FACTORS AFFECTING BUYING BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN LUDHIANA A Project Report Submitted by
GURIQBAL SINGH Reg. No. 80101317009
In partial fulfillment for the award of the degree Of
MASTERS OF BUSINESS ADMINISTRATION
IN MARKETING At
GURU NANAK DEV ENGINEERING COLLEGE LUDHIANA AUGUST 2009
ACKNOWLEDGEMENT
I take this opportunity to express my profound sense of gratitude & respect to all those who helped me in this Research. I would like to make special mention of help and encouragement that I received from Mr. Anil Gupta & Mr. Jagmohan Syal (V.P. Marketing, Hero CRD), my project leader Mr. Rajesh Vij (A.G.M. Marketing, Hero CRD) and special thanks to Mr. Manish Kr. Singh (Dy. Marketing Manager, Hero CRD), Mr. Dhirendra Singh & Mrs. Lizu Jagdish (Marketing (Marketing Coordinator) Coordinator) which which were were criti critical cal in the develop developmen mentt of this this
project. I have profited immensely from working with many distinguished thinkers and doers, who advised me at each step. I would also like to thank the Marketing Department of Hero Cycles CR Division and people in the organization organization for sparing their valuable valuable time and providing providing useful insight’s that have made my learning experience very fruitful.
Above all I want to thanks my parents, for their continuous involvement and constant support. Finall Finally y and most most impor importan tantt I would would like like to thank thank to Faculty of GNDEC to provide provide me with such an opportunity that has enhanced my learning horizon Last but not least, I thank the almighty, may he stand with all of us.
GURIQBAL SINGH REG. NO. 8010137009 MBA (2008-10)
PREFACE I feel delighted to present my project report on “ FACTORS AFFECTING BUYING BEHAVIOR BEHAVIOR OF CUSTOMERS CUSTOMERS OF COLD ROLLED ROLLED STEEL STRIPS/COILS STRIPS/COILS IN LUDHIANA” is a matter of honor and pride for me that I got a chance to undergo my
Summer Training in a company like HERO CYCLE Ltd . (CR Division). In this period of six weeks I got familiar to the real conditions of an organization and especially to the work culture of such a big and prestigious group which has its name in the manufacturing of Two Wheelers and many others products as well as Customer services.
The first task for me was to know about the concept on which my project my project was based. based. Then I had to set criteria, on the basis of which the above concept was valued. The data was collected for each of the parameter found responsible in influencing the purchase decision of the customers through Marketing Research Program.
Hence, this project had to be completed in the Six weeks of time. As the time was limited, so there is a possibility that some matters might not have been taken into consideration, but every effort has been done from my side to include every necessary parameter and include whole information that I got from the market during surveys as well as the marketing Research Program.
GURIQBAL SINGH
CERTIFICATION
This is to certify that the research project entitled “FACTORS AFFECTING BUYING BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN LUDHIANA” submit submitted ted for the parti partial al fulfil fulfillme lment nt of requir requireme ement nt for the degree degree of MASTER MASTERS S
OF BUSINES BUSINESS S
ADMINI ADMINISTRA STRATIO TION N
URU NANAK ANAK DEV DEV at GURU
ENGINEE ENGINEERING RING COLLEG COLLEGE E , Ludh PUNJAB TECHNI TECHNICAL CAL Ludhia iana na affi affili liat ated ed to PUNJAB UNIVERSITY, UNIVERSITY, JALANDHAR JALANDHAR is a bonafide research work carried out by Guriqbal
Singh of M.B.A under my supervision and that no part of this has been submitted for any degree.
The assistance and help received during the course of the investigation have been fully acknowledged.
Mr. PARAMPAL SINGH ASSISTANT PROFESSOR GURU NANAK DEV ENGINEERING COLLEGE LUDHIANA
DECLARATION
“FACTORS RS AFFECT AFFECTING ING BUYING BUYING I here hereby by decl declar aree that that the the proj projec ectt titl titled ed “FACTO BEHAVIOUR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN LUDHIANA” is an original piece of research work carried out by me.
The information has been collected from genuine & authentic sources. The work has been submitted in partial fulfillment of the requirement of Master of Business Administration to Guru Nanak Dev Engineering College Ludhiana affiliated to Punjab technical university.
Place:
Signature:
Date:
Guriqbal Singh M.B.A. (2008-10)
EXECUTIVE SUMMARY In the age of fast fast changi changing ng Market Marketing ing strate strategie gies, s, custom customer er behavi behavior, or, new market market segments and product opportunities along with sensitivity to changing customer needs, the Hero group develops and adapts marketing strategy and philosophy. As the Hero group is known for its completely customer- driven approach. For that very reason Hero Cycles CRD undergoes this project.
