CASE ANALYSIS I
Rakesh Basant
Professor, Economics Area
Indian Institute of Management,
Ahmedabad
e-mail: rakesh@iimahd.ernet.in
There are a few points about the context of TI Cycles that need to be
recognized explicitly. The company is operating in a mature industry
where competition is very high. 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. Incremental product innovations
(that are usually quickly imitated) expand the growth phase for the
‘specials’ from time to time. Ability to introduce new variants of existing
models and somewhat different models quickly is critical to retain market
share. 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 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.
In such a situation, the strategy of TI Cycles, especially the one related
to new product development, needs to be formulated in the context of the
competencies the company has acquired over the years and its access to complementary
assets.
PRODUCT DEVELOPMENT COMPETENCIES AT TI CYCLES
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. Development
of the capability to absorb foreign technologies was not restricted to TI Cycles
alone but to other group firms as well.
While the company did a good job of absorbing...