees TVS Motor as main competitor
 TVS Motor Company – Mission
 Vision Statement
 TVSM – Strategy for growth
 BCG MATRIX

• Cash cow
• Star
• Question mark
• dog
 ANSOFF MODEL :-
• Market penetration
• Market development
• Product development
• Diversification’
 TOWS ANALYSIS:-
 SUGGESTION
• Service offered by showroom
• competitors
• sales promotion
 BIBLIOGRAPHY:-
INTRODUCTION OF TWO WHEELER INDUSTRY
Automobile is one of the largest industries in global market. Being the leader in product and
process technologies in the manufacturing sector, it has been recognized as one of the drivers of
economic growth. During the last decade, well directed efforts have been made to provide a new
look to the automobile policy for realizing the sector's full potential for the economy. Aggressive
marketing by the auto finance companies have also played a significant role in boosting automobile
demand, especially from the population in the middle income group.
Two-wheeler segment is one of the most important components of the automobile sector that has
undergone significant changes due to shift in policy environment. The two-wheeler industry has
been in existence in the country since 1955. It consists of three segments viz. scooters, motorcycles

and mopeds. In India there are some MNC’s and Indian company dealing in automobile sector. The
main key players who are dealing in this sector are Hero Honda, Bajaj, Yamaha, Honda, and TVS.
Global two wheeler market – 2009-2010
Two-wheelers to remain the preferred option over Cars
– The ownership and maintenance cost of a car is 4 times of a two wheeler
– Two wheelers deliver a superior mileage of 70kmpl as compared to 12kmpl of the cars.
– Mileage is a key factor influencing buying behavior.
Size of the total market: 43 million numbers
Figures in %
42
22
15
25
3
2
9
China India Indonesia Vietnam Thailand USA Brazil Others
Two-wheelers Purchase Trend- Growing working population Increased access to credit and lower interest loans

 Increased consumer embrace of financial products Upward migration of household income levels Fast paced urbanization to rise from 28% to 40% by 2020 Middle class expanding by 30 - 40 million every year
India is on every major global automobile player's roadmap and it isn't hard to see why:
 India is the 2nd largest two-wheeler market in the world,
 4th largest commercial vehicle market in the world
 11th largest passenger car market in the world and is
 Expected to become the 7th largest by 2016.
Two-wheelers on a roll
 The demand drivers for the two-wheeler industry are

 High growth in service sector @ 9%
 Favorable demographics – a young population, rising house-hold incomes, increasing
literacy levels
 Faster introduction of new models
 Increasing replacement demand (from 6 to 3 years)
 Absence of effective public transport.
 Increased availability of low cost retail finance (more than 1500 locations)
The key factors emerging are:-
• Target audience for two-wheelers is huge.
• 140 mn people will be added to the working population in the next 5 years time.

Two-wheelers to remain the preferred option over Cars
– The ownership and maintenance cost of a car is 4 times of a two wheeler
– Two wheelers deliver a superior mileage of 70kmpl as compared to 12kmpl of the cars
– Mileage is a key factor influencing buying behavior.

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Introduction of TV Sundaram Iyengar and Sons Limited (TVSs)
TVS Motors is the second largest company in the two-wheeler industry with a market
share of 16%. Infect, it is the only Indian company without a foreign collaboration in the two-
wheeler industry. When the company opted out of the collaboration with Suzuki in 2002, many
believed that TVS was headed towards extinction. But the company proved the doomsayers wrong
and came out with a very successful `TVS Victor'. TVS Motors Ltd. originally incorporated in
1982 to manufacture two-wheelers in collaboration with Suzuki Motors of Japan, TVS was one of
the leaders in two-wheeler industry.It is the holding company for the TVS Group of companies
engaged in the manufacturing of various automotive components, two wheelers and a few other
industrial products. They are also into the financial services sector. The turnover of the entire group
was close to $2 billion in 2003.
TVS was founded by T. V. Sundaram Iyengar in 1911.It is the
only automotive manufacturer in India to get the prestigious Deming Prize. One of its subsidiaries
Sundaram Clayton was the first company in India to receive the Deming followed by Sundaram
Brake Linings also getting the Deming Prize. This prize is "given to organizations or divisions of
organizations that have achieved distinctive performance improvement through the application of
TQM in a designated year." Sundaram Clayton went on to be awarded the Japan Quality Medal.
Type Private Conglomerate (BSE)
Founded in 1911 by Shri.T V Sundaram Iyengar
Headquarters Chennai, Tamilnadu, India
Key people Mr.Venu Srinivasan Chairman
Products Motorcycles,Mopeds,Ungeared scooters, Automotive
components
Revenue USD 3.2 billion (FY 2009-2010)

