TI Cycle Of India Ltd Table of Contents Acknowledgments................................................3 Executive Summar………………………………………………………………………………..4 Section NO.1 1)Introduction of Indian Bicycle Industry……………………………………………………….05 2) Trends………………………………..…………………………………………………..…..06 3) Industry Product Scope…………………………………………………..................................07 4) PEST Analysis……………………..……………………………………………..………….08 5) Porters 5 Force analysis……………………………………………………………………….10 6) KSF……………..……………………………………………………………………………19 7) Industry Life Cycle……………………………………………………………………............20 Section No.2 8) corporate Profile…………………………………………………………………………...….21 a) Murugappa Group…………………………………………………………………………………………….……………21 b)Tube Investment of India……………………………………………………………………………………….…….…23 9) TI cycle of India……………………………………………………………………………………………………………………………..27 Shahbaz,Khubaib,Umair Page 1 University Of management & technology
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Sales in the children’s segment, ladies, school and college students were growing at a
speedy pace
Rise of Purchasing Power (Increase in spending power/Income levels)
Demand exists in Special segment
People prefer motor cycle as compare to bicycle as a fast mode of transportation
people prefer public transport system as compare to go on bicycle because of limited
time.
3) Industry products scope:
The bicycle industry can broadly be defined as the industry that is concerned with the bicycles and cycling. It includes bicycle manufacturers, parts or components manufacturers, and accessory manufacturers related to the bicycles. It can also include distributors, retailers, bicycle organizations, bicycle event promoters, and bicycle related service providers. The industry, with the changing environment, also caters to the needs of health, gymnasium and leisure segments.
The size of the Indian bicycle industry stands at US $1.2 billion. The number of units (finished bicycles including all segments) produced is around 12 million, according to an industry source. Of this, the number of units exported annually is about two to three million, which points to a huge demand in the domestic market. According to figures from the Engineering Exports Promotion Council, in 2007-08 India exported bicycles and components worth US $185.42 million. India has seen a tremendous increase in the number of bicycle manufacturers and bicycle exporters in the recent past. Today, the Indian bicycle manufacturing and bicycle spares industry is well accepted and is also widely recognized for its quality standards in international markets.
Most bicycle components, spares and bicycle accessories in India, except for free wheels and single piece bicycle hubs, are manufactured by the Small Scale Sector (SSIs), while the large scale units are permitted to manufacture bicycle frames, chains and rims for captive consumption. The manufacturing and export of complete bicycles falls within the organized sector. The Indian bicycle industry is currently in the midst of making endeavors for enhanced and increased bicycle exports since the scope for export of Indian manufactured bicycles in the international market is significant. As per public reports the present level of exports falls within the range of Rs. 150 crores.6 This includes Bicycles, bicycle spare parts and bicycle accessories.
India produces approximately 10% of the world annual bicycle production, which is estimated at 125 Million units. The annual domestic demand of bicycles in India is approximately 10 million units out of
which around 2.5 million units are a government demand for the various welfare schemes. Exports out of India are largely to Africa and the less developed economies and negligible to western markets.
Major players in the domestic bicycle industry are Hero Cycles, TI, Avon & Atlas with 48%, 27% & 14% & 10% of share of volume respectively. (page# 37 ) Most cycles manufactured & sold in India are in the low price bracket of Rs. 2,500 to Rs. 5,000.
The market for the premium or the lifestyle bikes targeted towards the lifestyle consumer is just about emerging. The definition of high end bikes itself is changing. Earlier the high-end bikes were considered as those selling between Rs. 5,000 to 8,000. However now with global brands moving into the country this definition is also changing with price-points starting from Rs.15,000 to as high as a few lakhs. The demand for these cycles at this stage is very limited but is expected to grow at a frenetic pace in future.
(http://www.avoncycles.com/gents-bicycle.asp)
4) Pest Analysis
Political Factors:
Manufacturers should not increase the prices without prior approval of the government.
Manufacturers are asked to freeze prices of their cycle( without saddles or accessories) at
the level of their F.O.R. It was also suggest that the distributor margin cover commission
agent, sole distributors and the dealers.
Distribution margin did not increase 15% of sale.
All price revisions would be cleared with the government for industry safety.
The cost audit and voluntary control were not applicable to the small scale sector only the
large integrated manufacturers were covered by it.
The sixth Tariff commission recommended that Protection need not be extended beyond
The typically a rural or semi urban consumer depended on the advice of other cyclist. For
example the milkman before buying the cycle looked around the brands used by the other
milkmen.
The fitter mechanics employed by the large dealers and as well as self employed cycle
repair shop men had major influence in decision making of the buyers.
