Background of the company

TVS Motor Company is the third largest two-wheeler manufacturer in India and one among the
top ten in the world, with annual turnover of more than USD 1.4 billion in 2011-2012, and is the
flagship company of the, USD 7.29 billion, TVS Group.
The business ranges across automobile component manufacturing, components distribution,
manufacturing of powered two-wheelers, computer peripherals, financial services, contract
manufacturing services and software development.

TVS Motor Company Ltd (TVS Motor), member of the TVS group, is the largest company of
the group in terms of size and turnover.
The TVS group has today emerged as India's leading player in the automobile
and automotive components industries. The group has 30 companies employing a work
force of around 40,000 people. TVS Motor Company is the largest among the group
companies in terms of size and turnover.

Today, TVS Motor Company has,
o 4 manufacturing plants (Hosur in Tamilnadu, Mysore in Karnataka, Nalagarh
in Himachal Pradesh India and Karawang - Indonesia)

16% market share in the two-wheeler industry in India
Product offerings in all segments of the two-wheeler industry in India
Product offerings for the three-wheeler industry in India
More than 15 million customers
Products exported to more than 50 countries worldwide

Resilience, can-do attitude, indomitable spirit to continuously better industry norms, doing
business with a human touch and putting customers at the forefront are some of the salient
features that best define Team TVS. The Company has been a
competitive player, constantly challenging industry standards and creating revolutionary
innovations. Take for example the many firsts that the Company has been credited with,
such as the deployment of a catalytic converter in a 100 cc motorcycle or even the first four
stroke 150cc motorcycle; both premiered from TVS Motor Company. Also, there is the
Apache, which in 2006 became the first Indian motorcycle to win six prestigious awards in a
row and that too, immediately on being launched.

TVS Motor Company is committed to achieve total customer
satisfaction through excellence in quality, its management philosophy being based on five
pillars of TQM (Total Quality Management)-Management Commitment, Customer focus,
Quality Costs, Quality Systems and Continuous Improvement.

TVS Motor Company has international presence in more than 50 countries in Asian, African
and Latin American Continents and will enter more international markets in due course. In
India, the company functions through a strong network of sales, service, authorised service
centers and other certified service points



1(a) PORTERS 5 FORCES ANALYSIS
Porters five forces Model of Competition are as follows:
Rivalry among competing sellers
Potential new entrants
Substitute products
Competitive pressures from supplier - seller relations: Bargaining power
Competitive pressures from seller buyer relations: Bargaining power.

Rivalry: The key players in two-wheeler industries are Hero Honda motor ltd. (HHML), Bajaj
Auto ltd and TVS motor Company ltd. The other players are Kinetic, Lml, Yamaha, Majestic
auto ltd, Royal Enfield ltd and Honda motorcycle & scooter India. Two-wheelers domestic
market growth rate for 2008-09 is 76.49% which is very high when compared to that of three
wheelers, Passenger and commercial vehicles. The standardized product used in manufacturing
of two-wheelers is steel, aluminum and rubber, because there are many industries in India for
manufacturing those standardized product the production is going smooth. Sales of two-
wheelers are very high when compared to that of three wheelers, Passenger and commercial
vehicles. Indian Auto policy 2002 gives added advantage to two-wheeler manufacturers to enter
even other countries outside India. Since big manufacturer plant with high technology and good
R&D team needed many of them dose not enter in two two-wheeler Industries. Only the
companies which are in automobile line will expand their product line like Mahindra.