The main aim of the project is to know the purchase criteria / Buying Behavior of customers of the Cold Rolled Steel Strips/ Sheets provided by the Hero Cycle C.R. Division and used in various industries (Automobiles, Bicycle etc.) in Ludhiana.
The customer’s perceive Quality as the most important factor while purchasing. More customers will be attracted towards the products if quality parameters such as surface finish, peeling off etc. are improved upon by getting continuous feedback on the quality and other other servic services es provid provided ed by the company. company. The second most import important ant factor factor is delivery system and price. The price should be competitive with the other suppliers. The third most important factor is Credit policy of the company. Better credit facility should be given to the customers and payment norms should be simplified. Quality should be used to cover the price. Improvement in quality, Services, Delivery and Rate reduction should be made to further increase the market share and to attract the new customers of C.R. Steel Strips/ Sheets.
CONTENTS CHAPTERS CHAPTER-1 ♦
INTRODUCTION OF THE PREOJECT
♦
REVIEW OF LITERATURE
♦
OBJECTIVE OF STUDY
♦
SCOPE OF STUDY
CHAPTER-2 ♦
COMPANY PROFILE
CHAPTER-3 ♦
RESEARCH METHODOLOGY
♦
UNIVERSE OF STUDY
♦
SAMPLING TECHNIQUES
♦
PERIOD OF STUDY
♦
LIMITATIONS OF STUDY
♦
SCOPE FOR FURTHER STUDY
CHAPTER-4 ♦
ANALYSIS OF TOPIC
♦
CONCLUSIONS
♦
INFERENCES
♦
SUGGESTIONS & RECOMMENDATIONS
CHAPTER-5 ♦
BIBLIOGRAPHY
♦
QUESTIONNAIRE
CHAPTER-1
INTRODUCTION TO THE PROJECT “FACTORS AFFECTING AFFECTING BUYING The The proj projec ectt was was give given n to me to stud study y the the “FACTORS BEHAVIOR OF CUSTOMERS OF COLD ROLLED STEEL STRIPS/COILS IN LUDHIANA”.
So, the area of operation for me was the MARKETING
organization. The first task for me was to know about the DEPARTMENT of the organization. concept on which my project was based. Then I had to set criteria, on the basis of which the above concept was valued. The data was collected for each of the parameter found respon responsib sible le in influe influenci ncing ng the buying buying behavi behavior or of the custom customers ers though though Market Marketing ing Research Program.
INTRODUCTION TO CONSUMER BEHAVIOUR The Business market is comprised of organizations that in some form are involved in the manufacturing, distribution or support of products or services sold or otherwise provided to other organizations. The amount of purchasing undertaken in the business market easily dwarfs the total spending by consumers. Because the business market is so large, it draws draws the intere interest st of milli millions ons of compan companies ies worldw worldwide ide that that market market exclusi exclusivel vely y to business customers. For these marketers understanding how businesses make purchase decision is critical to their organization’s marketing efforts. In some ways understanding the business market is not as complicated as understanding the consumer market. For example, in certain business market, purchase decision hinge on the outcome of a bidding proces processs betwee between n compet competit itors ors offeri offering ng simila similarr produc products ts and servic services. es. Thus Thus unlike unlike consumer markets, where building a recognizable brand is very important, for many purchase situations in the business market this not the case.
However, in many other ways business buying is much more complicated. For instance, the demand by business for products and services is affected by consumer purchases (called derived demand) and because so many organizations may have a part in creating consume consumerr purcha purchases ses,, a small small swing swing in consum consumer er demand demand can create create big changes changes in business purchasing. Automobile purchases are a good example. If consumer demand for cars increases many companies connected with the automobile industry will also see demand for their product and services increase. Under these condition companies will ratchet up their operations to ensure demand is met, which invariably will lead to new purchases by a large number of companies. In fact, it is conceivable that an increase of just one or two percent for consumer demand can increase business demand for products and services by five or more percent. Unfortunately, the opposite is true if demand declines. Trying to predict these swings requires businesses to not only understand their immediate customers but also the end user, which as we will discuss, may be will down the supply chain from where the business operates.
WHO MAKES UP THE BUSINESS MARKET? There are millions of organizations worldwide selling their products and services to other organizations. They operate in many industries and range in size from huge multinational companies with thousands of employees to one-person small businesses. With such a large number of originations and industries contained within the business market, a marketer can obtain a better picture of who is involved by looking at popular business classific classification ation systems set up by international international governments, governments, such as the North American American Industrial Classification system (NAICS), which covers Canada, Mexico and the United States and the International Standard Industrial Classifications (ISIC), which is widely used in Europe. These reports provide descriptions of hundreds of industry classification.
