Strategic the world. Spread across 60 acres in

Strategic the world. Spread across 60 acres in

Strategic Analysis New Holland Fiat India Strategic Management – I Prof Amita Mital WMP 2013 04-Oct-2011 Report Submitted By : (Group A8 ) WMP6029 WMP6030 WMP6031 WMP6041 WMP6125 WMP6127 Manu Chauhan Mukul Priyadarshi Nikhil Nangia Sanjeev Kumar Maurya Manmeet Singh Saini Abhinav Page 1 of 16 Table of Contents 1. Introduction ..

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3 1. 1. New Holland Tractor Organization .

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Tractor Market in India ….

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Porter’s Five Forces Analysis ….

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SWOT Analysis ….

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. 15 Page 2 of 16 1. Introduction 1. 1. 1. New Holland Tractor Organization New Holland Fiat India is a 100% subsidiary of USD 15billion CNH Global, the World’s largest agricultural equipments Company, and the leading manufacturer of agricultural and construction equipment manufacturer in the world.

Spread across 60 acres in the Greater Noida District of Uttar Pradesh, the state-of-the-art plant with an initial investment of over Rs. 250 Crores, is designed on the lines of New Holland’s international manufacturing facilities.The company’s main rivals in tractors are: Mahindra, Swaraj, Sonalika & Escorts. 2. 3.

% Indian Market Share New Holland 10% Others Mahindra 18% 23% Swaraj 20% Escorts 11% Sonalika 18% *Source : Tractor industry @ dsir. nic. in 4. It manufactures tractors in various segments based on horse power(hp).

Broadly segment is categorised into three categories. a. 30 to 40 hp. b. 41 to 60 hp. c.

61 hp onwards. Page 3 of 16 5. Product range. Standard product features across all variants: i. Side shift gears.

ii. Oil immersed breaks. iii. Temperature based hydraulics. iv.

Sensitivity control. v. Spin on diesel filter.

vi. Organized power. 6.

Company’s website: http://newhollandindia. co. in/ 1. 2.

