Bajaj 7 s framework by rakesh

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Bajaj Auto transformation from Independence era to Global age. This journey is evaluated using Mckinsey 7's framework Tool.

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Bajaj 7 s framework by rakesh

  1. 1. 7’S Framework Assessment for Baja Auto<br />
  2. 2. 7’s Framework Model<br />
  3. 3. Bajaj Auto Milestone <br />Economic Liberation<br />
  4. 4. Pre –Liberation Era (1945-1991)<br />1945 - Baja Auto being a early movers in Automobile industry. <br />1966 – Started manufacturing Vespa under license of Piaggio, Italy.<br />1970 Oil crisis – fueled Two wheeler vehicle growth. <br />1976-77, Bajaj produced 1,00,000 vehicles. <br />In this era, Government had a socialistic approach towards development and Bajaj did not face much competition in its initial stages. Automobile sector was under License raj. <br />1977, Bajaj agreement with Piaggio expired; lost 50% export market share due to patent infringement suits filed by Piaggio.<br />1980 Economic reforms initiated.<br />1980 – Japanese and Italian scooter companies began entering Indian Market.<br />Bajaj remain market leader in Pre-Liberation era. <br />1986-87, Bajaj was early mover in Motor Cycle Segment by introducing KB100 under collaboration with Kawasaki , Japan. <br />
  5. 5. Post Liberation Era (1991-2010)<br />Indian Economy opens up for Foreign companies in 1991.<br />License raj was abolished in several sectors including Automobile.<br />TVS Motors (With Suzuki) , Hero Honda joined Bajaj in 2 Wheeler Automobile Market. <br />Automobile market became more vibrant, looking for innovation.<br />Consumer is flooded with information from outside world and became more educated. <br />Bajaj started facing stiff competition from rivals and started loosing market share to <50% <br />Scooter segment started declining and Motor Cycle segment had steady growth from Year 2000 onwards.<br />
  6. 6. 7’S Framework - Strategy<br />1985 onwards Scooter market has declined and Motorcycle market share increased annually by 25%<br />scooter segment has been a shift away from traditional metal bodied models to the sleeker scooterettes.<br />Consumer is now 18-25 years (shift from older age who prefers metal body scooter)<br />R & D began exploring new models and Pulsar get ready for market in 2000.<br />Emission norms changed for Two Wheeler segment in April 2000 leaving two options : 1. catalytic converters 2. produce four-stroke scooters.<br />Sales Tax increased for Scooter and catalyst convertor costing INR 1000 hits scooter profitability due to #5.<br />Diversify into Wind Energy and other areas. <br />‘Distinctly Ahead’ strategy in 2006-2007 means every offering to the customer should be distinctly ahead of the competition.<br />
  7. 7. 7’S Framework - Structure<br />Akurdi and Waluj plant has capacity to produce 1 million vehicles <br />In 2000, Chakan(3rd Plant – Phase I ) commission with 30,000 Vehicles per Annum.<br />In 2000, R & D Expense increased from INR 236 million to 316.2 million accounting 1.10 % of total sales to compete in post liberation era.<br />In April 2005, Rahul Bajaj hands over Managing Director post to Rajiv Bajaj . <br />Motor Cycle segment divided into Entry level, value level and premium level. <br />R&D had unveiled a path-breaking technology called DTSi (Digital Twin Spark Ignition) in 2003-2004.<br />The demerger of Bajaj Auto Ltd - [1] Bajaj Finserv Ltd (BFL) [2] Bajaj Auto Ltd (BAL) [3] Bajaj Holdings and Investment Ltd (BHIL) in May 26, 2008.<br />Bajaj Finserv Ltd (BFL), Bajaj Auto Ltd (BAL), and Bajaj Holdings and Investment Ltd (BHIL)—was completed with the shares listing on May 26, 2008<br />Leader in Sports segment with 31% marketshare out of overall 35% Sports segment in two wheeler.<br />Pantnagar plant (also called as Mother Plant) operational in 2007 to increase manufacturing capacity.<br />
  8. 8. 7’S Framework - System<br />Cost Management by value engineering through better design,<br /><ul><li>planning the right mix between in-house
  9. 9. manufacturing and bought-out parts, and
  10. 10. cutting fixed costs in the plants.</li></ul>Vendor rationalization from 1400 to 200<br />Production Capabilities increased across plants. <br />Total Productive Maintenance (Increased Equipment effectiveness from 67 to 95% in Tool Room)<br />VRS in 2001-2002 opted by 2017 employees. <br />9 FANUC Robots were installed in chakan plant to reduce component rejection.<br />