Supply Chain Members The supply chain consists of mostly for-profit companies engaged in activities involving product creation and delivery. Essentially the chain represents major steps needed to manufacture a product that will eventually be sold as a final product. Each member of the supply chain purchases products and services enabling them to carry out its business objectives. When making purchase decisions supply chain members may be motivated by such factors as:
➢
Product cost
➢
Return on investment
➢
Assurance of consistent supply
➢
Reciprocity with supplying firm
An example of purchasing occurring in the supply chain includes:
➢
Manufacturing and Plant equipment
➢
Information Technology
➢
Offices Supplies
➢
Professional Business Services, etc.
Business User Markets Besides selling final products and services to supply chain companies, several additional User markets also make purchases either for their own consumption or they buy with the intention of redistributing to others. In these purchase situations the buyer generally does not radically change the product from it’s from when it was purchased from a products manufacture.
BUSINESS MARKET V/S CONSUMER MARKET?
For marketers, the selling environment of business markets present uniquely different circumstances when compared to selling to consumers. At the beginning of this tutorial we saw two ways in which consumer co nsumer and business markets differ: 1) Business markets are more likely to be price driven than brand driven, and 2) Demand in business markets tend to be more volatile than consumer markets.
However, the two markets are dissimilar in other ways requiring marketers to take a diff differ erent ent appr approa oach ch when when sell sellin ing g to busi busines nesss cust custom omer erss than than to consu consume mers rs.. Thes Thesee differences include: ➢
How decisions are made. Existence of experienced purchasers. purchasers. Time needed to make buying decision. Size of purchases. Number of buyers.
➢
Type of promotional effort needed to reach buyer.
How Decision Are Made In the consumer market a very large percentage of purchase decisions are made by a single single person. person. There There are situati situations ons in which which multi multiple ple people people may be involv involved ed in a consumer purchase decision, such as a child influencing a parent to choose a certain brand of cereal or a husband and wife deciding together to buy a house, but most of the time purchases are individual decisions. The business market is significantly different. While single person purchasing is not unusual, especially within a small company, a significant percentage of business buying, especially within larger organizations, requires of many. In the marketing literature those associated with the purchase decision are know known n to be part part of a Buyi Buying ng Cent Centre re,, whic which h cons consis ists ts of indi indivi vidu dual alss with within in an organization that perform one or more of the following roles:
➢
Buyer – Buyer – Buyer is responsible for dealing with suppliers and placing orders (e.g., purchasing Agent).
➢
Decider – Decider has the power to make the final purchase decision. (e.g.,
C.E.O). ➢
Influencer – has the ability to affect what is ordered such as setting order specifications (e.g., engineers, researchers, product manager).
➢
User - those who will actually use the product when it is received (e.g., office staff etc).
➢
Initiator – any buying centre member who is the first to determine that a need exist.
➢
Gatekeeper – anyone who controls access to other Buying Center members (e.g., administrative assistant).
Experienced purchasers As noted in the discussion of the buying center, organizations often employ purchasing agents or professional buyers whose job is to negotiate the best deals for their company. Unlike Unlike consum consumers ers,, who often often lack lack inform informati ation on when when making making purchas purchasee decisi decisions, ons, professional buyers are generally as knowledgeable about the product and industry as the marketer who is selling to them.
Decision Making Time Depending on the product, business purchase decisions can drag on for an extensive period. Unlike consumer markets where impulse purchasing is rampant, the number of people involved in business purchase decisions results in decisions taking weeks, months, or even years.
Larger purchases For products that are regularly used and frequently purchased, businesses will often buy a larger volume at one time compared to consumer purchases. Because of this business purchasers often demand price breaks (e.g., discounts) for higher order levels.
Number of Buyers While there are several million companies worldwide that operate in the overall business market, within a particular market the number is much smaller. For example, while in the
United States there are 95 million households who may shop at a grocery store, there are only a few thousands grocery grocery stores with many of these centrally centrally controlled controlled as part of a chain of stores. Additionally, within some industries buyers are highly concentrated in certai certain n geograp geographic hic areas. areas. Conseq Consequen uently tly,, compar compared ed to consum consumer er product products, s, market marketing ing efforts are confined to a smaller targeted group.
Promotional Focus Companies who primarily target consumers often use mass advertising methods to reach an often often widely widely disper dispersed sed market market.. For busine businessss-toto- busine business ss market marketers ers the size size of individual orders, along with a smaller number of buyers, makes P2P contact by sales representatives a more effective means of promotion.
