This thesis analyses the competitive strategies of foreign OEMs in the Indian small to mid-size passenger car industry and explains why some companies were able to achieve a competitive advantage while others failed to do so. It can be said that two factors were crucial for gaining a competitive advantage in this industry: the date of resource commitment and the degree of localization in the value chain. A foreign OEM holds a competitive advantage to (1) a foreign OEM that entered at the same time but had a lower degree of resource commitment and to (2) a foreign OEM with the same degree of resource commitment but a later entry date. Moreover, a foreign OEM holds a competitive advantage to a foreign OEM with a lower degree of localization in the value chain.
Table of Contents
1 Introduction
2 Literature Review on Competitive Strategy
2.1 An institution-based view on Competitive Strategy
2.2 An Industry-Based View on Competitive Strategy
2.3 A Resource-Based View on Competitive Strategy
3 The Indian Passenger Car Industry
3.1 Development of the Indian Passenger Car Industry
3.2 Status Quo of the Indian Passenger Car Industry
4 Analysis of Competitive Advantage in the Indian Small to Mid-Size Passenger Car Segment
4.1 Methodology
4.2 Analysis of the Impact of the Date of Entry on Competitive Advantage
4.3 Analysis of the Impact of the Degree of Localization of the Value Chain on Competitive Advantage
5 Conclusion
6 References
7 Appendix
Research Objectives and Key Themes
This thesis examines the competitive strategies of foreign automotive manufacturers (OEMs) within the Indian small to mid-size passenger car market. It seeks to explain why certain foreign companies have successfully gained a competitive advantage while others have struggled, specifically focusing on the impact of entry timing and the degree of value chain localization.
- The influence of entry timing and resource commitment on market success.
- The role of value chain localization (R&D, manufacturing, procurement) in achieving competitive advantage.
- Comparative analysis of different foreign OEMs and their performance in the Indian market.
- The impact of local institutional frameworks and Indian consumer characteristics on corporate strategy.
Excerpt from the Book
4.2.2 Economic Factors
The first source of potential advantages for the early mover stem from economic factors. This means that an early mover can build or acquire resources earlier and benefit from asset mass efficiency, time compression and the experience curve as described in chapter two. Two resources have a significant impact on a company’s success in the Indian small to mid-size passenger car industry: annual production capacity and the number of sales outlets.
The Indian small to mid-size passenger car customer is, as stated before, extremely price sensitive. Thus a main source of gaining a competitive advantage in this industry is the ability to produce at very low costs, which is reached through economies of scale. In theory, a first-mover could start building capacity before others and already generate profits which can be invested into additional capacity. When other companies enter, the first-mover strongly benefits from economies of scale as it can produce at lower costs than competition which generates even more profit that can be invested in even more capacity (asset mass efficiency) resulting in an even greater cost advantage. Additionally, building capacity takes time; a company that starts building capacity earlier has an advantage to a company that is building capacity later (time compression). Thus, early movers in the Indian passenger car industry have the opportunity to gain a competitive advantage compared to later entrants through building production capacity earlier.
Summary of Chapters
1 Introduction: Provides an overview of the automotive industry's global context and the specific rise of the Indian passenger car market, setting the stage for the thesis's core research question.
2 Literature Review on Competitive Strategy: Discusses theoretical frameworks for competitive advantage, including institution-based, industry-based, and resource-based views, to provide a foundation for analysis.
3 The Indian Passenger Car Industry: Outlines the historical development of the industry, from early protectionist policies to recent liberalization, and details the current market status and key players.
4 Analysis of Competitive Advantage in the Indian Small to Mid-Size Passenger Car Segment: Evaluates how entry dates, resource commitment, and value chain localization strategies have influenced the market performance of various foreign OEMs.
5 Conclusion: Synthesizes the findings, confirming that early entry and a high degree of resource commitment and localization are primary drivers for competitive success in the Indian market.
Keywords
Competitive Strategy, Indian Passenger Car Industry, Foreign OEMs, Competitive Advantage, Resource-Based View, Date of Entry, Value Chain Localization, Small to Mid-Size Segment, Market Share, Research & Development, Manufacturing, Procurement, Emerging Markets, Maruti Suzuki, Hyundai.
Frequently Asked Questions
What is the core focus of this thesis?
This thesis investigates the competitive strategies employed by foreign original equipment manufacturers (OEMs) in the Indian small to mid-size passenger car market to identify factors that lead to sustained competitive advantage.
What are the primary themes discussed?
The research centers on the influence of industry development, entry timing (the "date of resource commitment"), and the strategic localization of value chain activities such as R&D, manufacturing, and marketing.
What is the primary research question?
The study asks: "How could leading foreign OEMs in the Indian small to mid-size passenger car segment gain a competitive advantage?"
Which methodology is applied?
The research utilizes secondary data from company reports, annual reports, and Indian business news media, analyzed through the lens of resource-based competitive strategy theory, specifically comparing market share and entry timing.
What does the main body cover?
The main part of the thesis reviews relevant strategic theories, provides a historical and current outlook on the Indian automotive industry, and conducts an in-depth analysis of how early entry and local value chain integration impact firm performance.
Which keywords best characterize this work?
Key terms include Competitive Strategy, Foreign OEMs, Indian Passenger Car Industry, Resource-Based View, Competitive Advantage, and Value Chain Localization.
Why did Maruti Suzuki hold such a significant market advantage for so long?
As the first-mover, Maruti Suzuki benefited from 13 years of protected operations before other foreign entrants were allowed, allowing it to scale production, build a massive sales network, and deeply integrate into the local market before facing direct competition.
How does Hyundai's strategy differ from that of other early followers like Ford or Honda?
Unlike other early followers that were hesitant, Hyundai committed substantial resources from the inception of its Indian operations, allowing it to quickly develop a robust value chain and reach a market share closer to the incumbent leader.
- Quote paper
- Bernhard Wallner (Author), 2012, Competitive Strategies of Foreign Original Equipment Manufacturers in the Indian Passenger Car Industry, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/202893
