Facts about TI:

TI dominated Indian market almost two decades ago. Their best quality and
durability bicycles were BSA and Hercules.

They maintained market leadership for 30 years based on its value creation
strategy and organization process.

They were in a joint venture with the TI of UK and therefore viewed cycles
as they viewed in UK.

TI produced high quality elegant bikes based on drawings and design from
UK.

They adopted a vertical integration policy because they were confronting a

poor infrastructure and lack of quality supplier.

Their colonial mindset created a very formal and hierarchial organization

dominated by manufacturing rather then customer orientation.

Bureaucratic values reflected the organization.

Facts about Hero:

Started as a small cycle producer in Ludhiana and became the largest in the
world.

They develop their product to meet specific Indian needs.

The cycle is designed keeping in mind that it should carry two people, heavy
load and should be manufactured at the lowest possible cost.

Hero Cycles outsourced most of the components and focused on creating a

highly efficient assembly operation in-house.

Hero Cycles—created the local component supplier infrastructure by

inducing friends and family to set up ancillary units, often supporting them
with both funds and technical assistance.
Answer 1.) As stated in the facts above, it is clear that TI had a very
bureaucratic approach in its organization. From process to the people,
everything had a very strict organizational value instilled in them.

As they were working in a joint venture with the TI at UK, so they followed
the same work practice as in UK. They even developed their product
according to the demand at the UK market i.e. best quality and elegant
bicycle.

This strategy, based on producing high-quality bicycles on the strength of

vertical integration, was implemented through a set of organizational values
and people processes that were also shaped by the British expatriates. Their
colonial mindset created a relatively formal and hierarchical organization
dominated by a manufacturing rather than customer orientation. TI adopted a
policy of vertical integration.

Answer 2.) TI produced cycles based on the drawings and designs from UK
where as Hero produced its cycles based on the specific demand of the
Indian market.

TI adapted the vertical integration policy where as Hero Cycles—created the

local component supplier infrastructure by inducing friends and family to set
up ancillary units, often supporting them with both funds and technical
assistance.

Much before the concept of just-in-time production became famous; the

Hero group adopted the system, leading to extremely low costs which
allowed them to undercut TI’s prices by over Rs. 1.50 even for the cheapest
models.

TI’s model were very elegant like BSA and Hercules which were considered
as leisure bike’s on the other hand Hero’s model helped the farmers of
Punjab to carry heavy load of vegetables to the village.
Answer 3.) As accordance with the case study, it is evident that keeping your
guard up while entering a foreign market is a must. Planning for the future
should definitely include measures to overcome threats from the competitor.
Here Hero became the world leader from right under the nose of TI which
was a result of sheer negligence.

Hero understood the requirement of the market and designed its product
accordingly on the other hand even TI designed its product according to the
market demand but then they failed to recognize the market demand of the
Indian market.

The tight coupling of value creation logic, organizing principles and people
processes had made TI blind to the competitive threat posed by Hero Cycles.