Technological Factors:
Lastly, the technology also plays an important role in the bicycle industry. During the 1980’s and 1990’s much of the growth increase can be attributed to new technologies such as the use of new light weight materials in the frame of bicycles which greatly increased performance. Also shift from Dip Brazing technology to Welding to reduce the overall cost of the production. The technology also results in the customization rather than standardization of the cycles.
In 1960-62 India had the technology maturity to manufacture quality cycle with out
external help.
Now with help of new technology Magnesium frames are used in production of cycles
with reason able price.
In cycle industry carbon fiber as a frame material is used for making cycle.
5) Porter Five Forces Analysis
THE PORTERS 5 FORCES MODEL (TEMPLATE)
BARGAINING POWER OF BUYERS.
Determinants Defining Question Assess the power of
Buyers Circle one of the
following.
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1 = low, 5 = high, or
N/A if it doesn’t apply to
your industry.
Concentration Are buyer fragmented or highly concentrated
(i.e. do a few monopolize the market?) If they
are few and concentrated, then buyer
bargaining power is typically high.
1 2 3 4 5
N/A
Product Cost
versus Total
Purchases
Does your product buyer’s purchase represent a
significant fraction of the buyer’s cost? If so,
buyer bargaining power is typically high.
1 2 3 4 5
N/A
Product
Differentiatio
n
Is the buyer’s product or serve a commodity? Is
there branding critical to success? Is there any
actual versus a perceived difference? If the
product are standard or undifferentiated, buyers
typically have high bargaining power
1 2 3 4 5
N/A
Switching
Costs
Is Switching cost low or high? If buyers face
few switching costs, their bargaining power is
typically high.
1 2 3 4 5
N/A
Backward
Integration
Can they make what you make themselves? Is
there a threat of backward integration? If so the
threat is typically high
1 2 3 4 5
N/A
Impact on
Quality/
Is the product you offer important to the quality
of the buyer’s product or services? If not buyer
1 2 3 4 5
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Performance power is typically high N/A
Buyers
Information
Does the buyer have complete information on
the product he may purchase? If so buyer
power is typically high
1 2 3 4 5
N/A
25/7=3.6
Result:
As the result of the above analysis, it represents that the bargaining power of the buyer is
relatively higher because buyers have low switching cost, low product differentiation and
complete information about the products.
BARGAINING POWER OF SUPPLIERS.
Determinants Defining Question
Assess the power of
suppliers Circle one of
the following.
1 = low, 5 = high, or
N/A if it doesn’t apply
to your industry.
Concentration Are the supplier fragmented or highly
concentrated? (Do a few monopolize the
market)? If an industry is dominated by a
1 2 3 4 5
N/A
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few companies, the suppliers are
typically powerful.
Presences of
Substitute inputs
Are there any substitutes for your
supplier products? If not suppliers are
typically powerful.
1 2 3 4 5
N/A
Importance Relative
to Customer.
Is your industry an important customer
the supplier group? If not suppliers are
typically powerful
1 2 3 4 5
N/A
Impact on Quality/
Performance
Is your supplier product essential to the
quality or performance of your business?
If so suppliers are typically powerful
1 2 3 4 5
N/A
Product
Differentiation
Is the supplier’s product or service a
commodity? Is branding critical for
success? Is there an actual versus a
perceived difference? Suppliers with
differentiated products typically have
more bargaining power then suppliers
selling commodities.
1 2 3 4 5
N/A
Switching Costs How costly is it for you to switch from
suppliers product? If switching costs are
high, suppliers are typically more
powerful.
1 2 3 4 5
N/A
Forward Integration Can the supplier produce the product you
make? Is there a threat of forward
integration? If so, suppliers are typically
1 2 3 4 5
N/A
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powerful 22/7=3.14
Result:
As the result of the above analysis, it represents that the bargaining power of the
suppliers are low because of the presence of substitute, switching cost, product
differentiation is low.
INTENSITY OF RIVALRY
Determinants Defining Question
Assess the power of
Buyers, Circle one of the
following.
1 = low, 5 = high, or N/A
if it doesn’t apply to your
industry.
Industry
growth
How slowly or quickly is the industry
growing? If it is a slow growth industry,
there is likely to be more intense fights
among rivals for market share.
1 2 3 4 5
N/A
Fixed Cost Does your business have a high fixed cost?
If so, rivals will typically be tempted to cut
prices to ensure sales, thus posing a
significant threat
1 2 3 4 5
N/A
Product
Differentiation
Is your product or service a commodity?
Typically the closer the product is to being a
commodity the fiercer the intensity of
1 2 3 4 5
N/A
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rivalry.
Brand Identity Is branding critical for your Rival’s success?
Is there actual vs. perceived difference?
Brand identification by buyer reduces the
threat of rivals.