BUSINESS BUYING BEHAVIOR To cap our discussion of the business market we now look at how purchasing decisions are made. made. Busine Business ss purcha purchasin sing g follow followss the same same fivefive-ste step p buying buying proces processs faced faced by consumers:
1. Need Need Reco Recogn gnit itio ion n 2. Search 3. Eval Evalua uate te Op Opti tion onss 4. Purchase 5. After Purchase Evaluation.
OBEJECTIVES OF RESEARCH Primary Objective:
To study the purchase criteria of the customers and identify the factors that influence the Customer Buying Behavior in respect of Cold Rolled Steel Strips/Sheets provided by the used in variou variouss indust industri ries es (Autom (Automobi obiles les,, Bicycl Bicycle) e) in Hero Her o Cycles Cycles (C.R. (C.R. Divisio Division) n) used Ludhiana.
Secondary Objectives: Objectives: 1. To find the major Specif Specifica icatio tions ns and Grades Grades of Cold Rolled Rolled Steel Steel Strips/ Strips/ Sheets Sheets used in various type of industries in Ludhiana.
2. To find out the the requirement requirementss of various various types of of industries industries in in Ludhiana Ludhiana in which cold Rolled (C.R) steel strips/ sheets are used as a raw material.
3. To find out the the market share of the Hero Hero Cycle Cycle CR Divisio Division n in Ludhiana Ludhiana Region. Region.
4. To know about about the future future expans expansion ion plans plans of various various organiza organizati tions ons & ascert ascertain ain their increased buying from Hero Cycles CR Division.
CHAPTER-2
HERO GROUP GROU P PROFILE PROF ILE HERO HE RO GROUP GRO UP - A name synonymous with the two wheelers in India began its journey
around four decades ago. Like every success story, Hero’s saga contains an element of
spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning. The Hero Group began with a simple philosophy: “To provide excellent transportation to the common man, at a price he could easily afford” . It is this spirit which drives
Hero, even today the dream of providing total satisfaction in all its spheres of activities.
The saga of HERO started in 1956 . Starting as manufacturer of bicycle components,
Hero Hero has today today grown grown into into multi multi-uni -unit, t, multi multi-pr -produc oduct, t, geogra geographi phical cally ly divers diversifi ified, ed, manufacturing companies for bicycles, motor cycles, mini motor cycles, mopeds, cold rolled steels and components. The flagship company of the group HERO CYCLES LTD. entered entered into the “GUINNESS BOOK OF WORLD RECORDS” as the largest bicycle manufacturers of the world in 1986 and continues to hold the envious record ever since then. Currently it is producing 21500 bicycles per day. Group Turnover is Rs. 20000 Crore in 2007-2008 of which EXPORT share is more than 15%. The exports are being b eing made to all parts of the world including sophisticated markets of Europe & US. Today Hero is the largest largest exporter of two-wheel two-wheelers ers in India, besides besides being the fastest growing Indian Two-wheeler Company.
One of the group companies, companies, Hero Honda also awarded as Company of the Year by Economic Times in 2009 as it increased its market share from 54% to 58 %.The main
compon componen entt of all all Hero Hero grou group p comp compan anie iess are are CR Stee Steell ther theref efor oree grow growth th in thes thesee companies means growth in Hero Cycles CR Division.
The group has redefined the concept of ANCILLIARISATION by extending technical & managerial support to the ancillaries. Consequently, HERO HONDA has managed to achieve indigenization of over 95% - a Honda record worldwide.
Hero is proud to have a DEALER NETWORK of more than 4000, which has been cemented cemented with warmth of personal personal relationship, relationship, rapport & fraternit fraternity. y. With With a deep sense of belonging to the Hero fraternity, the Group’s dealers have catalyzed growth and act as a strong bridge between the customers and the group. More than 20,000 employees of the group have vividly and continuously demonstrated that human endeavor can ceaselessly achieve excellence and distinction given a congenial and conducive environment. This has been amply testified in very low employee turnover and world-class productivity. The flag ship company of the group HERO CYCLES LIMITED has been practicing JUST-IN-TIME JUST-IN-TIME (JIT) INVENTORY since the period when the term was not widely
known. The practice is prevalent in all the group companies. The group Chairman Mr. Brijmohan Lal, is one of the leading business personalities of the country. He was awarded Businessman of the year award in 1994 by a leading business journal of India. India. Mr. Brijmohan Lal is the former President of Association of Indian Indian Automo Automobil bilee Manufa Manufactu cturer rerss (AIAM) (AIAM) as well well as of Confed Confedera eratio tion n of Indian Indian Industries (CII), the premier Industry Association of India. On Enterprise Resource Planning, the Group has already started its journey and has started working on SAP R/3 module in Hero Honda, Hero Cycles Ltd. and Hero With the expert expertise ise availa available ble in-hou in-house se the group group has Cycles Ltd. (C. R. Division Division)) . With mustered to implement SAP in other Companies on its own.
