INTRODUCTION

INDUSTRY PROFILE

ABOUT BICYCLE

A bicycle or bike is a pedal – driven land vehicle with two

wheels attached to a frame, one behind the other. First introduced in

19th century Europe, bicycle evolved quickly into their familiar,

current design. Numbering over 1000, 000,000 in the world today,

bicycles provide the principal means of transportation in many

regions and a popular form of recreational transport in others. To

distinguish a bicycle from a motor cycle, it is also called a

pushbike.

The bicycle is one of the most notable of human invention.

The basic shape and configuration of the frame, wheels, pedal,

saddle and handle bars has hardly changed since the first chain

driven model was developed around 1885, although, many

important detail improvements have been made since, especially in

recent years using modern materials and computer-aided design.

A marketable aspect of the bicycle is its widespread

adaptation in many different fields of human activity, e.g. as a

child’s toy in adult recreation and fitness, as a means of everyday

transport, in cycle-touring as a barks of cycle sport (branches: tack,

of road or MTB, downhill, cycle-cross, time tailing, road racing,

cycle speedway, cycle polo, BMX), and as a basis for static

gymnasium or home fitness versions.

A human being traveling on a bicycle at low to mediums

speeds of a around 10-15 mph (16-24kph), using only the energy

required to walk, in the most energy – efficient means of transport

generally available. Is day, which increases with the square of

speed, requires increasingly higher power outputs relative to speed.

A bicycle in which the rides lies in a prone position and which may

be covered in as aerodynamic faring to achieve very low air drag in

referred to as a recumbent bicycle or human powered vehicle.

The bicycle has affected history considerably in both the

cultural and industrial realness. In its early years, bicycle

construction drew on pre-existing technologies; in turn, to others,

newer areas. Beyond recreation and amputation, bicycles have been

adapted for use in many occupations, including the military,

policing, courier services, and sports. A recurrent theme in

bicycling has been the tension between bicyclists and derivers of

motor vehicles, each group arguing for its fair share of the world’s

roadways.

THE HISTORY OF BICYCLE INDUSTRY

THE STORY

No single time a person can be identified with the invention

of the bicycle. Its earliest know forebears were called velocipedes

and included many types of human- powered vehicles. One of

these, the scooter-like dandy horse of the French comet de sivrac,

dating to 1970, was long cited as the earliest bicycle. Most bicycle

historians now believe that these hobbyhorses with no steering

mechanisms probably never existed, but were made up by Louis

bawdry de saunier, a 19th – century French bicycle historians.

The most likely originator of the bicycle in German Baron

Karl von Drais, who rode his tenants. He patented his draisine, a

number of which still exist, including of the paleis let too museum

in Apeldoorn, the Netherlands. These were pushbikes, powered by

the action of the rider’s feet pushing against the ground.

Scottish blacksmith Kirkpatrick Mac Million shakes creative

credit with von drais for adding a treadle drive mechanism, in 1840,

that enabled the rider to lift his feet off the ground while driving the

rear wheel. However, some reports describe Macmillan’s vehicle as

more of a “quadricycle”.

In the 1850s and 1860s, Frenchman Ernest Michhaux and his

pupil pierre lallement took bicycle design in a different direction,

placing pedals on an enlarged front wheel. There creation, which

came to be called the “Boneshaker”, featured a heavy steel fame on

which they mounted wooden wheels with iron tires. Lallement

emigrated to America, where he recorded a patent on his bicycle in

1866 in new haven, Connecticut.

James Starley further refined the Boneshaker in the 1870s.

He mounted the seat more squarely over the pedals, so that the rider

could push more firmly, and further enlarged the front wheel to

increases the potential for speed with tires of solid rubber, his

machine became known as the ordinary. British cyclists likened the

disparity in size of the two wheels to their win age, nicknaming it

the penny-farthing. The primitive bicycles of this generation were

difficulty to ride, and the high seat and poor weight distribution

made for dangerous falls.