1 2 3 4 5
N/A
Switching
Costs
How costly is it for your buyer to switch
between providers? Low switching costs
typically increase rivalry. When a customer
can freely switch from one product o
another, companies must struggle to capture
and retain customers.
1 2 3 4 5
N/A
Concentration
and balance
Are there a large number of firms of equal
size and power, all chasing after the same
customer? If so rivalry is typically intense
1 2 3 4 5
N/A
Diversity of
competitors
Are there competitors with different
strategies and frame of reference? When
competitors are diverse it is more difficult to
establish the rules of game, so the threat
from competitors is greater.
1 2 3 4 5
N/A
Exit Barriers Are exit barriers low or high? High exit
barriers make it costly to abandon a product.
E.g. when an organization has specialized
assets that cannot be easily sold off.
1 2 3 4 5
N/A
33/8=4.125
Result:
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As the result of the above analysis, it represents that the intensity of rivalry is high
because the high fixed cost, exit barrier and no product differentiation and market is a
competitive market with a number of companies that lead to a tough competition.
THREAT OF NEW ENTRANTS.
Determinants Defining Question
Assess the power of
Buyers. Circle one of
the following.
1 = low, 5 = high, or
N/A if it doesn’t apply
to your industry.
Economies of
Scale and
experience
Does successful entry require that companies have
significant economies of scale or experience?
Barriers to entry are typically high when an aspiring
company must cut costs in order to compete in a
large-scale and/or experienced market.
1 2 3 4 5
N/A
Product
Differentiation
Do new entrants need to differentiate by spending
heavily on advertising, customer services or product
differences to overcome existing customer loyalty?
Product differentiation is typically a barrier to entry.
1 2 3 4 5
N/A
Brand Identity Do new companies need to spend heavily on brand
identification to gain customers loyalty? Brand
identification is typically a barrier to entry
1 2 3 4 5
N/A
Switching
Costs
Does the buyer have to pay to switch from one
supplier’s product to another? High switching costs
1 2 3 4 5
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are typically a barrier to entry. N/A
Capital
Required
Does the new company need to invest large financial
resources (relative to market size) in order to
compete? Huge capital requirements are typically a
barrier to entry
1 2 3 4 5
N/A
Access to
Distribution
Do the new comers have access to distribution
channel for product or services? Difficult access can
typically be a high barrier to entry.
1 2 3 4 5
N/A
Cost
advantage
Established companies have cost advantages over
new rivals because they may have already obtained
proprietary product technology, access to raw
materials, favorable locations and government
subsidies. In addition, established company may have
passed a learning or experience curve. Such costs
advantages are typically a barrier to entry for a new
entrant.
1 2 3 4 5
N/A
23/7=3.3
Result:
As the result of the above analysis, it represents that the threat of new entrant is low
and barrier to entry is high because access to distribution is very challenging for new
entrant, huge capital is required and switching cost is also low. The existing players in
the industry have cost advantage to the new rivals because they have already production
technology and favorable locations.
THREAT OF SUBSTITUTION:
Determinants Defining Question Assess the power of
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Buyers
Circle one of the
following.
1 = low, 5 = high, or
N/A if it doesn’t apply
to your industry.
Price performance Does the substitute offer a better price or
performance? A substitute product or service
is a threat to competition when it offers a
higher performance at a given price or the
same performance at a lower price.
1 2 3 4 5
N/A
Switching Cost Is it costly for buyer to switch to the
substitute product? When buyers must pay
more to switch to a substitute the threat of
substitutes is low.
1 2 3 4 5
N/A
4/2=2
Result:
As the result of the above analysis, it represents that the threat of substitutes is lower.
Because the price of the substitute is high as compare to cycle. So it is very difficult to
switch on subtitue.Therefore the threat of substitutes is relatively lower.
Interpretations:
BARGAINING POWERE OF BUYERS:
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The Dealers and sub-dealers are compelling to provide the cycles of their choice (Special) which
may cause losing the market for standard cycles. Buyers switching cost is low because of the
availability of Hero, Atlas, Avon and Chinese Cycles in the market. The buyer can switch to the
other brands so the bargaining powers of buyers are high.
BARGAINING POWERE OF SUPPLIERS:
Industry players are not facing sizeable threat from suppliers because the major parts of cycles
are manufactured by them except some of the parts for special cycles are imported from Japan.
INTENSITY OF RIVERLRY
Industry players are facing stiff competition because of number of players Like, Avon, Atlas,
Hero and few foreign competitors. The competition is strong in standard cycles because the
market growth of standard cycles is slow. But it is weak in a sense that market for special cycles
is growing rapidly. Switching cost in special is low so the buyer may shift the demand.