COMPANY PROFILE Hero Her o Cycles Cycles Limited Limited (Cold (Cold Rolling Rolling Divisio Division) n) has been been promot promoted ed under under backwar backward d
integration integration plan by Hero Cycles Cycles Limited, Limited, the world’s world’s largest bicycle manufacturer. manufacturer. The
plant was commissioned in July, 1991 at Ludhiana at a cost of Rs. 320 million with an installed capacity of 50,000 MT in consultation with MECON, Asia’s largest engineering consultants which had a technical collaboration with WEAN UNITED, U.S.A. An additional 6-HI COLD REDUCTION MILL based on a joint Engineering & design by MECON & Hero Cycle Ltd . along with hydrogen annealing and Electro
cleaning line has been installed for better product quality and capacity enhancement to 1,30,000 TPA with an additional investment of Rs. 700 million. The plant was commissioned primarily to cater to the group requirements. However the product was soon accepted by major automotive and White Goods manufacturers and today has been supplied to other market segment also, e.g. automobile sector, Maruti Udyog Limited ancillaries/vendors for both formed and drawn components -in D. DD, EDD, MC-11 and other medium and high carbon grades. Towards realization of CUSTOMER DELIGHT, the plant has been investing constantly in up gradati gradation on of Tec Technol hnology ogy and Human Human Resource Resourcess . Cold Cold Rollin Rolling g Divisi Division on is
reno renowne wned d for for its its trad tradit itio ion n in main mainta tain inin ing g high high stand standar ards ds in the the Prod Product uct Qual Qualit ity y constan constantly tly,, Reliab Reliabili ility ty in custom customer er servic servicing ing and is also also commit committed ted to attune attune to the changing quality standards through continuous up gradation of Product, Process and Human Resources. At the base of all Hero Group’s activities is one basic ingredient - cold rolled steel. Cognizant Cognizant of the importance importance to ensure perfect quality quality of the basic raw material, the Group established its own cold rolling mill for steel processing in 1990 . With an
installed capacity of 50,000 MT per annum, the mill has state-of-art equipment including 4-HI reversible cold rolling-cum-skin pass mill with rewinding line, C. R. Slitter, and a modern close annealing facility to maximize the quality of its products.
The The mill mill has seve severa rall firs firsts ts to its its cred credit it,, incl includ udin ing g hydr hydrau auli licc auto auto gauge gauge cont contro rols ls,, comput computer eriz ized ed pass pass sche schedu dule les, s, auto automa mati ticc slow slow down down and and a tota totall lly y encl enclos osed, ed, semi semi continuous pickling line; apart from effective anti-pollution and safety controls which were incorporated from the very beginning.
The company has also implemented SAP R/3 with the assistance of SIEMENS & MECON.
Hero Cycles Limited, C. R. Division has also entered into an agreement for technical assistance to improve operation & maintenance of the plant with the help of technology & know how from Kawasaki Steel Corporation, Japan. Kawasaki Steel Corporation will help C. R. Division for improvement of Production Yield, removal of Defects, reduction of Custom Customer er Return Returnss & improv improveme ement nt of Mainte Maintenan nance ce Operati Operations ons agains againstt certai certain n predetermined Targets. Kawasaki Steel possesses expertise based on the wealth & experience and expertise acquired through development, operation & maintenance of its own Cold Rolling Plant in Chiba and Mizushima Works, Japan. Primarily Cold Rolling is done for two purposes:
1) To improve the surface finish of the steel.
2) To improve the gauge accuracy.