Potential New Entrants: Capital investment is very huge in two-wheeler industries since large
plant and large machineries needed with skilled labours and good R&D team needed for
producing two-wheelers. Since high technology and raw material resources are abundant to
produce the production cost is less in producing two-wheelers. Since each company in industry
change the model on going basis to show differentiation among their competitors because of this
there is more learning and experience in this field. Each company in industry not only makes
differentiation in their product strategy but also makes differentiation in the promotional strategy
to create brand preference and loyalty. Because of low cost production, this industry enjoys
good growth rate and profitability.
Substitute Product: Substitute products for two-wheeler industries are bus transportation, Auto
transportation and even low-end cars, but people using two-wheelers can only use the service of
buses and auto as a substitute product. Sometimes low-end car is a substitute product for the
people using high-end motor cycles. Because nowadays there is lot of segment in buses in urban
areas and the private companies also influenced very much, buses are available from normal
buses to hi-tech ac buses which is threat to two-wheeler industry. Since only two people can
travel in a bike most of them uses auto when they go out with their family and if they are
affordable to buy car will use car instead of auto. Since bus service has increased when
compared to five years back people who are aged above 45 years uses buses because of their
health condition. These are the substitute product available to two-wheelers.
Supplier Seller Relations: Since their selling units are very high in two-wheeler industry and
because of many competitors supplier are very high. Since they change their models on going
basis they create good relationship between their suppliers. Some of the components in two-
wheeler industry are very common for all the two-wheeler industries like steel, aluminum, tyres
and tubes, these material are available in abundant. This makes them to drive a smooth
production of their finished products.
Seller Buyer Relations: Buyer has added advantage than seller because there are five to six
big popular brands of two-wheelers are available in India, so that they can switch brand from one
another. Since full information is available to the buyers about their product details and their
prices buyers are fully aware of seller costs and products. Buyers are very conscious in spending
their money to purchase two-wheeler, because it attracts most of the middle-income groups
seller cannot price their product very high. Nowadays people go to unique brand because of the
good service they provide after purchase. Because service centers and spare parts shop available
to their customer very near to their place buyer sometimes do not mind spending little money
extra. These factors create good relationship between them.


1(b) Current Scenario Of The Company

For the financial year2013-2014,the Company sold 19.9 lakh two wheelers in line with last year.
Motorcycle sales increased by 4% and scooters by 6%.
TVS Jupiter, the newly launched scooter bagged seven awards acclaiming its superiority over
competitive products.

New product launches and initiatives in the year included the following: TVS Sport, TVS
Phoenix 125, TVS Apache, TVS Jupiter
The Company's two wheeler exports increased by 14% in 2013-14 due to demand expansion,
better product mix and improvement in distribution network in some major export markets.

TVS Motor company said in its Annual General Meeting held recently that it plans to regain
third position in the country's two wheeler market. This would be done through new launches
like scooter "Zest" and upgraded versions of its motorcycle models like Apache and Victor in the
current fiscal.

The company is also looking for exporting its products in emerging markets like Africa, South
America and Indonesia. TVS Motors declared that they are expecting that the Indonesian
subsidiary of the company would turn cash positive this year. In the current fiscal, TVS motors
have grown by ~35% in its scooter and motorcycle sales.









2. PRODUCT MIX
TVS Motor Companys customer inspired engineering approach, has enabled it to
introduce a wide product range that caters to all industry segments with TVS Sport and
StaR City in the economy segment, TVS Phoenix 125 in the executive segment and
TVS Apache RTR in the performance segment. The company also manufactures TVS
Max4R, a product dedicated to rural commuters. The scooter segment of the company,
comprises of TVS Scooty Pep+, Scooty Streak, TVS WEGO and TVS Jupiter, while XL
Super and Heavy Duty comprise the mopeds segment. The companys three-wheeler
TVS King is Indias first 200 cc auto rickshaw with electric start and elegant styling,
available in Petrol, LPG and CNG versions. The company recently launched the diesel
version of TVS King.

Marketing mix of TVS Motors
TVS Motors is the third largest automobile manufacturer in India next to Hero Moto Corp and
Bajaj auto. TVS motors is belongs to TVS group which is $ 2.2 billion. It is the first company to
produce indigenous moped and enter into 100 cc two wheeler markets with collaboration of
Suzuki. The 19 year old relation with Suzuki was to engage in technology transfer and design
suiting to Indian market. In 2001, they had a strain in relationship in continuing the joint venture
which led to a separation.

Product
TVS motors broad product categories include Domestic range, Three wheelers, International
range.TVS motors is the only two wheeler automobile which has its penetration all consumer
segments. They have products like Apache ATR which caters to sports segment, TVS super XL
to rural, Scooty pep to young and dynamic women, Flame and Star City to working professional.
Hence their product category meets the needs from rural to urban life style. They also have their
presence in three wheeler segments. Recently they launched TVS Jive which is first clutch free
bike.