THREAT OF NEW ENTRANTS:
Over all the industry in a mature stage and there is strong threat of new players particularly form
China, Indonesia and Taiwan with low priced cycles. But on the other hand strict regulatory
control of the Government on this industry and access to distribution channels is difficult. So it is
very difficult for the new entrants.
THREAT OF SUBTITUTE:
In cycle industry threat of substitute is low because close substitute of cycles is cycle Scotty and
motor cycle which have high switching cost and high prices.
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6) Key Success Factors:
Product design
In cycle industry survival innovative products designs are compulsory to attract the
customers.
Technological up-gradation
The industry players need to replace their old machinery with latest updated machinery
that does reduce production time and cost of the products.
Research & development
The industry players more focus on the research and development to create innovation in
products. By the innovative products as carbon frame and magnesium frames so they can
compete domestic market as well as the international market.
Product quality
In cycle industry there is a huge competition with local and international players. The
players do more concentrate on quality products and sustain this quality on the basis of
quality standards. Quality depends on good material as steel,frames,tubes etc So this way
they can attract and make loyal to customers with their brand.
Strong distribution network
Companies in bicycle industry must have strong retail and distribution network for
survive in the industry.
Cost competitiveness
Industry players and new comers use new technology and install plants to reduce the
production cost by this they can penetrate in the market and gain more market shares.
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Customer satisfaction & loyalty
Companies offer low cost and high quality cycles with design through this can succeed in
the industry and can make customers loyal with their brands.
Financial capital
The financial capital is necessary to sustain and compete in the industry because huge
investment is required otherwise no one sustain and enter in this industry.
Market shares:
The companies in cycle industry offer low cost and high quality products to customers
focus on rural and urban areas to gain market shares.
Brand Image:
Indian people are brand conscious as given information in the case that people purchase
cycle which are recommended by other person(cyclist, friends).
7) Industry Life cycle:
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Cycle industryIndustry
TI Cycle Of India Ltd
Bicycle industry is a mature industry where competition is very high. Product innovations are
few and incremental. In Indian bicycle industry two core models exist – ‘specials’ and
‘standards.’ While the market has matured in standard model but in growth in special model, the
market of special segment is growing rapidly. The companies target to youth in special segments.
Industry players are introducing new designs and with different material which are frequently
copied by others. Market of standard bicycle is decreasing because people prefer stylish bicycle
as girls and boys. In Indian market material is available at low cot and they are manufacturing
inside of India .In some cases players import material for special bicycle. The drivers of demand
essentially are the rates of growth of income and its distribution.
Section No.2
8) CORPORATE PROFILE
a) MURUGAPPA GROUP
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The Murugappa group, headquartered in Chennai, India, is a $1.5 billion conglomerate with
interest in engineering, abrasives, sanitary ware, fertilizers, finance, bio-products and plantations.
It has 29 companies under its umbrella; eight are listed and actively handed on the national stock
exchange and the Bombay stock exchange. Together, they have over 28,000 employees.
The business has its origins in 1990, when Dew a bahadur AM Murugappa chattier established a
money-lending and banking business in Burma (now Myanmar), which then spread to Malaysia,
Sri Lanka, Indonesia and Vietnam. A century down the line, it has withstood enormous
vicissitudes (including strategically moving its assets bank to India and restarting from scratch in
the 30’s before the Japanese invasion in world war 2) to became one of the country’s biggest
industrial houses. The group turnover crossed the $1 billion mark in 2003-04, with an impressive
growth of 25% Rs. 42,060 million in 2002-03. The group clocked a 40 percent jump in profit
before tax over the previous year. Murugappa Group’s consolidated turnover for 2004-05
crossed %1.44 billion. The group achieved a growth of 20 percent over the previous year.
The group is a market leader in India across a spectrum of products like sanitary ware, fertilizers,
abrasive, automotive chains, car doorframes and steel tubes. Neemzal, a neem - based organic
pesticide, is the country’s best known brands like BSA and Hercules in bicycles, parry ware in
sanitary ware, parry’s spiraling and parry’s Beta carotene in nutraceuticals, ball master and Ajax
in abrasives, Gromor and paramfos in fertilizers, and many more come from the Murugappa
group.
Its companies have tie-up with Borg-warner of the USA, wend of Germany. Morgan Crucibles of
the U.K and Mitsui Sumitomo insurance of Japan. It has registered 43 International patents for
its research and development innovation. The group has grown consistently through its decisive
and visionary response to change times. Its pioneering efforts, steadfast commitment to ethical
business practices and it dogged pursuit of new arras to extend its business acumen have brought
in its wake several prestigious national and international awards.
Social commitment has always been the cornerstone of the group’s ethos and it has been at the
forefront of eco-conservation, public health, and education in the communities where its
companies operate, since 1957. It runs four schools, a polytechnic college and four hospitals.
