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Krishnan and jha innovation strategies in emerging

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KrishnanandJhaInnovation Strategies in Emerging Markets29business of Tata Motors and allow it to learn, absorb and leverage new technology andengineering capabilities.Case 2: Bajaj Auto2Bajaj Auto is the second largest player in the Indian motorcycle market and the leader in theexecutive segment with nearly 60% market share in 2007. Bajaj Auto was the second largesttwo-wheeler company in India in financial year 2009–10 and had sales of Rs. 119 billionduring this year.Bajaj Auto was a major player in scooters, selling scooters from 1945 and manufacturingthem since 1959. Historically, Bajaj dominated the scooter market. Even till the mid-90s, themainstay of Bajaj was the long runningChetak, which was based on a 25-year oldVespamodel. Bajaj focused on adaptive changes toChetak,e.g., developing a 150cc engine whichwas more suitable to Indian conditions. Bajaj’s reputation for ‘value for money’ and reliability,built over the years, led to continued domination in the scooter market.With the opening up of the motorcycle market in the mid-1980s, Bajaj entered motorcyclesin 1985, having signed a technical collaboration agreement with Kawasaki of Japan to produce100-cc two-stroke motorcycles. Since the company did not have expertise in the motorcycletechnology, it explored technology from external sources. The first product was theKB 100launched in 1986, which performed poorly in the market. Kawasaki’s primary expertise lay inmore powerful bikes and the bike technology had to be adapted to the Indian market. However,the “KB” design was found to be ill-suited to Indian conditions resulting in poor performancein the market. A modified version was soon launched in the market, which had a better salesperformance. But, by the time Bajaj was able to adapt the Kawasaki technology to competein the 100cc bike market, the market was dominated by another player (Hero Honda).Bajaj soon realized that the market leader, Hero Honda, had succeeded in moving the marketto four-stroke vehicles. Though Bajaj’s first four-stroke bike launched in 1991 offered excellentfuel economy, it was unable to make a significant dent as Hero Honda re-styled its own biketo protect its market. The Bajaj Kawasaki partnership continued to design and launch newmotorcycles throughout the second half of the 1990s – the 100ccBoxer, the 111ccCaliber,etc., but made only a minor dent in Hero Honda’s domination.In sum, the company’s effortat product innovation exploiting its existing technological capability met with limited success.In 1999, Bajaj launched a green-field manufacturing facility, incorporating principles fromthe Toyota production system. The team setting up the new facility also launched a freshinternal product development effort in competition with the Kawasaki-Bajaj collaboration.

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