Price
TVS motor, a unit of TVS group is which is a 100 year old group is known for its strong values.
There pricing strategy varies according to product category and the consumer segment. The
pricing is often economical pricing with focus on quality and Indian pricing values and
sentiments.

Place
TVS motors have around 2000 country wide main dealer show rooms and service stations
attached to it. Manufacturing plants of TVS are located at Hosur, Mysore, Nalagarh and
Karawang in Indonesia. There are also sub dealers who are engaged in selling multiple brands in
their show rooms with proper agreements.

Promotions
The promotional strategies involve placing brand ambassadors for each product specific to
geographic division (North India and South India).ViratKohli ,Dhoni for North India, Actor
Surya and Trisha for south India. The promotional activities include dirt bike rally, MRF super
cross championship rally promotional events in Malls etc.TVS motors majorly concentrates on
rural markets. They also observed that volume wise the 100 cc generates a lot of volumes, but if
seen in terms of profitability it did not add

3. PLC And Related Strategies


FUNCTIONAL LEVEL STRATEGIES
3.1.1 Star and Apache - Key volume drivers

"Much of the volume growth is being contributed by the Star and Apache along with a fillip from
the Victor variants. For the period April - October 06, the company recorded 937,405 units of
two-wheelers compared to 770,841 units recorded in the previous year, at a growth of 22%. The
motorcycles during this period clocked 584,155 units at a growth rate of 30%. TVS Star brand
crossed the 1 million sales mark since its launch and with the launch of the electric start variant
the demand for the vehicle has grown further in the coming months. Apache continues to be in
demand and has captured sizeable share in the premium segment of the motorcycle market."
3.1.2. Brand Building - Focus to sustain

"The company has been spending whole-heartedly in creating its key model brands. The
company plans to capitalize on the sizable success achieved by top brands in respective
segments. The Star, Victor and Apache in respective segments have done well and all future
efforts would be directed towards keeping the brand image live and fresh by introducing newer
variants of the existing successful bikes."

3.1.3. Capturing the imagination of people

TVS Motors, the country's third largest two-wheeler manufacturer, launched seven products in a
first-of-its-kind rollout in the Indian automobile industry.

The seven products include a completely new 125 cc motorcycle FLAME, an all-new 110 cc Star
City, an Apache variant with fuel injection technology and the electric variant of a Scooty.
The other three products were the petrol, CNG and LPG version of a three-wheeler passenger
vehicle that will compete with the Bajaj group, the only player in that segment. This is the first
step to make the announcement of TVS as a young Indian multinational company. TVS have
done significant amount of hard work in the last few years and now forthcoming years will mark
the emergence of new TVS," said Venu Srinivasan, chairman and managing director of TVS
Motors. He added that the simultaneous rollouts are a tribute to the engineering skill of the
research and development wing of TVS, making it the first two-wheeler company to make
multiple rollouts in a single day. Each new rollout signals avowed intent on the part of TVS to
regain market share and momentum within the industry. The new offerings are targeted at
different segments of the two-and three-wheeler customers with emphasis on superior
technology, styling and engine capabilities," said Srinivasan.

In its bid to make more environment-friendly vehicle, TVS also announced the launch of its new
CCVTi (controlled combustion variable timing intelligent) engine, which will be integrated in
the newly launched 125cc FLAME. "The CCVTi engine not only reduces the carbon dioxide but
also cuts down carbon monoxide production by 70 per cent. The Indian auto industry has to
make its best effort to make a green revolution," said Srinivasan.

"The auto industry has to make its best effort to make a green revolution by developing the
technology of the future," said Srinivasan. The TVS chief added the company has plans for a
"hybrid vehicle" but it would take a long time as the cost is significantly high and the market is
niche.