TVS Motors:-
TVS Motor Company has its origin in SUndaram Clayton Limited, Moped Division, started in
1980. The factory was started in Hosur, Tamil Nadu in southern India. The first product launched
was a 50 cc moped, which appealed to the masses because of its capability to carry two people. In
the same location, the same promoters started another company in 1984, in collaboration with
Suzuki Motor Corporation of Japan, for the manufacture of 100 cc motorcycles under the brand
name of Ind-Suzuki Motorcycles. Subsequently in the moped division was bought by Ind Suzuki
Motorcycles in 1987 and the company changed its name to TVS Suzuki Ltd. Even though the
company started producing all kinds of two wheelers like mopeds, scooters and motorcycles, the
collaboration with Suzuki continued for the motorcycles only. The collaboration with Suzuki
Motor Corporation ended in 2001 and since then the name of the company changed to TVS Motor
Company. The company now develops all types of two-wheelers through its own in house R&D
facility and manufactures in three locations in India, Hosur in Tamil Nadu, Mysore in Karnataka
and Baddi in Himachal Pradesh. It has recently started a new manufacturing plant in Indonesia to
cater to the South East Asian market. The Chairman and Managing Director of the Company is Mr.
Venu Srinivasan who is the grandson of TV Sundaram Iyengar.
OPERATIONS REVIEW
Quality
The Company has significantly improved the quality performance of all its products through a
systematic task force approach. The fact that the Company came out with Industry first five year
extended warranty program on Star brand is a testimony to its manufacturing quality.
TQM
The Company continues to benefit from 100% participation of employees in TQM activities. The
employees have completed more than 1,200 projects through QC Circles and Cross Functional
Teams. The average number of suggestions implemented per employee was 69 during 2007-08.

Cost management
The Company continues its rigorous focus on costs through an effective deployment system.
Value engineering and aggressive global sourcing projects are being pursued to reduce material
costs and also to partially neutralize input material cost increase.
TPM is practiced in all the plants to ensure significant improvement in productivity and reduction
in manufacturing cost. During 2007-08, the Hosur and Mysore plants were awarded the TPM
excellence certificate by the Japanese Institute of Plant Management (JIPM).
Going forward-
Going forward, the road for TVS appears to be bumpy. Automobile industry is the most
competitive industry with competition on all fronts viz. pricing, innovations, supply chain,
efficiency etc. The situation is further aggravated by rise in raw materials like steel, rubber, plastics
etc, as the company is not able to increase the selling price in proportion, thereby affecting the net
profit growth. This is evident from the fact that though in FY04 sales grew by 4%, operating profit
fell by 1%. Though the raw material prices have cooled off from their peaks, we expect margins to
remain under pressure in near future.
Riding on significant growth in the two-wheeler segment over the years, coupled with strong cash
position and expectation of buoyant economy, two wheeler companies have been planning capacity
expansions. Hero Honda has embarked on a green field expansion plan (initial investment of Rs 2.5
bn). Bajaj Auto (BJAT.BO, news) is expected to increase its capacity by 33% by June 2005.
Similarly Honda Motors and Scooters (SCOO.BO, news) India Ltd, 100% subsidiary of Honda
Motors Japan is expected to double its capacity in FY06. These developments are likely to create a
significant increase in supply of two wheelers, changing the demand supply scenario and thus
putting pressure on margins. As compared to TVS, its competitors are sitting with on a huge pile of
cash. Hero Honda generated close to Rs 9 bn from operations, where as Bajaj Auto generated Rs
15 bn from operation in FY04, thereby are in a better position to execute expansion plans. TVS
generated Rs 2 bn from operations in FY04.

National Council for Applied and Economic Research (NCAER), in its report has projected that the
demand for motorcycles will be almost 10 times of that of the scooters by 2011-12. TVS,
traditionally is considered to be a regional player with a strong hold in Southern region. As per
NCAER report, major demand for Scooters is expected to come from northern region, which will
account for 50% of the total demand. Similarly the major demand for motorcycle is expected to be
from Western region, which will account for 40% of the total demand. Thus it will require
considerable effort on part of the management to significantly improve their presence in these
regions. This may have an adverse impact on profits due to additional expenditure on account of
advertising and publicity.
Suzuki sees TVS Motor as main competitor
SUZUKI MOTOR Corporation (SMC) and Venu Srinivasan-led TVS Group may have parted
company. But the separation seems to be still working on the mind of the erstwhile foreign partner
in the former joint venture TVS Suzuki Ltd. (now TVS Motor).
SMC, which is now entering the Indian two-wheeler segment independently, has sort of identified
TVS Motor as its principal competitor. In a chat with the visiting Indian newspersons at
Hamamatsu in Japan, Shinzo Nakanishi, Managing Director, had on more than one occasion
indicated that their target would be TVS Motor. Suzuki would aim to match the production and
sales of TVS. "Otherwise, there is no meaning for the divorce,'' he asserted.
Suzuki is currently waiting for the `cooling off' period post-separation to end to launch head-on
into the Indian two-wheeler market. The cooling-off period ends in April 2004.
Mr. Nakanishi indicated that the SMC joint venture with Integra Group would go on stream in the
autumn of 2005.While declining to divulge the capacity of the proposed plant, he said the initial
Suzuki investment in the venture would be around $10 million. To a question, he said, the joint
venture would focus on producing products in the growing segments (100cc to 150cc four-stroke
vehicles). Suzuki had picked the plant location in Haryana in view of the fact that Maruti Udyog
had already established a large vendor base around that place.