THE QUALITY POLICY OF THE COMPANY
TO MEET THE CUSTOMER NEEDS, EXPRESSED AND IMPLIED BY MAINTAINING CONSISTENCY IN QUALITY THROUGH CONTINUOUS UPGRADATION UPGRADATION OF TECHNOLOGY AND HUMAN ENDEAVOR FOR MAXIMIZING THE RETURN ON INVESTMENT TO THE STAKE HOLDERS
SWOT ANALYSIS STRENGTHS ➢
MANAGEMENT WITH VISION
➢
GOOD CORPORATE IMAGE
➢
LOCATION ADVANTAGE
➢
STRONG BRAND IMAGE
➢
MATERIAL QUALITY SATISFACTORY
➢
GOOD CUSTOMER BASE
➢
CAPTIVE CONSUMPTION
➢
6 HI MILL WITH ADVANCED CAPABILITIES
➢
HYDROGEN ANNEALED FURNACE FOR BETTER FINISH
➢
SAP/ERP IMPLIMENTATION
➢
CAN PRODUCE SPECIAL GRADE MATERIAL
➢
INFRASTRUCTURAL FACILITIES FOR NORTHERN REGION
WEAKNESSES ➢
INABILITY TO ACCOMMODATE CUSTOMERS IN URGENCIES
➢
INTER/ INTRA DEPARMENTAL COMMUNICATIONS NOT EFFECTIVE
➢
RECCURANCE OF SIMILAR PROBLEM
➢
INEFFECTIVE IMPLEMENTATION OF CORRECTIVE MEASURES
➢
DELAY & DAMAGES DURING TRANSPORTATION
➢
➢
➢
NEW DEVELOPMENTS, PERPETUAL DELAY
UNPROFITABLE PRODUCT MIX
NARROW WIDTH LIMITATION IN 760 MM
➢
PERCIEVED HIGH PRICE OF PRODUCT
➢
DELAY IN DELIVERY
➢
LESS CREDIT PERIOD
OPPORTUNITIES
➢
GROWTH IN AUTO/ WHITE GOODS SEGMENTS
➢
GROWTH N ECONOMY WILL PULL THE DEMAND
➢
DIRE DIRECT CT// INDI INDIRE RECT CT EXPO EXPORT RT OPPO OPPORT RTUN UNIT ITIE IES S TO INCR INCREA EASE SE THE THE MARKET
➢
FORWARD INTEGRATION IN PRESS MENTAL COMPONENTS/ TUBES/ COATED/ WIDER WIDTH
➢
BACKWARD INTEGRATION LIKE TIE UP WITH SOME HR PRODUCER
➢
QUALITY SHOULD BE USED TO COVER THE PRICE
➢
BY SUPPLYING RIGHT QUANITY AT TIME , SATISFACTION OF THE CUSTOMER CAN BE INCREASD
➢
THE COMPANY CAN INCRESE ITS MARKET SHARE BY INCRESING ITS PRODUCTION CAPCITY
➢
INCR INCREA EASE SE MARK MARKET ET SEGM SEGMEN ENTS TS TO CATE CATER R AND AND TO INCR INCREA EASE SE CUSTOMER BASE
THREATS
➢
HUGE IDLE & ADDITIONAL CAPACITY IN EXPANSIONS IN NEW MILL.
➢
SHIFT OF CR MARKET TO HR, HR OILED AND PICKLED MARKET.
➢
EXISTENCE OF COMPETITION WILL CUT DOWN PROFITS
➢
REGIONALISATION DUE TO HIGH TRANSPORTATION COSTS.
➢
DECIMATION OF DD/ EDD GRADES.
➢
USAGE PATTERN CHANGING FROM CR TO GALVANIZED, COLOUR
.
COATED STEEL
➢
MAJOR COMPITITORS OF HERO ARE IMPROVING THEIR QUALITY
AND DELIVERY
➢
SMALLER SUPPLIER ARE INCREASING THEIR CREDIT PERIOD
➢
THE
POLICIES
OF
THE
COMPARED TO HERO CYCLES CR DIVISON
COMPETITORS ORS
ARE
FLEXIB XIBLE
AS
PROCE PROCESS SS ROUT ROU TE Before the execution of a production orders the details of process route and product specifications are sent to the shop floor in the form of a small rectangular card. This card accompanies the coil through out its process life. The different work centers work centers in HERO CYCLES Ltd. C.R. Division are:
1).
HR (Hot Rolled) SLITTER
The HR Coil is first sent to the HR Slitter, where it can be slit in maximum 4 widths. The widths are decided based on factors like minimization of slit loss, order priority etc. This PRODUCTIO TION N PLANNI PLANNING NG & acti activi vity ty is bein being g done done manu manual ally ly at pres presen entt by PRODUC CONTROL department, but the optimization package being developed by MECON will
calculate this, and suggest the most optimum-slitting pattern for the HR Coil. A 4 digit unique code is assigned to the HR Coil, and a suffix of A, B, C and D is added to this number after the coil is slatted. This identity of slatted coil is maintained till it reaches the CR slitting stage. The Pull through HR slitting line cuts the rough edges of the HR coils, slitting it into narrower widths. The HR Slitter has a production ca pacity of 20 tonnes/hr.
2).
