About Eicher Motors

Eicher Motors, was founded in 1982 to manufacture a range of reliable, fuel-efficient

commercial vehicles of contemporary technology. The unit manufactures and
markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5-25
tons.

Today, Eicher Motors is one of the leading manufacturer of commercial vehicles in

India with a 33% market share in the 7T-11T segment. The success and growth of
this unit is a result of various customer-driven strategies. The manufacturing facility
is situated in Central India Pithampur, Madhya Pradesh. Eicher Motors has stepped
into the Heavy Commercial Vehicle segment with its state-of-the-art HCV, the
"Eicher 20.16", the first commercial vehicle designed and developed indigenously.

Eicher Motors functions through a strong three-tier service network consisting of

authorised distributors, service centres and company trained private mechanics.
The vehicles are sold and serviced through a network of over 576 Authorized
Contact Points all over India, supported by service centres and over 4500 company
trained private mechanics, who are close at hand on all major highways throughout
India to provide initial "first aid" to the vehicles if required.

In 1986, Eicher Motors entered into a technical and financial collaboration with
Mitsubishi Motor Corporation of Japan to manufacture the Canter range of vehicles.
The technical assistance agreement with Mitsubishi ended in March 94 after
successful transfer of technology and on achieving total indigenisation with only a
few parts sourced globally.

Eicher Motors has acquired formidable expertise in designing and developing

commercial vehicles. It has a world-class R&D centre manned by a team of brilliant
engineers and equipped with latest Computer Aided Design (CAD) and Computer
Aided Engineering facilities like NASTRAN, FEM analysis packages. Leveraging its in-
house expertise, this unit has successfully developed a wide range of commercial
vehicles to meet varying customer needs. The product range includes Trucks :
Eicher 10.50, Eicher 10.75, Eicher 10.90, Eicher 11.10, Eicher 20.16 & 30.25; Buses:
Eicher Skyline, Eicher Cruiser and Eicher School Bus range of buses. Besides the
basic models, it offers over 85 models of ready-to-use custom-built vehicles for
various specialised applications. Eicher Motors products have been well accepted in
the market. This is also demonstrated by significant sales of its commercial vehicles
in export markets where the company competes with reputed international brands.
 SALES MANAGMENT

I. Sales Organisation

On a broader level Sales Organisation for Eicher is structured (in order of

reporting) as following:

In Parallel the marketing team has Product managers responsible for

different products of the company.

In the sales organization some of the key structural points are as following:

Territory Manager and Area managers for different products might be

different also. For example Eicher makes 3 kinds of product lines
o Light Trucks
o Heavy Trucks &
o Buses
So territory manager and Area managers will be different for each of
these 3 products. But Regional manager will be same and All India
sales head will be same.

Besides the above mentioned structure there are support staff also
which handle the following work areas
o After Sales
 o Repairs

II. Territory Allocation

Following are the steps of how EML defines its territories:
III. Compensation Structure

Compensation ranges for various position in EML are as broadly as following:

 Territory Manager 7-8 lacs per annum.
Area Manager 12-15 lacs per annum
Regional Manager - 20 -25 lacs per annum
All India Sales Head 30-40 lacs per annum
Then there are bands for salary decisions. For example employees who
are senior but not MBA have higher salaries because of their overall
experience.

Structure
Variable salary is 10%
Rest all is fixed
Basic salary is very less only 10%. Rest all is a flexi structure where in
you can declare the balance salary under various heads to save tax.
But note that this flexi salary is fixed only and it is called flexi because
it is reimbursed by employees as payment against various heads.
Then there are incentive plans which are variable and linked to
performance.

IV. Performance Evaluation System

Overview
Introduced in 1977 and Reviewed in 1979, 1981,1984, 1986 & 1991
Executives :
o Reviewed by Career Development Groups (CDG)
o Under Annual Development Review (ADR) Process
o At the beginning of the year target / KRAs (Key Result Areas) are
set
Features of Present Appraisal System for Executives :
o Customer Orientation
Expectations of internal & external Customers
Review will be based on on the job and off the job
development requirement.
It is measured whether an employee has achieved their
annual targets or not. This is a performance based
evaluation and it is about 10% of salary.
 o Emphasis on Potential development
Acceptances of more responsibilities
Individual Potentiality
Following 6 Points Rating Factors are used for evaluation of Non-
Executives:
1. Sincerity and willing to work
2. Intelligence and Grasping power
3. Knowledge
4. Presentation & Clarity of expression
5. Dynamism, Association, Attendance & Initiative
6. Discipline

Based on the above factors an employees performance can fall into 3 levels:
o Level1: Meeting the KRA
o Level2: More than what was defined in the KRA
o Level3: Extraordinary performance entitling to promotions,
bonuses and pay hikes.
(If an employee fails to reach Level1 then the rating is 0 and no
hike is given.)

Competency Measurement: Every role and position in EML has a set

defined level of competency. Here again there are levels defined of how one
exhibits competencies in comparison to the expected competency for that
position. Those who exhibit higher competencies are given a monthly bonus
ranging from 5K to 15K.