The subsequent dwarf ordinary addressed some of these

faults, by adding gearing, reducing the front wheel diameter, and

setting the seat further back with no loss of speed. Having to both

pedal and steer via the front wheel remained a problem.

Staley’s nephew, J.K. Starley, J.H. Lawson, and Shergold

solved this problem by introducing the chain and producing rear-

wheel drive. These models were known as dwarf safeties, a safety

bicycles, for their lower seat height and better weight distribution.

Starley’s 1885s Rover is usually described as the first recognizably

modern bicycle. Soon as the seat tube was added, creating the

double triangle, diamond frame of the modern bike.

While the Starley design was much safer, the return to

smaller wheels made for a bumpy ride. The next innovations

increased comfort and ushered in the 1890s golden age of bicycles.

In 1885 Scotsman john Boyd Dunlop introduced the pneumatic tire,

which soon became universal. Shortly there often the rear free

wheel was developed, enabling the rider the coast without the

pedals spinning cut of control. This refinement led to the 1987

invention of coaster brakes. Derailleur gears and hand-operated;

cable-pull brakes were also developed during these years, but were

only slowly adopted by casual riders.

By the turn of the country, bicycling dubs flourished on both

sides of the Atlantic, and touring and racing were soon the range.

Successful early bicycle manufactures included Englishman

frank Bowdeb and German builder Ignaz schwinn. Bowden started

the Raleigh company in nothing ham in the 1890s and soon was

producing some 80,000 bicycles a year. Schwinn emigrated to the

united states. Where he founded his similarly successful company

in Chicago in 1895. Schwinn bicycles soon featured widened tires

and spring-cushioned, padded seats, sacrificing some efficiency for

increased comfort facilitated by connections between European

nations and their overseas colonies. European- style bicycles were

soon available worldwide.

By the mid. 20th century bicycles had become the primary

means of transportation for millions of people around the globe. In

many western countries the uses of bicycles traveled off a declined,

as motorized D became affordable and car- centered policies led to

an increasingly hostile road environment for bicycles. In North

America, bicycle sales declined markedly after 1905, to the point

where by the 1940s they had largely been relegated to the role of

childern’s toys. In the other part of the world however, such a

china, India and European countries such as Germany, Denmark,

and the Netherlands, the traditional utility bicycle remained a

mainstay of transportation, its design only gradually changing to

incorporated hand-operated brakes and internal hub gears allowing

up to seven speeds. In the Netherlands, such so- called granny bikes

have remained popular, and are again in production. Especially in

austere Dane they are often colorfully painted and or otherwise

decorated.

In North America, increasing consciousness of physical

fitness and environmental preservation spawned a renaissance of

bicycling in the late 1960s. Bicycle sales in the United States

boomed, largely in the form of the racing bicycles long used in such

events as the hugely popular Tour de France. Sales were also

helped by a number of technical innovation that were new to us

marked, including higher number of gears, while 10 speeds were

the rage in the 1970s, 12-speed designs were introduced in the

1980s and today most bikes features 18 or more speeds.

By the 1980s these newer designs had driven the three-speed

bicycle from the roads. In the late 1980s the mountain bike became

particularly popular, and in the 1990s something of a major fad.

This task-specific design led many American recreational cyclists

to demand a more comfortable and practical product. Manufactures

responded with the hybrid bicycle, which restored many of the

features long enjoyed by riders of the time tested European utility

bikes.

BICYCLE INDUSTRY IN INDIA

INDUSTRY SCENARIO

4 major manufactures- Hero, TICI, Atlas.

Industry capacity-119 Lakhs cycles p. a (as on 2003).

Industry capacity utilization-89 percent (as on 2003).

Industry penetration- 45 prcent (as on 2003).

Concentration of component supplies at

Ludhiana/Delhi.

Approx. 3500 deals across the country.

MAJOR PLAYERS (As on 2003)

Company Volume Market share

(Lac Nos.) %

Hero 53-85 45%

TII 28-83 24%

Atlas 28.30 24%

Others 7.68 6%

India is the second largest maker of bicycles in the world.