PICKLING
After the HR slitting, the coil goes through the process of pickling that the coil is sent through through various various chambers chambers containing containing acids, which removes the surface surface impuritie impurities. s. The pickling line uses three acid tanks and three rinse tanks. After the pickling operation, the coil is sent for cold rolling. As it was mentioned above, the route, which the coil has to take, is predetermined, and is displayed, on a card, which accompanies the coil. It offers the following Advantages: ➢
Removes ferrous scales from the surface of the HR Coils.
➢
Minimum carryover of chloride.
➢
Minimal set–up, hence more adaptable to quick changeovers.
➢
A hot air blower at the end en d dries off the excess water on the strip.
3).
ROLLING
Rolling can be done either in 6Hi mill or in 4Hi mill depending upon the desired thickness, and available capacity. The rolled coils have to be rewound to decrease the tension. This can be done either on 2Hi, 4Hi or 6Hi mill. Rolling also leads to increased hardness, which makes the coils brittle. The 6-Hi mill has automatic gauge control, pass schedule storage and auto intermediate slow down. The mills give flat strip shape, minimized edge drops and thinner gauges.
4).
ANNEALING
Annealing is a process of Heating, Soaking and Controlled cooling of a Coil in a nonoxidizing atmosphere. This process renders the strip soft and restores the ductility and formability. There are two types of annealing: HYDROGEN ANNEALING. NITROGEN ANNEALING.
5). SKIN PASS After Annealing the coil is sent for skin pass. This Process imparts a surface finish for e.g. matte, mirror etc. to the coil, depending on the customer requirements. This process can be carried out on o n all 3 rolling mills. It offers the following Advantages: ➢
Skin Passing removes stretcher strain or Luder Lines.
➢
It provides desired finishes such as Matt, Bright on the strip surface.
➢
Imparts flatness to the strip.
6).
CR(Cold Rolled) SLITTER
After the skin pass the coil is sent to CR slitting machines. The slit coils are again allotted a new number, and the previous identity is lost after this process. Other considerations here are the inner and outer diameter and number of coils.
7). CUT TO LENGTH If the customer customer requires requires strips strips as final goods then the coils coils are sent to Cut to Length (CTL) machines which cut the coil in the desired length of the strips.The length can vary from 400mm to 3500mm.
8).
PACKING
The final process is packing of coils and strips, and subsequent dispatch. This is the complete description of the process route. It is not necessary for the coil to go through all the processes mentioned. Depending on the type of product and customer’s requirement some of these processes can be skipped or repeated.
PRODUCT APPLICATIONS Cold rolled steel strips are manufactured by C.R. Division to meet a variety of uses. Some of the common applications are detailed below:Automobiles & Auto Components. Bicycle and bicycle components. Pipes and Tubes. Refrigerators. Furniture. Shutters. Bearings. Cable tape. Transformers and Radiators. Electric steel (Laminations, TV chassis, picture tube frames, meters, switch gears). Domesti Domesticc applian appliances ces (Washin (Washing g machine machines, s, fans, fans, stoves, stoves, sewing sewing machines machines,, ovens, ovens, toasters, grills etc) Office automation products (Computer components, typewriters, Photostat machine components etc)
MAJOR CUSTOMERS OF HERO CR DIVISION 1.
MARUTI UD UDYOG LI LIMITED
2.
ESCORTS LIMITED (MSD)
3.
ESCORTS LI LIMITED (T (TRACTOR DI DIVISION)
4.
ESCO ESCORT RTS S LIM LIMIT ITED ED (YAM (YAMAH AHA A MOT MOTOR OR CYCL CYCLES ES DIVI DIVISI SION ON))
5.
HERO HONDA MOTORS LI LIMITED
6.
TECHNICO IINDUSTRIES (P (P) LI LIMITED
7.
GABRIEL IN INDIA LIMITED
8.
GODREJ GE GE AP APPLIANCES LI LIMITED
9.
MANDAP INTERNA RNATIONAL LIMITED
10.
HERO CYCLES LIMITED
11.
LOHIA MA MACHINES LI LIMITED
12. 12.
MOONLIGH LIGHT T AUTO (P) LIM LIMIITED TED
13.
BHURJEE MACHINE TOOLS
14. 14.
SHEE SHEET T COM COMPO PONE NENT NTS/ S/PI PION ONEE EER R AUT AUTO O (KA (KAY Y JAY) JAY)
15.
HAWKINS CO COOKERS LI LIMITED
16. 16.
RAIL RAIL COAC COACH H FACT FACTOR ORY, Y, KAPU KAPURT RTHA HALA LA
17. 17.