TVS Motor has set the stage for entry into the three - wheeler market with the setting up of a new
plant at Nanjangud, near Mysore in Karnataka. We understand that the company would be
targeting the sub - one tonne passenger and goods carriers segment of the market. It will cater to
both passenger and cargo segments with an investment of about Rs. 50 crore in phase-I. The total
investment for the three - wheeler and four - wheeler quadricycle project are expected to be in
the range of Rs 500 crore in the next 2 to 3 years. It plans to go with the petrol version of three
wheelers and expects higher demand to come from B class towns.

3.1.4. Customer satisfaction and quality

The continued improvement in quality of its products has resulted in the company winning
several quality awards as well as bringing in more value for its customers. TVS was the first
Indian company to win Deming Quality Award. Company's adoption of Total Quality
management has made this possible. Company has adopted policy of employee involvement in
the best possible manner. Large number of quality circles has been formed. Equal attention has
been given to both process and end product. Every employee ranging from manager to worker
has a say as to how the quality can be improved. TVS has always focussed on business
reengineering. Philosophies like JIT have enabled TVS to manufacture the product in the most
efficient manner. This is one of the strategic advantages that TVS enjoys over its competitor in
the market.

3.1.6. Increasing nationwide network and reach

TVS Motor Company is aggressively increasing its national reach of its sales and service
footprint through increased national network for customer access. Currently the products of the
company can be purchased and serviced from over 4000 points.

3.1.7. Creating goodwill in the market - Serving the society

This extended arm of the company believes in social responsibility and has involved itself in
several community development initiatives that have significantly improved the standard of
living of the people in 51 adopted villages across the country. The CSR activities of TVS focus
on following fronts of the society:
Economic development - The program enables people below the poverty line in these adopted
villages to earn their livelihood by involving them in activities that generate income.

Health - Health is one of the main focus areas of the Srinivasan Services Trust. Dental care
camps; eye camps, health check-up and nutrition programs are conducted. The initiative also
focuses on primary health, maternal health, child-care and leprosy eradication.
Infrastructure Development - The Company is actively involved in the community development
of the villages by providing infrastructure facilities such as housing, sanitation, roads, drains, bus
shelters, medical centre and natural resources management.

Rebuilding Quake Hit Villages - Supported by Rural Agro Research & Development Society and
Kutch Nav Nirman Abhiyan, the Company has rebuilt "Goyersama" a village in the District of
Gujarat, which was hit by an earthquake of unprecedented scale and magnitude on 26th January
2001.

Education and Literacy - In addition to providing infrastructure facilities like new buildings for
school, the Company helps establish computer education programs for school children. The
Srinivasan Services Trust has successfully achieved 98% primary school enrolment in the
adopted villages.


OPERATIONAL STRATEGY


3.2.1 Inventory management

TVS Motors has adopted the JIT technique. Quality and productivity improvement targets of
plants were achieved through the lean manufacturing systems and JIT projects. Significant
improvements were achieved in productivity, quality and cost through application of Total
Productive Maintenance (TPM). Lean and TPM were two key initiatives undertaken under the
TQM umbrella for rapid improvements in quality, productivity and cost. The initiatives on e-
buying and global sourcing resulted in substantial cost savings.

3.2.2 Quality management

Total Quality Management (TQM): The Company has been using the philosophies of TQM as
the cornerstone of its management since 1987. Based on the "TVS Way" manual created in
2010-11, diagnosis was conducted to refine the understanding and application of different
processes in 2011-12. Focus on application of statistical tools in problem solving and improved
rigor in analysis, helped in completion of continuous improvement projects which yielded good
results. These projects have also won awards both in national and state level competitions. The
Company has continued to benefit from 100% participation of employees in TQM activities, for
the sixth year in succession.

The employees have completed & presented more than 1800 projects through QC Circles and
Cross Functional Teams for the year 2011-12 towards achieving Company / Department
objectives. During 2011-12, the Company received and implemented an average of 54
suggestions per employee. The Companys QCC teams participated in state / national /
international level conventions and were recognized with "par excellence" awards.