Around a million bicycles (valued at Rs. 1500 Crores) are produced

each year. Ludhiana has been the prime source of components fir

the cycle industry in India. Recently, vendor bases have come up in

other parts of the country there by diluting the geographical risk.

Cycles can be classified into two segments- standards and

specials. There are four major players- Hero cycles, TI cycles, Atlas

cycles and Avon cycles. With changing environment, the market for

standard for standard bicycles has become highly price sensitive

allowing small players take aggressive price postures. The special

category bicycle are more differentiated by design and find market

in kids, students and youth, for fitness and leisure.

The bicycle industry in India has witnessed a continues

downward tend in demand over the last three years. In 2004-2005,

there was 7 percent drop in volume over the previous year.

Increased urbanization, in proved public transport system, increased

affordably of motorized vehicles and limited road space for bicycles

(there in complete absence of “cycles only” lanes even in most

congested and polluted cities) are said to be some of the causes for

the down turn. However, the bicycle is still the first vehicle for

most children and there is growing use of bicycle as health and

leisure products.

COMPANY PROFILE

MURUGAPPA GROUP

The Murugappa group, headquartered in Chennai, India, is a

$1.5 billion conglomerate with interest in engineering, abrasives,

sanitary ware, fertilizers, finance, bio-products and plantations. It

has 29 companies under its umbrella; eight are listed and actively

handed on the national stock exchange and the Bombay stock

exchange. Together, they have over 28,000 employees.

The business has its origins in 1990, when Dew a bahadur

AM Murugappa chattier established a money-lending and banking

business in Burma (now Myanmar), which then spread to Malaysia,

Sri Lanka, Indonesia and Vietnam. A century down the line, it has

withstood enormous vicissitudes (including strategically moving its

assets bank to India and restarting from scratch in the 30’s before

the Japanese invasion in world war 2) to became one of the

country’s biggest industrial houses. The group turnover crossed the

$1 billion mark in 2003-04, with an impressive growth of 25% Rs.

42,060 million in 2002-03. The group clocked a 40 percent jump in

profit before tax over the previous year. Murugappa Group’s

consolidated turnover for 2004-05 crossed %1.44 billion. The group

achieved a growth of 20 percent over the previous year.

The group is a market leader in India across a spectrum of

products like sanitary ware, fertilizers, abrasive, automotive chains,

car doorframes and steel tubes. Neemzal, a neem - based organic

pesticide, is the country’s best known brands like BSA and

Hercules in bicycles, parry ware in sanitary ware, parry’s spiraling

and parry’s Beta carotene in nutraceuticals, ball master and Ajax in

abrasives, Gromor and paramfos in fertilizers, and many more come

from the Murugappa group.

Its companies have tie-up with Borg-warner of the USA,

wend of Germany. Morgan Crucibles of the U.K and Mitsui

Sumitomo insurance of Japan. It has registered 43 International

patents for its research and development innovation. The group has

grown consistently through its decisive and visionary response to

change times. Its pioneering efforts, steadfast commitment to

ethical business practices and it dogged pursuit of new arras to

extend its business acumen have brought in its wake several

prestigious national and international awards.

Social commitment has always been the cornerstone of the

group’s ethos and it has been at the forefront of eco-conservation,

public health, and education in the communities where its

companies operate, since 1957. It runs four schools, a polytechnic

college and four hospitals. Besides, the group runs a research and

development center for rural development the sir AMM Murugappa

Chettiar research center (MCRC), which has been a designing

simple, cost-effective technology for local artisans since 1977.

The Murugappa group has 29 companies active in the area of

engineering, abrasive, sanitary- ware, fertilizers, finance, bio-

products and plantations. The major companies of the group all:

Carborumdum Universal Limited

Cholamandalam Investment & Finance Company

Limited

Coromandel Fertilizers Limited

EID Parry Indian Limited

Godavari Fertilizers Limited

Parry Agro Industries Limited

Parry Nutraceuticals Limited

Tube investment of India Limited

Name of the Country % of turnover

TII 28%

EIDP 34%

CFL 16%

CUMI 8%

OTHERS 14%

TUBE INVESTMENT OF INDIA LIMITED

A reputed engineering company in India, driving excellent in

work and part of the US $1.5 billion India conglomerate, the

Murugappa Group.