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Besides, the group runs a research and development center for rural development the sir AMM
Murugappa Chettiar research center (MCRC), which has been a designing simple, cost-effective
technology for local artisans since 1977.
The Murugappa group has 29 companies active in the area of engineering, abrasive, sanitary-
ware, fertilizers, finance, bio-products and plantations. The major companies of the group all:
Carborumdum Universal Limited
Cholamandalam Investment & Finance Company Limited
A subsidiary, tube products of India was set up in 195 in collaboration with tube products (old
bury) Ltd, UK to produce electric resistance welded (ERW), cold drawn welded (CDW) tubes
and draw over mandrel (DOM) tubes. In 1957, tube investments of India started production of
cold-rolled close annealed steel strips, in collaboration with TI, UK, primarily to meet in house
and group requirements.
Through started as a backward integration project for the manufacture of bicycles, today, TPI is a
major preferred supply of precision welded tubes to major automotive companies in India and
abroad. It is the undisputed leader in the Indian market for precision welded ERW & CDW steel
tubes, with the widest variety and range in terms of size as well as material gracles offered. TPI
started operation at Avadi, Chennai, but has expanded with two more plants satirically located in
western and northern India.
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Another subsidiary, TI metal forming, is a pioneer in cold roll forming. It manufacturers and
supplies value- added metal formed components like car door flames, sash/division channels,
door guide rails and bar assembly. It has plant in Chennai and Bawal (near Gurgaon). Both plants
in Chennai and QS 9000 certified. The Chennai plant is ISO 14001 certified.
A third plant has been set up near Baroda (in Gujarat state, Western India) to manufacture and
supply doorframes, impact beam, bar and rail assembly for general motors, India. Its client list
includes Maruti udyog general motors, India.
TIDC India formerly known as TI Diamond chain Ltd, was established in 1960 in collaboration
with the Diamond chain co, USA. Starting as a marker of bicycle industrial chains TIDC produce
from tiller chains, leaf chains and conveyor chain to industrial power drive chains, engineering
class chains, in automotive TIDC produces motorcycle drive chains and engine mechanism chain
and fine blank parts. Annually production runs to 45 million ESS feet, and commands 40 percent
of the domestic market share. The company is known for developing high performance chains,
for specific applications and machinery. Some of TIDC’s popular brands are Diamond and
Xtron, TIDC exports to over 50 countries worldwide.
TII has entered into a joint venture with Borg Warner Morse TEC, USA for production of timing
and silent chains. It has entered into a technology agreement with Tsubakimoto chains company,
Japan, for engineering class chains. Some of TI Diamond chain’s popular brands are Diamond
and Xtron.
Tube Investment group
TI CYCLES OF India
TUBE PRODUCTS OF India
TI METAL FORMING OF India
TI DIAMOND CHAIN LTD
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TII – BUSINESS PORTFOLIO
Business % Turnover
TI Cycle 41%
Engineering 56%
TI Metal Forming 3%
9) TI cycle of India Ltd
TI is a leading player in bicycles segment with 30 percent market share by virtue of its brand
equity, product development capability and proximity to the markets. The company reported a
turnover of RS. 1563.39cror and profit after tax of Rs. 98.55cror in 2004-2005
TI is the second largest- manufacturer of bicycles in India. Marketing top Brands like Hercules,
BSA and Philips, and had a market share of 31 percent in 2003-04. In the value-added special
segment, TI in the leader, with a 50 percent market share. More recently, the company entered
the promising health conscious ‘exercise’ bicycle segment in 2002-03. TI cycles of India, one of
the leading bicycle manufacturers in India, started in 1949, have been at the forefront of
innovation and are a pioneer in the market of cycles. TI cycles are the makes of country’s most
famous brands like Hercules, BSA and Philips cycles. The company’s vision is to be a
worldwide leader in cycling and solution by installing the pride of ownership in the customers”.
Mission:
Ethical norms in dealing with all the stakeholders Provide value of money to customers through quality and services
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Treat employees with respect; provide opportunity to learn innovativeness and creativity in business.
Vision:
TI Cycles’ vision is “To be the most preferred brand in fitness, recreation & personal mobility solutions”. It strives to give its customers not only a bicycle but a lifetime experience.
a) BRANDS Of TI cycle of India Ltd:
Hercules
Hercules the flag ship brand of TI cycles portfolio, this brand of ours is still as young as ever.
Hercules stands for a unique pride of possession-anchored in the time-tested values of heroisne
and integrity, to which the brand’s customers subscribe in their own lives.
BSA
BSA anchor flag ship brand of TI cycles, BSA stands for Birneighani small arms. It signifies the
joy of cycling; fun and comfort go hand in hand with BSA. BSA today is an intrinsic part of the
Indian family with cycles for everyone kids teams and adults.
