Lahore School of Economics

Business Policy
Bajaj Auto Limited



Submitted to
Professor Fareedy


Submitted by
Faizan Khalid
12P00015



MBA II-Section III
Case Facts
Bajaj auto, the market leader in motorized two wheeler vehicle in India, dominated the
market right since its inception.
The sales of two wheeler vehicles are much above the competitors. Its market share is
slipping away fast and its growth rate has dwindled down as compare to its own past.
Bajaj auto were in the business of trading since 1945 but enter in the business of
manufacturing after 1960 (started manufacturing scooters).
There were only two competitors of two wheeler vehicles in India that time; Enfield and
Lambretta.
Company got 1
st
license of manufacturing 48,000 scooters and started manufacturing
scooters with the name of Vespa at Akurdi near Pune.
In March 1971 , its technical collaboration with Piaggo ended and the company decided
to go it alone in scooter segment
In 1971, Bajaj introduced three wheelers for which models were developed through in
house R&D. During early 1980s the government liberisesd the market and new
competitors came in and Bajaj also made alliance with Kawasaki Japan
Two wheeler market may be grouped into 3 segments; scooters, motorcycles and moped.
Possible Problems
1. Poor Expansion strategy of Bajaj
Bajaj only has plant in Pune. Despite of claiming itself a largest manufacturing of two and three
wheeler, Bajaj autos did not expand its business. The market of India is extremely huge and
Bajaj had the competitive edge in terms of manufacturing low cost bikes. Bajaj could have
stretch its manufacturing facilities, improve its technology, as it is only doing in house R&D,
outsourcing R&D can result improve technological advancement and better product design
and hence getting a differentiated product.
2. Emphasize on the three wheeler market and ignoring the change in market
dynamics and inability to forecast (status quo)
What is the point of investing in the product which is least lucrative in future? Bajaj did not
anticipate that the market is changing and so are the consumer needs for the motorbike
products.
3. Lack of collaboration with the big guns
4. Inefficient utilizing of resources
Bajaj could have collaborated with the competitors suppliers to have an intelligent idea of
what products and parts they are making and on a benchmark of products and parts quality
where they actually stand. Bajaj had operating profit of more than 500 Million. The cash seems
to be tied up because of inefficiencies in the system and lack of initiative to improve with
respect to the changing markets,
5. Poor Positioning strategy
Recommendation
Bajaj should immediately use its cash, improve its current product design with respect to
the consumer needs (MR). Have technological efficiency by outsourcing R&D, and make
expand its manufacturing plants to produce more and produce well and opt a
differentiation strategy along with cost leadership.