CORPORATE CHRONICLE

Incorporate in 1949- TI cycles of India (TICI) in

collaboration with TI, UK the world’s largest manufactures

of bicycles.

A tube product of India (TPI) was established in 1955 with

the objectives of providing backward integration to bicycles.

TPI merged with TICI in 1959. Name of the company

changed to tube investments of India Ltd.

TPI established a cold Rolling mill in 1962 for the production

of cold Rolled close annealed steel strip.

TPI established EOU at Avadi in 1996.

Tube plant commissioned in 1997 at Shirwal, Maharashtra.

Facilities to produce doorframes for Maruti 800 cc and

Hyundai Santro in 1998

Cycles plant at Nashik set up in 2001.

Tube Investment of India limited is the flagship company of

Rs. 6250 cr. Murugappa Group. It manufactures precision steel

tubes and ships, car door flames, auto motives and industrial chain

and bicycles.

The company has 13 manufacturing assembly units spread

across the country. Marketing offices that act as interface between

customer requirements and production train ably support these

units. The company’s shares are listed on the national, Mumbai and

Chennai stock exchanges within India and GDRS on the

Luxembourg stock exchange. The company’s product segments

are- Engineering, metal formed products and cycles.

TI is the market leader in precision tubes with 61

percent market share by virtue of its quality &

application engineering capabilities.

TI is the market leader in roll formed car door flames

with 57 percent market share by virtue of its cist

efficiency, association with key auto majors and roll

forming capabilities.

TI is a leading players in auto motive chain with 35

percent market share by virtue of its quality, cist &

delivery and association with two wheeler major.

TI is a leading player in bicycles segment with 30

percent market share by virtue of its brand equity,

product development capability and proximity to the

markets.

The company reported a turnover of RS. 1563.39cr and profit

after tax of Rs. 98.55cr in 2004-2005.

The company also has an interest in the services sector

through its investments in Cholamandalam Investment and finance

company Ltd and Cholamandalam MS general insurance Co. Ltd.,

Tube investment of India was one of the most important post-

independence forays of the Murugappa group into manufactures. It

was a niche the group identified as a trump card for a nascent

nation; marking the poor man’s vehicle, the bicycle. It was

originally founded as TI cycles of India and TI miller-, which

manufactured cycle, lamps and dynamo sets-were merged with the

company in 1959 and 1984 respectively.

TII is the second largest- manufacturer of bicycles in India.

Marketing top Brands like Hercules, BSA and Philips, and had a

market share of 31 percent in 2003-04. In the value-added special

segment, TI in the leader, with a 50 percent market share. More

recently, the company entered the promising health conscious

‘exercise’ bicycle segment in 2002-03. TI cycles of India, one of

the leading bicycle manufacturers in India, started in 1949, has been

at the forefront of innovation and is a pioneer in the market of

cycles. TI cycles are the makes of country’s most famous brands

like Hercules, BSA and Philips cycles. The company’s vision is to

be a worldwide leader in cycling and solution by installing the pride

of ownership in the customers”.

BRANDS

Hercules- the flag ship brand of TI cycles portfolio, this

brand of ours is still as young as ever. Hercules stands for a unique

pride of possession-anchored in the time-tested values of heroisne

and integrity, to which the brand’s customers subscribe in their own

lives.

BSA- anchor flag ship brand of TI cycles, BSA stands for

Birneighani small arms. It signifies the joy of cycling; fun and

comfort go hand in hand with BSA. BSA today is an intrinsic part

of the Indian family with cycles for everyone kids teams and adults.

Certificates: certified with ISO 9002 & Iso 14001

Exports: TI cycles is an exporter to many regions across the

global-Europe, south East Asia and Africa; being some of them

Locations: Chennai (corporate HO), Nashile, Noida,

Durgapur, Banglore, Kolkatta, Patna & Ludhiana.