3.2.1. Research and development

The Company's strong Research and Development (R&D) team is supported by modern
computer aided laboratory, capable of developing new and innovative products. It has state-of-art
facilities for engine testing, Noise, Vibration and Harshness (NVH) measurements and life
testing. At present, nearly 600 engineers are working on development of new products and in
other advanced areas of technology. The Company works with leading technological research
laboratories and institutions. The Company is also working on development of fuel-efficient
technologies and CO2 reduction technologies to remain ahead of needs of consumers and
environment regulations.

R&D has developed and launched 3-wheelers with alternate fuels like LPG and CNG. India's
first motorcycle with auto clutch technology, a motorcycle which runs on ethanol blended fuel
for Brazilian market, a two wheeler with music system for ASEAN market are the innovations in
the current year. R&D has developed and demonstrated a motorcycle with Anti-Lock brake
system technology, a scooter and a 3-wheeler with hybrid technology. R&D has also ensured that
during 2010-11 all products will meet new emission norms.
R&D team has so far published 58 technical papers in national and international conferences.

3.2.2. Changing technology when needed

After the controversial legal duel with Bajaj Auto on ignition technology, TVS Motors launched
its 125cc motorcycle 'Flame' with a new and modified engine. It incorporated a single-spark
ignition engine based on controlled combustion variable timing intelligent (CC-VTi) technology.

The engine has been developed and patented by Austria-based AVL and has been licensed to
TVS in India. AVL is the world leader in internal combustion engine technology and develops
power train systems. It is a leading provider of technology to the global engine and automotive
industry.

The 125cc segment has blurred the line between the 100cc and 125cc segments and it has been
reckoned as the new entry level of the bike riders, considering the element of youth and style
attached to it. TVS Motors, considering this approach and segment and its increasing wide
acceptance, has pitched 'Flame' against the current rage, 'Bajaj Exceed'.

It is the combination of two factors, which would determine the acceptance of 'Flame'. First, it is
the time and then there are the features. Flame comes with the already accepted single-spark
ignition. Its launch was to coincide with the 'Exceed'. However, due to a legal duel with Bajaj
Auto, its launch was delayed. In this span, the Exceed has been branded and promoted as a
motorcycle having premium features (mileage-108km and disc brakes). Hence, a lot would
depend on the company's branding strategy and Flame's fight with the features present in the
Exceed (almost of a 150cc bike). TVS Motors OPM has been hovering around 4-5%.

3.2.3. Launch goods carrier, gearless scooter

TVS Motor Company Ltd has ventured into commercial vehicle segment with launching TVS
King 200cc three-wheeler. It was also said that the company would launch a gearless scooter, a
segment that is logging growth even when the motorcycles are registering slide in sales.
Apart from the domestic market, TVS Motor will also export its TVS King to countries like Sri
Lanka, Bangladesh, Latin America, Nigeria and others.

TVS motors, the Deming medal-winning company, which has a turnover of Rs.39.28 billion
($969 million), has invested around Rs.1.2 billion in developing its two-stroke three-wheeler in
three versions - petrol, LPG and CNG.

"There is lot of commonality of components between our three-wheeler and two-wheeler
engines. There will be around five-seven percent cost savings due to common parts," Srinivasan
said.




4. PRICING AND PROMOTIONAL STRATEGY

The motorcycle industry is such that the uniqueness couldn't exist for a long period of time and
the technology is also imitable. So, the only strategy for a company having a competitive scope
of broad target and cost as a competitive advantage ought to have cost leadership as its primary
strategy.
In order to capture the market share and to have the economy of scale and scope they needed to
have a broad target as their competitive scope. Even if they try to have a differentiation, that
would be imitable. So they finally zeroed in for the integrated price leadership/differentiation
strategy. So they had technologically advanced products, greater than 100 cc, that too at a price
just slightly higher than a 100 cc motorcycle.


value to the segment. As a result, in 100 cc the profits are less but the hassles are more. On
contrary to this, the 125cc+ segment is the most profitable, in which the profit is also higher with
less hassles. Even though the total industry size is 40% for the 125cc+, the profit share
contributed by this segment is whopping 65%. So, TVS decided to focus on both 100 cc and 125
cc segment and started producing 125cc+ motorcycle. The prices were set competitively so that
the switch from 100 cc to 125 cc+ could be easy and the consumers could easily be convinced.