Phillips
Phillips Cycles Limited was a British bicycle manufacturer based in Smethwick near
Birmingham, England. Its history began early in the 20th century and ended in the 1980s by
which time it had become part of Raleigh Industries, itself a part of the Tube Investments group.
For a number of years, the company was the second-largest bicycle producer in Britain, after
The Ambattur unit began with the assembly of completely knocked down kits imported from the
collaborator. The indigenization of the components began with the commissioning of
components manufacturing units in 1954 at Ambattur itself. The management decided to make
all parts under one roof, as there were no reliable suppliers of parts in and around Madras. The
unit started by producing parts for standard black colored `Hercules’ bicycles. An executive
remarked, “In those days producing parts that fitted to each other was a commendable
engineering effort.”
The key parts were the frame and the fork made from steel tubes. To the frame and fork
assembly were fitted the various parts of the bicycles like tyres, mudguards, handles, brakes and
carriers. Fitting the frame and the fork together was the most critical operation. The technology
used to join the various metal parts was called “dip brazing”. The technology called for dipping
the parts to be joined in a bath of molten brass and allowing the molten metal to enter the gap
between two parts and solidify. This was a very tough and hazardous operation. It led to
wastage by way of excess deposit of brass on the parts. The excess metal was recovered by
dipping the joined parts in zinc acid. This operation released zinc fumes and caused pollution. It
also restricted the shape of the frame to a `triangle’. This technology was changed in 1985 and a
new technology called ‘charge brazing’ was adopted to join the parts. In this technology fine
particles of brass were charged into the cavities of the two parts and heated at high temperature.
This saved the metal but consumed more energy. This technology was replaced by welding. The
parts were welded together using welding rods. Welding created the possibilities of alternative
shapes and facilitated the introduction of luxury and sports bikes.
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The frames and fork assembly was painted in the painting shop. Earlier the parts were dipped in
a paint bath. This was discarded in favour of spray painting in which fine particles of paint were
deposited on the parts by a spray gun.
Outbound logistics
Initially fully assembled bikes were sent to the market. To save the cost of transportation and
improve logistics, the format was changed to sending ready to assemble kits to the dealers. The
components were put in a cardboard box and dispatched to the dealers by truck. The dealers
received the cycles in completely knocked down (CKD) conditions in cases. Each case
contained 5, 6, 10 or 16 cycles. The dealer assembled the cycles before sale. The dealers
assembled the parts into full bikes at their premise. The technicians of the dealers were trained
by the dealer himself.
Marketing and sales
The basic task of marketing department is to market their products to the local and the
international market to their prospectus customers to boost their overall sales. Company marketer
focus to the three segment as employed who use cycle, white collar worker, and the affluent
youth. Through marketing effort BSA SLR models which sold about 300000cycles a years was
good. They have a very strong sales force that is competent and motivated towards achieving the
target. Company extensively advertise in newspaper and sponsor to the sports player and do
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internet marketing and give free gift to its customers for creating customer loyalty.
Services:
They offer after sales services to their customers to better cope with their further demand and
increase their overall revenues. This also helps in customer satisfaction about their product and
customer expectations from the product.
TI cycle of India Ltd give warranty and after sale services to its customers as mention given
below
Everything we make and sell is guaranteed to be free of manufacturer's defects for the time
period specified from the original date of purchase. This warranty applies only to frames and
components that have been subjected to ordinary stresses of use or component type purchased
(mountain, road, cyclocross, track, touring or BMX) and does not apply to frames or components
sold to or used regularly by someone other than the person for whom the frame or component
was built. This warranty does not cover alteration or failure due to accident. Ti Cycles liability
for breach of warranty is limited to repair or replacement of the frame or component at the sole
discretion of Ti Cycles. Ti Cycles disclaims all other express or implied warranties as provided
in this section, including warranties of fitness for a particular purpose. This warranty is extended
to the original owner of the frame or component and is non-transferrable. In all cases, proof of
original purchase is required. Production Components - 1 year. Custom Components - 2 years.
Shahbaz,Khubaib,UmairPage 50
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TI Cycle Of India Ltd
Production Frames - 2 years. Custom Steel Frames - 5 years. Custom Titanium Frames - 10
years.
Value Chain Activity:
Value-chain
Activity
Yes/ no How Does TI cycle of India Create Value For
Customers
Primary:
Inbound
logistics
Yes Mainly once in a year because they purchases in bulk
for cater their yearly demand.
Operations Yes Through traditional and latest automated machinery
& quality control check.
Outbound
logistics
Yes Shipment in large lot to minimize cost and assure
quick delivery.