Assessment Centre:
EML started this in 1984 to undertake promoting staff to executive positions
V. Training and Development
EML conducts both internal and external training programs for its employees.
Following are the various types of training that are available to EML
employees:
Behavioral Training - for all level
 Functional Training - for all level
Potential Related Training - for all level
Multi-Skill Training - workmen & Jr. staff
Training for Dealers - to deal with customers
Training Schools - Skill development
International Exposure - Sr. Level Executives to establish TQM
Following data shows the feedback of EML employees for the
trainings they receive:

100
90 90 92
88 Received any
90 Training at Eicher
81
80 76
70 Individual needs
70
58
60 Organisation's
50 50 48 perception as
50 44 Individual need
39
40 Organisational
Need
30 23

20

10

0
Workers Jr.Staff Sr. Staff Executives
VI. Recruitment and Induction
EML does not hire; but VE Commercial Vehicles and Royal Enfield are
employers. They offer exciting career opportunities in manufacturing,
materials, product development, marketing, legal and taxation,
administration, internal audit, IT, personnel, quality control and assurance for
entry level and experienced candidates.

At Eicher Motors Ltd. Recruitment is done via two methods

1. Lateral Recruitment where experienced people from the Auto Industry
they come.
2. In sales fresher are hired who are Engineer & MBAs. The positions are
generally filled by conducting campus recruitment drives across India -
in management and engineering colleges. Engineers are hired as
graduate engineer trainees. During a nine month long training
program, candidates are given on the job training and after successful
completion; the candidate is inducted in the company as an employee

Induction process is not very elaborate

Management graduates are hired as management trainees and put
through a customised induction program.
During the training phase, which typically lasts for six months, a
candidate is put through various business units in order to understand
Eicher's various business processes.
 CHANNEL MANAGMENT

I. Channel Environment & Strategy

Channel environment at EML is exclusive owing to the fact that dealerships
are also exclusive; meaning that a channel will sell only EML vehicle and that
too of a category, for example, a channel will sell only trucks made my EML.
So it is a dedicated channel much like cars. As a result there is no conflict of
interest because the dealer is selling only vehicles of Eicher.
The challenge is to find a dealer who is willing to be a part of such
an exclusive channel. Exclusivity is also a barrier considering not
many dealers would want to commit to just one company/channel.
Secondly it involves a heavy capital investment.

II. Channel Structure & Design

EML has three types of channel structure:
1. 3-S structure

2. 2-S Channel
 The 2-S channel is used if there is a very big territory and adequate no. of
vehicles are not sold but vehicles are supplied in those areas then only
service and spare is required (The dealer is not authorized to sell).
3. 1-S Channel These are retailers who sell spares only.

While selecting channel members following characteristics are considered by

EML:
Years in business
Size of dealer
Growth and profit record
Cooperativeness and reputation
Location
Note: These are ideal parameters but EML does not strictly go by these

III. Managing the channel members and conflict

Conflict is normal among channels as each member of the channel has a
specific goal that is generally unique from the channel member preceding or
following it. The goal of the manufacturer is different than the goal of the
distributor/retailer. Resources are generally money and each channel
member is trying to maximize their efficiency and many times that means
reducing costs for the individual channel member even if that means
increased cost for other channel members.
At EML there are mainly 2-3 types of conflict that happen between channel
members.
One is on discount part and is normally taken care by penalties.
Then there are territory infringement leading to conflicts. These are
again handled via penalties.
The penalties can be monitory and sometimes warning is enough also.
The company strict decisions in case of conflicts like territory
infringement. For discount related conflicts it is difficult to be very
strict as those are not easy to prove.
Some other management principles used to resolve conflicts are as
following:
o Diplomacy
o Mediation
o Arbitration
o Managing and motivating channel members
o Partner relationship management (PRM) for long-term
partnerships
o Software available to coordinate members
o Check channel performance of:
Sales
Customer delivery
Promotion and training
Customer service

IV. Evaluation of Channel Members

EML maintains dealer scorecard. It has different types of head like market
share target, sales target etc. Then there are sales dealer audit scores. These
scores are sent on a regular basis from by Area offices and are finally
compared on national level.
Then there are Gallop survey scores.
Gallop is an international organisation which helps companies conduct
customer engagement surveys. So such surveys are run and numbers
are awarded based on the survey results obtained. These are
conducted every year.
Second type of survey is Dealer engagement survey which measures
how much are the dealers engaged to EML.

All these score lead to a final balance scorecard which is used for final
evaluation. All these results are than tallied on all India level and annual
rewards are also given out to top performers.

Problem with Channel Management:

The biggest problem with EML channel management was at the time of
selecting a channel member. EML really lacks lot of big dealers who
have good amount of money (and this kind of business does require
heavy capital investment and is a long term business from returns
point of view).
EML has lot of small dealers, in the sense that they dont have much
money. So in that way the channel selection is pretty weak or poor at
EML. They would make anyone a dealer and their criterias were not
too high for the selection.
Tata being the number one attracts most of the dealers and no one
want to be associated with number 2 or 3 player.
To get bigger dealer EML is not a in a position to offer a bigger carrot,
i.e., higher incentives and dealer discounts.
So that resulted in everything Poor channel selection leads to poor
sales. Poor sales lead to poor growth and smaller market share. As
channel is ultimately the last end which interacts with the customer, so
if that is not strong losses are bound to happen.