Tractor Market in India 1. The Indian tractor market is dominated by low price, rugged, versatile and low to medium-powered tractors largely due to inability of farmers to invest much in farm mechanization. 2. In India, the popular range of tractor is 20-40 HP. 3. The tractor industry has a certain cyclical nature and depends heavily upon what happens in the general rural economy—investments by the government, monsoons and availability of credit at affordable rate. Page 4 of 16 4. Agriculture accounts for 25 % of country’s GDP and enagages 60 % of population in employment.Average CAGR is around 8% for last three decades. 5. Region wise market share (% of sales). % Market Share – Region Wise AP, Kar, Punjab & TN, Kerala Haryana 16% 17% Raj, Guj & Mah 18% UP and MP 38% Bihar, WB & Orissa 11% Page 5 of 16 2. General Environment Analysis – PESTL ? Government laid stress on the mechanization of agriculture with a view to boost food grain production. ? Subsidy on agricultural loans from government. Rs 20,000 crore loan waiver was granted by UPA govt. ? ? ? Flexibility in taxation policy. 100% FDI policy. “Agricultural dynamism” as part of 5-year plan. WTO negotiations for Free Trade of agriculture products. ? ? Credit is being extended by banks for agricultural activities. Cost of tractors in India is the cheapest in world. The cost of a finished tractor here is as much as the cost of gear box in developed countries. This leads to potentiality of tremendous scope for exports. Less interest rate charged by banks for agricultural inputs. Inflation may provoke higher wage demands from workers and raise costs. Higher national income growth may boost demand for a firm’s products ? ? ? ? ? Due to land fragmentation, farmers with small land-holding are buying tractor.Shift from joint family to nuclear family is another factor. Less availability of manual labor leads to mechanization of farming. There is an increase in awareness among the farmers for the need of farm mechanization and are keen to acquire tractor with the help of credit facilities from financial institutions. There is need for more tilling due to depletion of moisture and repeated cultivation of land. It is precisely for this reason that the demand for tractors was well maintained even during a draught period. Animal power available is too inadequate to meet power Page 6 of 16 ? ? ? demand of our farmers.Mechanized operations are preferred to eliminate drudgery and delay, also labor shortage during harvesting increased the use of tractor. ? More farmers are opting for multiple cropping over last decade. Country’s gross cropped area increased by about 4. 7%. This indicates the increased popularity of multiple cropping. ? ? Accelerated acquisition of technology capabilities to raises productivity in agriculture. Continuous technological innovation ? ? Collaboration with government which shapes policy issues Agricultural policy Page 7 of 16 3. Porter’s Five Forces Analysis I. Bargaining power of buyers – Low ? ? ? The consumer base of tractor is highly disbursed throughout India. Lack of awareness among farmers like pricing, offerings etc. There are a few, big buyers so each one is very important to the firm. High switching cost. II. Bargaining Power of suppliers – Low ? ? ? The suppliers do not pose any threat of forward integration. Large number of suppliers present in market. Switching cost from one supplier to another is less. III. Threat of new entrant – High ? ? ? Highly capital intensive industry. High start-up capital required. Customers are brand loyal ex Mahindra. It require large dealer network.However globalization and 100 % FDI has reduced barrier of entry. IV. Threat of substitutes – Low ? There are no credible substitutes to the tractors. Page 8 of 16 ? V. The only option available is bull-plough. Inter firm rivalry – Very High ? The rivalry is extremely high owing to the consolidation that the industry is witnessing. ? ? ? ? Entry of foreign players. Continuous technological innovation. Less merger and acquisition of tractor industry increases rivalries. Globalization. Page 9 of 16 4. SWOT Analysis – New Holland ? ? ? Well-established distribution network in rural areas. Deep penetration. Strong tractor model range. ? Slow publicity. High price. ? ? ? ? Increase sale opportunity through exchange offer on old tractor. Export potential. Increasing income levels will result in faster revenue growth. Increase in tractor models feature awareness and customer’s switches from national brands to international brands. ? ? ? ? In market there is a threat from unorganized and local players because of low entry-level barrier. Threat from competitors who copy New Holland India tractor body shape and have similar colors. If competitors become cost competitive then New Holland India tractor market share may go down Slowdown in demandPage 10 of 16 5. Value Chain Analysis Primary activities: I. Inbound and outbound logistics ? New Holland India warehouse based at Greater Noida stocks adequate parts, components, accessories and sub-assemblies, making New Holland capable of prompt distribution in the domestic and international markets at any point of time. They have exercised the multi-channel distribution to make Original New Holland spares available to each and every New Holland tractor owner. Today, India Parts Operations, through strong network of Dealers and Stockists, stands strong as a backbone to New Holland’s after sales and service. hrough sourcing, efficient warehousing operations and synergized marketing, enables parts team to extend its support to customers not only in the remotest corners of India but also to our business ventures abroad in North America, Brazil, Modena (Italy) and Southeast Asia to name a few. Shipping of goods in large lot sizes to reduce transportation costs. It also lay great importance to quick delivery and minimizes damages in transportation. ? ? II. Operations ? It has efficient plant operations to minimize costs. It has the following key operational areas in its plant in Gr.Noida: Page 11 of 16 o Engine assembly and testing o Independent machining center o Cathodic electro-deposition paint shop o Final assembly and testing ? HI-tech 3-dimensional