Marketing &
sales
Yes Focusing on good retailer and customer relationship
to boost the sales
Service Yes Provide warranty and after sale services to its
customers and Emphasize on customer feedback to
improve quality.
Support:
Procurement Yes Buy good quality steel that fits their standards from
selected suppliers
Technology
development
Yes Large emphasize on quality than to quantity
Human
resource
management
Yes Friendly environment with emphasize on quality
work.
General
administration
Yes Effective planning with ability to coordinate and
integrate activities across the system.
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TI Cycle Of India Ltd
Resources, activities and relationships that enable TI to achieve a sustainable competitive
advantage?
Resource/Activity Is it Valuable? Is it Rare? Are there few
substitutes?
Is it difficult to
make?
Inbound logistics Yes No No Yes
Operations Yes No No Yes
Outbound logistics Yes No NO Yes
Marketing & Sales Yes Yes Yes Yes
Service Yes No No Yes
Procurement Yes No Yes Yes
Technology
development
Yes NO yes No
HRM Yes Yes No Yes
General admin. Yes No Yes Yes
Shahbaz,Khubaib,UmairPage 52
University Of management & technology
TI Cycle Of India Ltd
VROI Analysis:
(1 is low and 5 is high)
KSF Value Rare limitability Substitute Competitive
advantage
Brand image 4 4 5 4 17/20=0.85
Technology 5 4 3 4 16/20=0.80
Continuous innovation
5 3 3 4 15/20=0.75
R & D 3 3 3 3 12/20=0.60
Product
quality &
design
4 3 2 2 12/20=0.60
Distribution
network
5 4 4 4 17/20=0.85
Financial
position
5 3 4 5 17/20=0.85
Core Competencies:
Murugappa Family’s has experience, knowledge, values, decision making power. The core
competences and competitive advantage of TI is strong distribution network strong financial
position and good brand image. Also TI has good score in innovation and technology.
TII capabilities:
Expertise in Engineering & Electroplating
Shahbaz,Khubaib,UmairPage 53
University Of management & technology
TI Cycle Of India Ltd
Competencies in Technical Sophistication of the Product
Process Efficiencies
Section No.4
16) McGahan Framework Model BCG Matrix
As per McMahan Framework, TI is not facing serious threat of obsolescence of core assets and
core activities either. So TI falls in Progressive change. And it is cash cow. On the other hand TI
has opportunity to go into auto industry because by using same assets and activities can produce
motor bikes.
Star ?
Cash Cow Dog
Shahbaz,Khubaib,UmairPage 54
University Of management & technology
Core Activities
Cor
e A
sset
s
Threatened Not Threatened
Thr
eat
Radical change Creative change
Not
Intermediating
change
Progressive
change
TI Cycle Of India Ltd
17) Ansoff Model:
Chennai,
March 24,
2011Murugappa Group, announced the launch of India’s first indigenously manufactured carbon frame
bicycle series with the brand name ‘Montra’.Therefore TI is doing product development so it exist in 2nd
quadrant of new products and existing market. TI brands as BSA Hercules and Philips exists in 1 st
quadrant existing product and existing market. TI has opportunity t go into new market as rural market
because they have only stores in urban areas people of rural areas come in cities for purchasing bicycle.
18) Grand strategy matrix:
Rapid Market Growth
Quadrant II Quadrant I
Market development Market development Market penetration Market penetrationProduct development Product development Horizontal integration Forward integration
The specials segment, constitute about 35% of the total cycle market was expected to grow by
more than 20,000 per month and TI Cycles lead this segment with 50 per cent market share
followed by Hero Cycles with 35 per cent and Atlas with 10 per cent.
TI cycle of India has strong competitive position in the market because they have 3.23 score in CPM which is high as compare to its competitors’ so market is growing and TI cycle has strong competitive position so that why TI lies in I quadrant. According to Grand strategy matrix suggested strategies for 1st quadrant are
Market development Market penetration, Product development, Backward integration, Forward integration, Horizontal integration Related diversification
Shahbaz,Khubaib,UmairPage 56
University Of management & technology
TI Cycle Of India Ltd
19) Diversification strategy:
TI investment group consists of TI cycle; Tube products of India Ltd, TI diamond Chain, Miller
and the Saddles of India all of which are manufacturing companies. So TI group is making tubes,
saddles, chains for cycles and motor cycle therefore it is using related diversification strategy by
using the almost same value chain.
20) Integration strategy:
TI is using backward and forward integration strategy. TI is manufacturing cycle parts for itself
for example Tube products of India is making tube for cycle and motor cycle,TI dimond chain
Ltd also is making chains for cycle and motor cycle so TI cycle taking material from its
companies for making cycle.
