Murugappa group head quarter- Chennai employees- 28,000 No.

of registered companies- 29 diverse areas of business- eng, finance, insurance, cycle, sugar, farms, plantations, bio-products, nutraceuticals

TI cycles India

TI cycle part if Tube Investment of India business of 7300 crore nd largest mfg of bicycles 2 top brands- BSA, Hercules no.of stores till today- 12 certified with- ISO 9001:2000 and ISO 14001

Vision No one should lose business with whom you do business, so the company will be successful

Mission Ethical norms in dealing with all the stakeholders Provide value of money to customers through quality and services Treat employees with respect; provide opportunity to learn innovativeness and creativity in business.

Competitors of TI Cycles

Interpretation. The market share of TI s not significant in terms of its competitors which must be improved through market and product development. It should exploit the market in special category and standard category.

Core Competencies. Murugappa Familys experience, knowledge, values, decision making and strong financial support has played important role in the success of TI over a long time period; they came to rescue the company when ever the company needed the guidance and support.

SWOT Analysis

Strengths: Strong Financial Support from group Brand name awareness Most cycle enthusiasts know the TI name. TI is known as a high-performance leader in the bicycle industry. Good relationships with customers/dealers. Research and Development capabilities: TI R&D department keeps them up to date with the latest technologies involving manufacturing of bicycles.

Weaknesses: Accuracy of future analysis. Lack of established manufacturing capabilities. No products offering in motorcycle category. Lack of global operations. No new market tapping.(North)

Opportunities: Internet/Mobile introduces new avenues to customer. This can save costs of dealerships. New markets in India and around the world Entry into the lower cost bicycle market may add to market share. Entry into market where Bicycles are the substitute product.

Threats: The popularity of less expensive substitute products (Scooty) More competitors entering the market.(China,Tiawan) Shift of demand for higher priced to lower priced bicycles. Unsure trends in the bicycle industry.

Value Chain Analysis of TI Cycles

SUPPORT ACTIVITIES

Firm Infrastructure. Dedicated management team Home-grown Financial Support Formal Planning and Execution Procurement All necessary inputs provided by one location shop floor only few input are imported.

Human Resource Management

Unionised Competitive Pay structure Fringe benefits Divisional Monitoring

Technology a) Indigenous Technical system and facilities b) Appropriate R&D c) Total Quality management

PRIMARY ACTIVITIES Inbounds. Frames, Forks, Mudgaurds, Rims, Tubes, Tyres Operations. Manufacturing of Metal tubes, assembling of parts by charge brazing and welding. Out Bound. Complete Knocked Down kits to dealers in small quantities in cases.

Marketing/Sales. a) Well knitted dealers network and sub-dealers. b) Sales cum services showrooms c) Effective advertisement and sales promotion through celebrities organizing events. Services. Cyclinics Services and Spare parts available at show rooms

Five Force Model Application

Rival.

TI is facing stiff competition from the rival companies 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.

New Entrants

Over all the industry is growing so there is strong threat of new players particularly form China, Indonesia and Taiwan with low priced cycles. It is also weak because access to distribution channels is difficult and strict regulatory control of the Government.

Substitute TI is facing a considerable threat of substitute because close substitute of cycles Scooty which is offered by Hero but switching cost is high.

Supplier TI is 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.

Buyers 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

Future Strategic Options

Market Development

The TI should consider following future strategies for the market development. Northern markets should be focused for broadening sales. Offering cycles to Indian Postal Services. Offering cycles and tricycles to Ice Cream vendors, Home delivery services restaurants, Tea Companies and Soft Drink Companies. Offer cycles to courier companies. 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 purpose built cycle with wide carrier for lunch providers in the urban areas. Purpose built cycles for house wives with added carriers.

Recommendations 1. TI should focus on redeveloping its bicycle manufacturing. 2. Include lower cost segment of bicycles. Create another brand of bikes. These bikes will be of the lower cost variety. 3. Outsource manufacturing of lower cost products to different countries. 4. Change distribution strategy to include major retailers. Lower cost line can be sold in these stores. 5. Include sales over the Internet.

Overall, there is great room for improvement on TIs position. Although the threats to TI are large, the company has opportunity that it is not currently taking advantage of favourable environment. Although the situation is not attractive, with the right change in strategy, TI can have a brighter future.