computer-aided-design tools are used to develop new products. Extensive testing is carried out on the products designed and developed in R centre which includes bench testing of components. It has quality production control systems to reduce cost and enhance quality. New Holland India is the first Indian tractor company to get an ISO 9001:2000 certification for quality standards. ? III. Marketing and Sales ? New Holland India has a strong network of over 450 dealers spread across the country from Baramula in North to Kanyakumari in the South and Bhuj in West to Guwahati in the East. New Holland authorized dealers are equipped to provide its customer Sales, Service and Spare Parts support. Regular training programs are carried by New Holland for its dealers to provide best services to its customers. ? IV. Services ? It provides training to its sales team and its dealers to provide services to its customer effectively and efficiently.New Holland understands the importance of the right way of using and maintaining the products for getting the best performance output. Hence they were the first one to introduce “On site comprehensive Product Installation” for their valued customers. Regularly update their customers regarding new product applications and fuel saving tips They provide prompt after-sales service support to all customers through their network of over 400 dealers. These dealers’ outlets store and sell New Holland genuine parts, lubes and accessories that conform to the ‘New Holland stringent quality standards’.Furthermore, these tractor parts/accessories are also available through our network of 70 strategically located stockists and their retailer network of over 2500 outlets spread all over the country. Page 12 of 16 ? ? ? ? Strive to improve their services through effective Customer Relationship Management. They have assigned a dedicated customer care personnel to provide support to their channel partners and also seek feedback for services provided, throughout the year. Support activities: I. Human resource management: It consists of activities involved in recruiting, training, development and compensation of all types of personal. There is a suitable course for every person at the Dealership. Also a suitable module is ensured on product training keeping in mind the requirement of the entire field staff. Special course are planned for the Dealers Principals covering in depth knowledge on Product, Sales Management and also various Dealer policies, so as to support Dealership activities. In Technical programs focus is given on Dealer Service Managers and Technicians with two levels (Basic and Advance) of separate programs for both Service Managers and Technicians are planned.For Service Managers apart from the technical competency, reporting procedures, warranty systems, PDI / Installation of the product with more emphasis on logic and concepts so as to make them effective at troubleshooting. ? In Sales programs focus is given on Sales managers and Salesmen with special focus on Dealership management, territory management, apart from selling skills and product and competitive knowledge as also imparted to the Dealer salesmen. Field training is given due importance to understand correct tractor and implement practices.To provide on job training especially for mechanics and operators. New Holland has Regional training centres operational at Ludhiana, Trichy, Rohuri and Ananatpaur. Customized training programs are also offered to satisfy the stated need of every person so that they are able to satisfy the end customers and provide them the best always. ? Company further emphasises on ENVIRONMENT, HEALTH & SAFETY (EHS) for its employees and the Society. ? ? Page 13 of 16 II. Technology development ? The New Holland India R & D centre designs, develops and tests new products for Indian as well as International markets.HI-tech 3 dimensional computer aided design tools are used to develop new products. Extensive testing is carried out on the products designed and developed in R&D centre which includes bench testing of components. Performance and reliability tests are also done keeping in mind the actual working conditions with customers They have a single goal: that of putting technology into the hands of farmers, allowing them to maximise productivity most economically. They work continuously to make tractors fuel efficient and comfortable in driving with advance gear arrangement systems and steering systems. ? ? ? III.Infrastructure ? Spread across 60 acres in the Greater Noida District of Uttar Pradesh, the stateof-the-art plant with an initial investment of over Rs. 250 Crores, is designed on the lines of New Holland’s international manufacturing facilities. The company has focused its strength in agricultural mechanization to build a world-class tractor company in India. It’s rationale for investment in India to be driven primarily by its long involvement and in-depth understanding of the Indian agricultural industry. Last year it produced over 23,000 tractors in 35-75 Hp segment with over a 90 per cent indigenization.Not just India, tractors made by New Holland India have made their mark in the rest of the world. Today completely built tractors manufactured in its state-of-the-art Greater Noida plant are being exported to over 51countries in Asia, Africa and Middle East, Australia, New Zealand, Latin America and North America. It has its R & D centre in Gr. Noida where it designs, develops and tests new products for Indian as well as International markets. ? ? ? ? Page 14 of 16 6. Resource Based View (VRIO) 7. Financial Analysis 8. Conclusion Page 15 of 16 9. References 1.Tractor Industry http://dsir. nic. in/reports/techreps/tsr042. pdf 2. New Holland Fiat India http://newhollandindia. co. in/ 3. Tractor Industry in India : Present and Future http://www. unapcaem. org/Activities%20Files/A0611/P-In. pdf 4. Tractor industry fortunes on the upswing http://www. thehindubusinessline. com/bline/2004/12/22/stories/2004122201700200. htm 5. Tractors in India – http://en. wikipedia. org/wiki/Tractors_in_India 6. Indian Agricultural Machinery Market: An Investment Perspective http://www. aranca. com/samples/airsreport. pdf Page 16 of 16