  11. 11. 7’S Framework – Style & Skills<br />Flattered and more empowered organization structure in 2003-2004.<br />“Role-Goal clarity “ process in 2003-2004 at each management level. <br />a new and rejuvenated Bajaj Auto in 2003-2004 believes in speed and innovation.<br />A 360-degree feedback was done for all senior managers, including the Managing Director in 2005-2006.<br />Speed, Innovation and Perfection (Distinctly Ahead philosophy) in 2006-2007.<br />Average age of research engineer is below 30 years to maintain vibrancy in research. <br />Total Quality Focus<br />All manufacturing facilities were awarded by JIPM (Japan Institute of Plant Maintenance) as winners of the ‘TPM excellence categoryin 2007-2008.<br />A concurrent TPM Kick-off. conducting TPM on such a scale is definitely a first in India, and possibly in the worldin 2007-2008.<br />64 vendors received the ‘Bajaj Quality Award’ in 2007-2008.<br />Whistle Blower Policy in 2009-2010.<br />
  12. 12. 7 ‘ S Framework – Staff (Part 1)<br />Akurdi Plant provides “A world class development / training centre for its employees, vendors and dealers.”<br />Vendors were treated as brother rather than external entity. <br />TPM extended towards vendors to achieve Zero defect and rejection in component.<br />Lowest Attrition ration in R &D across industry. <br />Continuous training and Quality focus has helped Bajaj to increase Vehicles per Person to 266 vehicles per person in 2007.<br />Bajaj performed re-structuring exercise for efficient Management and greater operation empowerment in July 2007.<br />
  13. 13. 7’S Framework - Staff (Part 2)<br />Bajaj Auto Revamped Organizational Structure in 2007<br />
  14. 14. 7’S Framework - Shared Value<br />Education - Undertaken 2 IIT in Pune and Pantnagar in 2009-2010. Running educational institutes from School to Management studies. <br />Health – 225 Bed super specialty Hospital in Aurangabad, A.R.T. Centre for HIV/Aids in Pimpri (considered as best ART centre in India).<br />WomenEmpowerment – Rural Entrepreneur ship under IIMC ladies and Gram Vikas sanstha.<br />SelfReliance – Institute of Gandhian studies and Seva trust. <br />RuralDevelopment – Working with NABARD, RUDSETI and various NGO's to conduct Rural Entrepreneurship Development Programmes (REDP) has resulted in creation of 1,400 Rural Service Outlets (RSO) <br />Environment & NaturalResources - Gram vikas sanstha.<br />
  15. 15. Score Card - Market Share (2009-10)<br />Bajaj Auto No. 1<br />Bajaj Auto No. 2<br />Bajaj Auto No. 1<br />
  16. 16. Scorecard - Market Cap and Sales<br />Bajaj leads Market cap by INR 4502.23 Crores and Hero Honda leads by INR 3939.53 Crores Sales. <br />
  17. 17. Score card – Balance Sheet<br />
  18. 18. Conclusion<br />Bajaj has identified agility needed and has shifted focus from Hard 3’s (Strategy, Structure and System) and extend to Soft 4’S (Style, Skill, Staff and Shared Value).<br />An Independent era company changed its philosophy to keep pace with customer in 21st Century. <br />Steps taken by Bajaj is accepted by Industry and seen in Market Cap (No. 1 in Two Wheeler) against competitor. <br />Global footprint by increasing export to 15% in Year 2010, setup subsidiary in World No 3 Two Wheeler market (Indonesia).<br />Hero Honda still leads the market. However with Honda’s exit from Hero Group may give lead to Bajaj. Bajaj has strong R & D Center and has made good breakthrough in 2 Wheeler technology. <br />Bajaj Auto with new and vibrant management ensures CSR are in-line with founder’s vision and philosophy.<br />2000+ Employees layoffs executed with utmost care and reflects ethical and value based functioning. <br />
  19. 19. References<br />https://www.mckinseyquarterly.com/home.aspx<br />http://en.wikipedia.org/wiki/Bajaj_Auto<br />http://www.fundinguniverse.com/company-histories/Bajaj-Auto-Limited-Company-History.html<br />http://www.indiastudychannel.com/resources/98631-Trends-Economy-Indian-Automotive.aspx<br />http://www.moneycontrol.com/news/business/bajaj-auto-revamps-organisational-structure_290462.html<br />www.bajajauto.com<br />www.herohonda.com<br />http://www.segmenty.com/GenerateNewsStaticJsps/Indonesian_2_wheeler_market_to_reach_10_million_units.html<br />Bajaj Auto Annual reports from 1999 to 2010<br />
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