A subsidiary, tube products of India was set up in 195 in

collaboration with tube products (old bury) Ltd, UK to produce

electric resistance welded (ERW), cold drawn welded (CDW) tubes

and draw over mandrel (DOM) tubes. In 1957, tube investments of

India started production of cold-rolled close annealed steel strips, in

collaboration with TI, UK, primarily to meet in house and group

requirements.

Through started as a backward integration project for the

manufacture of bicycles, today, TPI is a major preferred supplies of

precision welded tubes to major automotive companies in India and

abroad. It is the undisputed leader in the Indian market for precision

welded ERW & CDW steel tubes, with the widest variety and range

in terms of size as well as material gracles offered. TPI started

operation at Avadi, Chennai, but has expanded with two more

plants satirically located in western and northern India.

Another subsidiary, TI metal forming, is a pioneer in coid

roll forming. It manufacturers and supplies value- added metal

formed components like car door flames, sash/division channels,

door guide rails and bar assembly. It has plant in Chennai and

Bawal (near Gurgaon). Both plants in Chennai and QS 9000

certified. The Chennai plant is ISO 14001 certified.

A third plant has been set up near Baroda (in Gujarat state,

Western India) to manufacture and supply doorframes, impact

beam, bar and rail assembly for general motors, India. Its client list

includes Maruti udyog general motors, India.

TIDC India formerly known as TI Diamond chain Ltd, was

established in 1960 in collaboration with the Diamond chain co,

USA. Starting as a marker of bicycle industrial chains TIDC

produce from tiller chains, leaf chains and conveyor chain to

industrial power drive chains, engineering class chains, in

automotive TIDC produces motorcycle drive chains and engine

mechanism chain and fine blank parts. Annually production runs to

45 million ESS feet, and commands 40 percent of the domestic

market share. The company is known for developing high

performance chains, for specific applications and machinery. Some

of TIDC’s popular brands are Diamond and Xtron, TIDC exports to

over 50 countries worldwide.

TII has entered into a joint venture with Borg Warner Morse

TEC, USA for production of timing and silent chains. It has entered

into a technology agreement with Tsubakimoto chains company,

Japan, for engineering class chains. Some of TI Diamond chain’s

popular brands are Diamond and Xtron.

UNITS

- TI CYCLES OF India

- TUBE PRODUCTS OF India

- TI METAL METAL FORMING OF India

ASSOCIATE COMPANY

- TI DIAMOND CHAIN LTD

TII – BUSINESS PORTFOLIO

Business % Turnover

Cycle 41%

Engineering 56%

Metal Forming 3%

PRODUCT PROFILE AND ORGANISATION STRUCTURE

TI cycles is one of the largest integrated cycle manufacture in

Asia, Manufactures high quality bicycles for both domestic and

international market. TICI manufactures and markets the

HERCULES, PHILIPS and BSA brands.

HERCULES

Hercules MTB

Hercules Thriller

Hercules Bravo

Hercules Torando

Hercules Axn

Hercules Glider

Hercules Top Gear Ezy Ultra

Hercules Ultima

Hercules Captain Shakthi

Hercules Grand Champion

Hercules Explorer

Hercules Captain Kidz

Hercules Ultima Dx

Hercules Ultima Ex

Hercules Wind pacer

Hercules Hurricane

Hercules Spitfire

BSA

BSA Champ plus

BSA Lady bird spot

BSA Lady Bird

BSA Dino sour

BSA Dash DX

BSA Comet

BSA Champ-H-Plus

BSA Aqua Zing

BSA Aqua Marine

BSA Rocket

BSA Diana

BSA I-Bike

BSA Mach

BSA New Mach

BSA Spice-Ic

BSA Fold man

BSA City Axt

BSA photon

BSA SLR 2000

BSA Delite

BSA Supreme

Health Segment

BSA Trimgyni

BSA Trimgyni Jogger & BSA Trimgyni Stepper

DEPARTMENT OF THE COMPANY

Departmental organization is concerned with grouping the

various activities into separate administrative units. It implies

grouping activities and employees into departments.

