Internal Analysis

ASHOK LEYLAND

Automobile manufacturing industry:

History and current situation

International market

Indian market

International key players (DONGFENG/TATA Motors/VOLVO/FORD)

External Analysis:

PESTEL-General environment (Political/Economic/Socio/Technical/Environment/Legal)

Political:

• In 2002, the Indian government formulated an auto policy that aimed at promoting an integrated, phased, enduring and self-sustained growth of the Indian automotive industry which should help in the conductive growth of the Indian automobile industry.^[a]
• Promoting multi-model transportation and the implementation of the mass rapid transport system.^[b]

Economic:

• The Indian economy has grown at ~7% per annum (on an average in last 7-8 years).
• The manufacturing sector has grown at 8-10 % per annum in the last few years.
• Several Indian firms have partnered with global players.
• While some have formed joint ventures with equity participation, other also has entered into technology tie-ups.
• Establishment of India as a manufacturing hub, for mini, compact cars, OEMs and auto components.^[c]

Social:

• Today's society judges people on the type of car you drive/safety/need of maintenance etc. Same applies to utility vehicles.
• Another aspect of the socio-cultural is the environmental concerns for the need of fuel-efficient vehicles.^[d]

Technical:

• Because of new legislation, they had no choice but to come up with the new technology to make the fuel-efficient cars.
• Technological solutions help in integrating the supply chain, hence reduce losses and increase profitability.
• Customized solutions can be provided with the proliferation of technology 
• The Internet makes it easy to collect and ^[e]analyze customer feedback 
• With the entry of global companies into the Indian market, advanced technologies, both in product and production process have developed.

Environmental:

• Almost all of the regulations are increasing concerns for the environment and the concern for safer automobiles.
• For the safety of passengers, there was a law passed National Traffic and Motor Vehicle Safety Act.^[f][g][h][i]
• For the environment, a law was passed Vehicle Air Pollution and Control Act.

Legal:

SWOT-Environmentally aware organization

Strengths:

• Relatively stable industry
• Large domestic market
• Government incentives for manufacturing units
• Strong engineering and manufacturing team

Weakness:

• The Severe downturn in the economy can have a crippling effect on it.^[j]
• Heavy competition and little room for growth and become unattractive to new entrants.
• The cost of production increases due to various taxes levied.^[k][l]
• Low labor productivity.
• Infrastructure creates hazards

Opportunities:

• Technology and bio-technology can be introduced on a larger scale^[m][n]
• Increase in GDP
• Rising demand
• With SC ban on overloading, it's a big opportunity for c^[o]ommercial vehicle manufacturing

Threats:

• New emerging markets are a threat to the already established companies
• Rising interest rates
• Unreliable economy
• Inflation
• Competition locally and globally

PORTER’s Five forces- Competitive environment

Internal Analysis:

Value chain (Primary/Support)

Resource based view (VRIO)

Evaluating firm performances (Financial ratio/ Balance scorecard)