Nov 28, 2019

TVS BMW JOINT VENTURE CASE STUDY


TVS BMW TIE UP FOR 500CC SEGMENT

BMW Motorrad is the motorcycle brand of the German company BMW. They produced motorcycles since 1923 BMW known for there super bikes range from 310cc to 1649cc this german brand wants to put there feet in the Indian market for that they have to tie up with TVS motors TVS is the multinational motorcycle company headquartered is in Chennai INDIA it is the 3rd largest company in INDIA and 2nd largest exporter TVS has 3 million annual sales TVS exports over 60 countries the objective of this JV is to manufactured the bikes range from 200-500 cc which is known as  the sub-segment of 500 cc premium bikes range presently BMW has 19 different sports bike and scooters with very high range from 600-1600 CC capacity. this joint venture helps BMW introduce themselves in the INDIAN market with 300 cc category vehicles.

"This tie-up gives us the ability to produce motorcycles above 250cc which we do not make today," says VenuShrinivasan chairman and MD at TVS motors.we are adopting the technology that BMW has such as Quality, Durability, Reliability, Engine performance, Emission standards, and high-end technological manufacturing process.

BMW will get the benefits in terms of cost reduction for the production as they can utilize TVS motors plant equipment and machinery so the production cost will be kept low.


Problems and Issues

TVS control just over 7.7% market share in the motorcycle segment and they do not have any bike 200cc. The market above 200 cc segment is dominated by Royal Enfiled, Bajaj Auto LTD with 81.1% and 14.7% respectively also new entrants like Benelli, Indian, MV Agusta, Indian now has 11 premium bikes makers so competition in this segment is very high to enter in this segment TVS need a very strong partner so that they choose BMW as there partner for the 500cc segment.
There are several problem faced by BMW. India is one of the most rapidly growing economies in the world so that INDIA is one of the most important markets for BMW. Though the Indian luxury motorcycle market is still at nascent stage BMW facing a problem INDIA about there supply chain according to ShriNivasan TVS motors ability to develop small products in mass scale with the right quality and good production engineering and with a robust supply chain ware the reason for BMW choosing it as its partner.BMW is not known for there mass production so they found TVS motors company an experienced partner who can offer high-quality engineering and competence in mass manufacturing.
BMW was facing a problem where they have to pay higher production and export costs as TVS is over 60 countries with well manage supply chain system BMW can utilize that resources too.


Geographical Scenario

In the context of changing motorcycle markets demographic trends and increasing environmental demands BMW Motorrad will expand its product offering even further we are currently in the process of realigning our motorcycle business in order to maintain profitable and sustainable growth over the coming year one focus will be on urban mobility and e mobility another logical next step is the entry into segment below 500 ccs thereby tapping into sales potential in the emerging market of Asia and South America , where motorcycles with smaller capacity are especially in demand ,

therefore BMW Motorrad and TVS motors have signed long term corporation agreement in future we will be able to offer the vehicle in smaller capacity classes in addition to the BMW Motorrad core segment from 650 to 1600cc .BMW says INDIA is a very interesting future market for BMW Motorrad this is due to the fact that it features a fast-growing group of buyers interested in buying premium products.

the countervailing force model deals with the first business is deeply integrated into an open society and must respond to many forces both economic and noneconomic second business is a major force acting on government the public and environment factors and third is to maintain broad public support business must adjust to social politics and economic forces it can influence but not control.

Made in India 310R will be manufactured here in INDIA at the TVS motors Bangalore plant and India will  become the export hub for rest of the world this would also means that pricing in India is very tough while it will be manufactured in INDIA the entire design and development of motorcycles is been completed in Germany this is great example of Globalization

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