TI Cycles

Structure of Business And Organization

TI cycles is operating in a mature industry where competition is very high. It is now unable to keep control on its declining market share and profits due to many hugely successful entrepreneurial establishments. Product innovations are few and incremental. A long run product life cycle operates for the two core models 'specials and standards. While the market has matured for both the models, the level of maturity is more for the standards than for the specials and the market for the latter is growing more rapidly

 Given the maturity of the industry and product life cycles, manufacturing costs (prices), the ability to undertake incremental product innovations (design changes), and the speed to market penetration are critical for maintaining competitiveness. Followers are often able to gain a lead over the first movers in specific segments. The drivers of demand essentially are the rates of growth of income and its distribution.

Gaps in Manufacturing process

An interesting feature of TI Cycles was that product management, product development, manufacturing, and purchase departments under the overall guidance of the General Manager-Marketing and the Vice President jointly shared the new product design and introduction activity. One apparent gap in this process of new product development was that the manufacturing segment was not involved at the product design stage. The dealers were not well equipped to deal with aftersales service and repairs particularly for the bikes in the specials segment.

 One of the reasons for lower manufacturing costs of its competitors was that they had access to low-cost, decentralized manufacturing facilities in North India . Hero For example, had about 100 ancillary units dedicated to its production. These linkages with cycle parts manufacturers had been nurtured and developed over the years and were difficult to replicate. Atlas and Avon outsourced nearly all cycle parts from Ludhiana-based manufacturers. This created a difference of nearly 10 per cent in cost which was noticeably big for customers. TI cycles need to work closely with some vendors to develop long term, mutually rewarding relationships

 Accurate prediction of demand is very critical for the success of a company. The situation at TI Cycles reveals that there was excess inprocess inventory in the plants. Hero Cycles outsourced most of its products to ancillary manufacturers while TI Cycles undertook long production runs to produce complete products thereby increasing inprocess inventory.

Strategy
The interaction between manufacturing, purchase, and product development department should began at the prototype development stage. More interactions at the design stage would prove useful to enhance manufacturability and improve product quality. There is no substitute for better training for dealers to take care of technical issues that crop up at the point of sale and after-sales service. Such training is all the more important because assembly is done at the dealers level and inadequate training can lead to faulty assembly that would result in more post sale problems. In the short run, TI Cycles should focus on fine-tuning its product development process and on manufacturing to reduce costs and upgrade its relationships with dealers and vendors.

 Accurate prediction of demand is very critical for the success of a company. The situation at TI Cycles reveals that there was excess inprocess inventory in the plants TI Cycles should have deployed information technology with ERP and SCM to integrate its information system not only within the organization but also with its supply chain.

Technology and knowledge

The company was set up with a foreign collaboration that involved technology transfer. Over a period of time, it acquired the capability of usefully absorbing and adapting the technology acquired from outside. While the company did a good job of absorbing foreign technologies, it did not focus on R&D activity in any significant manner to build upon the technologies acquired from outside. As a result, it was not able to keep pace with technological developments in the developed countries. Its participation in the exports market and the associated learning remained restricted to low-end cycles.

Strategy
R&D effort to explore new materials that are increasingly being used in bicycle manufacturing world-wide. Consequently, the technology gap between TI Cycles and developed country firms will be reduced so that the company did have the design and manufacturing capabilities to make the middle-and upper-end bikes for these markets. Dealers are also the major source of information about the problems faced by the customers. Presently, TI Cycles is not collecting data on such problems on a regular basis. Such data can be very useful for training as well as new product and process design. The product development group should also systematically analyze customers complaints through cross-functional teams. The recurring complaint should find space in the Saturday meetings. These may provide useful inputs for product design and even process changes.

Marketing How to reach domestic customer??

TI Cycles presence in towns and cities is adequate, it needs to evaluate the sales target achievement. It can also categorize the dealers according to their performance and find out the reasons for the shortfall in sales as this will help the company to get aligned with its sales forecast and production. Due to change in customer preference, the company is facing a decline in demand for the standard category of cycles. It would be advisable for the company to divide the market into two tiers: Tier I: The basic offering would have the deciding factors as price, loading capacity, riding ease, and ease of repair. Tier II: The attributes would be acceleration, design, styling, and resale value.

Strategy
Market share in rural and smaller towns that has close to 70 Percent of market demand . Introducing special credit schemes in this category of standard bicycles. This will help small buyers, especially in rural areas, to get cycle at minimal cash as down payment who can then pay the loan in small installments of Rs 100 per month. The company may also introduce a scheme to its dealers to make compulsory purchase of standard along with special in any prespecified ratio by the company. The initial resistance may be high but can be handled if properly communicated by the sales representatives. The authorized spare parts sales and service showroom is an innovative idea and must be pursued in all important towns of India.

Communication Strategy
Being the oldest player in India, it could create a feeling of nationality among the users of standard category and position its cycle as the cycle of the nation. This in a way reflects the values of the company as well as how it has incorporated the suggestions and has taken care of customers complaint over a period of time. In case of special category, being already the leader ,it needs to sustain this position and has to be quick in addressing the need for change. Regarding exporting cycles, the company should target South America, Africa, and East Asian countries for better results.

 TI Cycles could possibly identify overseas markets for standard category where the total cost of ownership of its products could be the lowest compared to Chinese products due to favorable differential cost of transportation, logistics, and import duty rate. There is a need to expand the market in countries like Bangladesh, Nepal, and Bhutan which given the similar demography at the rural/semi-urban centers would requireproduct similar to the standards product of TI Cycles