Departmentation may thus be defined as a “process of

grouping activities into units with a view to ensure effective

management”.

THE VARIOUS DEPARTMENTS:

1. HUMAN RESOURCES

2. SALES AND MARKETING

3. RESEARCH AND DEVELOPMENT

4. PRODUCTION/OPERATIONS

5. CUSTOMER SERVICE

6. FINANCE AND ACCOUNTS

7. ADMINISTRATION AND I.T

1. HUMAN RESOURCES

Recruitment and retention

- Job descriptions

- Person specification

Dismissal

Redundancy

Motivation

Professional development and training

Health and safety and conditions at work

Liaison with trade unions

2. SALES AND MARKETING

Market research

Promotion strategies

Pricing strategies

Sales strategies

The sales team

Product-advice on new product development, product

improvement, extension strategies, target markets.

3. RESEARCH AND DEVELOPMENT

New product development

Product improvements

Competitive advantage

Value added

Product Testing

Efficiency gains

Cost savings

4. PRODUCTION / OPERATION

Acquiring resources

Planning output-labour, capital, land

Monitoring costs

Projections on future output

Production methods

- Batch

- Flow

- Job

- Cell

5. CUSTOMER SERVICE

Monitoring distribution

After-sales service

Handling consumer enquiries

Offering advice to consumers

Dealing with customer complaints

Publicity and public relations

6. FINANCE AND ACCOUNTS

Cash flow

- Monitoring income/revenue

- Monitoring expenditure

Preparing accounts

Raising finance

- Shares

- Loans

Links with all other functional areas

7. ADMINISTRATION AND IT

Managing Estates – Cleaning, Health and Safety,

Maintenance, security.

Reception

Clerical work – reporting, recording, record keeping,

communication

Overview of quality control

Use of IT systems.

FUNCTIONS OF SECRETARIAL DEPARTMENT AND DUTIES

The secretary must observe all legal formalities in respect of

the companies act and other laws which have a bearing on the

activities of the company.

To maintain register of investments held by the company in

the name of its nominees.

To sign any document or proceedings requiring

authentication by the company.

To deliver for registration written off allotment.

To give notice of increase in share capital or of members to

register.

To deliver the share certificates within 3 months of allotment

or within 2 months of registration of transfer.

To make entries in the register of members on issue of share

warrants.

To make trust deed available to members and debenture

holders for inspection and to forward a copy of it to them on

request on payment of prescribed fee.

To deliver for a registration particular of mortgages and

charges to the register.

To maintain registration of charges.

To maintain index of members.

To maintain register and index of debenture-holders.

To sign the annual return.

To allow inspection of and to furnish copies of register of

members.

To send notices of general meetings of members.

To file resolutions and agreements requiring registration with

the registrar.

To prepare minutes of every general meeting and of every

meeting of the board of directors and of every committee of

the board.

To make available for inspection the minutes books of

general meetings.

To sign the annual accounts of the company.

To send the notices of meetings of the board of directors.

To maintain register of contracts in which directors are

interested.

To maintain register of directors, managers and secretary.

To mark available register of directors etc. for inspection.

To maintain register of director’s shareholdings.

To maintain register of inter-corporate loans.

To maintain register of inter-corporate investments.

He is responsible for deduction of requisite income tax from

dividends and interest and from salaries of employees, for timely

filing of tax returns with the income tax authorities and for issue of

a certificate of income tax deducted to every shareholder receiving

dividend.

He must see that the provisions of any other act applicable to

the company, E. g.: Foreign Exchange Regulation Act, Payment Of

Wages Act, etc.

Directors should formulate policy. The secretary helps them

in formulating this policy.

The company secretary must serve in the best interest of the

shareholders. Safeguard the interest of the shareholders.

He should replies to the inquires and complaints of the

shareholders on behalf of the board.