TI is also using forward integration for example it is distributing products itself through TI M
sales Ltd distribute TI products with branches and district offices all over India
Horizontal strategic alliance:
TI investment group had horizontal strategic alliance with UK companies as TI metal sections
were formed with collaborations with BARHINGAM of Tube Investment ltd UK. The TI miller
ltd was established in 1960 with H Millar & co. of UK. The Wright saddles of India made
collaboration in 1962 with JB Brooks & co ltd UK. So all these alliances were made with related
UK companies that had same business and value chain.
21) Generic Strategy:
Shahbaz,Khubaib,UmairPage 57
University Of management & technology
TI Cycle Of India Ltd
The TI is using “Differentiation Strategy” on the base of quality and price. TI more focuses on
quality and don’t compromise on quality because TI cycle charge high prices from its customers
but on the other hand competitors are using penetrating strategy to capture the market. Hero gain
market shares on the base of penetrating strategy.
Market of standard cycle has declined and special cycle market is growing so this time TI needs
to use low cost strategy for standard cycle by changing its style and design to attract the
customers.
On the other hand TI use same differentiation strategy in special cycle segment because this
market segment is growing TI already has 50% market shares in special cycle segment. TI can
charge high price on the base of quality and different styles.
22)IE Matrix.
The IFE Total Weighted Scores
4.0 3.0 2.0 1.0
Shahbaz,Khubaib,UmairPage 58
University Of management & technology
TI Cycle Of India Ltd
EFE total score
Strategy for different quadrants
Growth and Build (I, II, IV ) Hold and Maintain (III, V, VII ) Harvest or Divest ( VI, VIII, IX )
IFE score 2.9 and EFE score is 2.65 which means that the company comes in 5 st quadrant that is in (III, V, VII) so the company should go for the hold and maintain strategies that are market penetration and product development, market development
23) Selecting Strategy:
Shahbaz,Khubaib,UmairPage 59
University Of management & technology
Strong
(3.0-4.0)
Average
(2.0-2.99)
Weak
(1.0-1.99)
High
3.0-4.0
3.0
I II III
Medium
2.0-2.99
2.0
IV V
TI
VI
Low
1.0-1.99
1.0
VII VIII IX
TI Cycle Of India Ltd
Alternative Strategies
Anita Modle
Ansoff Modle
IE Matrix GRAND Mtrix
TOTAL
Forward Integration
2
Backward Integration
2
Horizontal Integration
2
Market Penetration
4
Market Development
2
Product Development
3
Related Diversification
1
Unrelated Diversification
Retrenchment
Divestiture
Liquidation
Interpretation:
From the above calculation that the highest score in market penetration and product development
which is 4 and 3 so feasible for TI is to concentrate more on penetrating and market development
Shahbaz,Khubaib,UmairPage 60
University Of management & technology
TI Cycle Of India Ltd
strategy. If we see the original condition of the cycle industry that the competitors of TI as hero
and Hind use penetrating strategy by offering low cost concentrate on and product development
so they gain more market shares in current situation now hero is the market leader with 35%
market shares. Therefore TI also focuses on market penetrating strategy by offering low cot
product with good quality. TI has technology to produce low cost bicycles Also concentrate on
product development and introduce new designs, stylish bicycles to tap the market in this way TI
again can become the market leader.
24) Distribution Network of TI cycle of India Ltd
TI has strong distribution network all over the India (1,500 direct dealers under whom there are
over 10,000 indirect outlets across the country. About 600 of these are trained outlets, including
180 exclusive BSA-GO stores and warehouses in more than 12 cities). The company expects that
the number of retail outlets to increase to 700 and exclusive stores to 250 by the end of the next
financial year.
TI has extensive distribution channel and distribute its products through multiple channels as given below
Company (TI) Authorized dealers
Retailers End consumers
Company (TI) Unauthorized dealers
Retailers End consumers
Company (TI) wear house
End consumers
Shahbaz,Khubaib,UmairPage 61
University Of management & technology
TI Cycle Of India Ltd
25) Future Strategic Options
Market Development ( Big opportunity)
The TI should consider following future strategies for the market development.
a) Northern markets should be focused for broadening sales.
b) Offering cycles to Indian Postal Services.
c) Offering cycles and tricycles to Ice Cream vendors, Home delivery services restaurants,
Tea Companies and Soft Drink Companies.
d) Offer cycles to courier companies.
e) Offering cycles for athletes.
Product Development
a) The TI should develop an advanced version of standard cycles for rural area by
adding shock absorbers to carry heavy load with ease.
b) Light and folding cycles should be developed the urban areas to avoid traffic
congestion and parking problems.
a) A purpose built cycle with wide carrier for lunch providers in the urban areas.
b) Purpose built cycles for house wives with added carriers.