Maintaining records of meetings, issuing letters of

allotments, calls etc. registering transfer, issuing share certificates,

supplying information and copies of documents, arranging payment

of dividends etc.

As a chief administrative officer. The secretary is called upon

to supervise and control the functioning of officer and to co-

ordinate the activities of various deparments.

CONTENTS

Page No

1. Overview 1

1.1. Murugappa Group 1

1.2. TI Cycles of India 1

1.3. Vision 1

1.4. Mission 1

2. Competitive Analysis of Indian Cycle Industry 2

2.1. Competitors of TI Cycles 2

2.2. Core Competencies 2

2.3. SWOT Analysis 2

3. Value Chain Analysis of TI Cycles 3

3.1. Support activities 3

3.2. Primary activities 4

4. Five Force Model Application 4

4.1. Rival

4.2. New Entrants

4.3. Substitute

4.4. Supplier

4.5. Buyers

5. Future Strategic Options 5

5.1. Market Development

5.2. Product Development 5

6. Recommendations 5

Appendix

1. Overview

1.1. Murugappa Group

Headquartered in Chennai, the Rs.7300 plus crore Murugappa Group is

India's leading business conglomerate, which fosters an environment of

professionalism for its strong workforce of 28,000 employees. The group

has 29 registered companies, which are market leaders in diverse areas of

business viz. engineering, abrasives, finance, general insurance, sanitary

ware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and

nutraceuticals. The Group has manufacturing units in 12 states.

The Group has forged strong joint venture alliances with leading

international companies like Roca, Cargill, Cerdak, DBS Bank, Mitsui

Sumitomo and Groupe Chimique Tunisien and has consolidated its status

as one of the fastest growing diversified business house in India.

1.2. TI Cycles of India

TI Cycles of India is a part of Tube Investments of India (TII), a flagship

company of the Rs.7300 plus crore conglomerate Murugappa Group. TI

is the second largest manufacturer of bicycles in India, marketing top

brands like Hercules and BSA. The company is a market leader in the

value-added special segment, with a 50 percent market share. At present,

TI has twelve BSA GO stores across India.

Certified with ISO 9001:2000 and ISO 14001, TI Cycles is one of the

most quality and customer centric organizations. TI Cycles is an exporter

to many regions across the globe including Europe, South East Asia and

Africa.

1.3. Vision

No one should lose business with whom you do business, so the

company will be successful.

1.4. 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.

2. Competitive Analysis of Indian Cycle Industry

2.1. Competitors of TI Cycles

Table No.1

NO COMPETITORS MARKET SHARE IN 1999-2000

1 TI 23.3

2 Hero 43.43.

3 Atlas 24.95

4 Avon 8.31

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.

2.2. Core Competencies.

Murugappa Family’s 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.

2.3. 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.

3. Value Chain Analysis of TI Cycles

3.1. SUPPORT ACTIVITIES

Firm Infrastructure.

a) Dedicated management team

b) Home-grown Financial Support

c) Formal Planning and Execution

Human Resource Management

a) Unionised

b) Competitive Pay structure

c) Fringe benefits

d) Divisional Monitoring

Technology

a) Indigenous Technical system and facilities

b) Appropriate R&D

c) Total Quality management

Procurement

All necessary inputs provided by one location shop floor only few input are imported.

3.2. 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.

a) Cyclinics

b) Services and Spare parts available at show rooms

4. Five Force Model Application

4.1. 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.

4.2. 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.

4.3. 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.

4.4. 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.

4.5. 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.

5. Future Strategic Options

5.1. Market Development

The TI should consider following future strategies for the market

development.

a) Northern markets should be focused for broadening sales.

b) Offering cycles to Indian Postal Services.

c) Offering cycles and tricycles to Ice Cream vendors, Home

delivery services restaurants, Tea Companies and Soft Drink

Companies.

d) Offer cycles to courier companies.

e) Offering cycles for athletes.

5.2. 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.

c) A purpose built cycle with wide carrier for lunch providers in the

urban areas.

d) Purpose built cycles for house wives with added carriers.

6. 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 TI’s 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.