INDO NDO AS ASIAN IAN FU FUSEGARS GARS LIMI IMITED TED
18.
PGT CO COMPONENTS LI LIMITED
19. 19.
AGRO AGRO ENGI ENGINE NEER ERIN ING G WOR WORKS KS/A /ASI SIAD AD ENGI ENGINE NEER ERS S
20. 20.
HORIZO RIZON N IN INDUS DUSTRIES RIES PROD RODUCTS CTS
21.
JAY YUSHIN LIMITED
22. 22.
DHANJAL JAL EN ENGINE INEERI ERING LIMIT IMITED ED
23.
MULTITECH PRODUCTS
24. 24.
MITA ITASO APPLIAN LIANCE CES S LIMI LIMIT TED
25.
PERFECT WHEELS
26. 26.
SETHI IN INDIS DISTRI TRIAL CO CORPO RPORAT RATION ION
27. 27.
R.R. .R. AU AUTOMOT OMOTIV IVE E CO COMPONE ONENTS
28. 28.
SDL SDL AUT AUTO O PVT PVT.. LTD LTD.. (FOR (FOR CAR CAR SEA SEAT T COM COMPO PONE NENT NTS) S)
29.
JBM TOOLS LIMITED
30. 30.
SHIVA IVANI LOCKS CKS (P) (P) LIMIT IMITE ED
31. 31.
VENU VENUS S META METALS LS/V /VEN ENUS US STAM STAMPI PING NGS S
32.
VICTORA TOOLS
33.
OMAX ENGINEERS
34.
EMM KAY INDUSTRIES
35. 35.
INTE INTERN RNAT ATIO IONA NAL L ELEC ELECTR TRON ONIC IC DEV DEVIC ICES ES LIM LIMIT ITED ED (IE (IEDL DL))
36. 36.
STEEL TUBES BES OF OF IND INDIA IA LIMI LIMITE TED D
37.
AUTO TECH
38. 38.
AUTO AUTO MAX MAX (UN (UNIT IT OF OMAX MAX AUT AUTO O LIM LIMIT ITED ED))
39. 39.
HIMA HIMACH CHAL AL FAST FASTEN ENER ERS S LIM LIMIT ITED ED (VEN (VENDO DORS RS FOR FOR PUROLATOR)
40. 40.
NATI NATION ONAL AL ENGI ENGINE NEER ERIN ING G INDU INDUST STRI RIES ES LIMI LIMITE TED D
41.
BPL (I (INDIA) LT LTD.
42. 42.
ELECTRO CTROL LUX IND INDIA LIMIT IMITE ED
43. 43.
TECU TECUMS MSEH EH PROD PRODUC UCTS TS INDI INDIA A LIMI LIMITE TED D
44.
BAJAJ TEMPO LIMITED
45. 45.
BAJAJ JAJ AUT AUTO (ANCI ANCIL LLARI ARIES) ES)
46.
INDICA (ANCILLARIES)
47.
TECH AUTO LIMITED
48. 48.
DAEW DAEWOO OO MOTO MOTORS RS LIM LIMIT ITED ED (AN (ANCI CILL LLAR ARIE IES) S)
CHAPTER-3
RESEARCH METHODOLOGY
The Research Design is the basic framework, which provides the basic guidelines for the Research process. It is a blue print according to which research is to be conducted. For carrying out my research work, I carried out survey and respondents were contacted at their places. The primary data is collected co llected with the help of Questionnaire.
Survey Method: The The Surv Survey ey Meth Method od was was sele select cted ed to obtai obtain n the the need needed ed info inform rmat atio ion n by aski asking ng the the questions to the respondents through the Questionnaire developed, and passed by our HOD Marketing. As per Marketing Department this method was the suitable for the project. Surveys are generally conducted both in qualitative and quantitative researches. After decision about the sampling, the questionnaire was designed and the respondents were contacted to answer the question. This process of getting answer is known as interviewing.
Two significant factors affect the effectiveness of survey methods are:
1. Word Wordin ing g of quest questio ionna nnair iree (It (It must must be such such that that it extr extrac actt desi desire red d info inform rmat atio ion n accurately and unbiased.) 2. Ability Ability and willingn willingness ess of the the respondent respondent to give give accurate accurate and unbiased unbiased informat information. ion.
Method Used in conducting survey:
Personal Interview: Personal Personal interview interview is the process process of communication communication where face to face contact between the investigator and the respondent is established. It is the conversation arranged for the purpose of obtaining views of the respondent on the topic of interest to the interviewer. Under this method the investigator presents the questionnaire in person at office of the respondent. Being active participant, he establishes a close rapport with the respondent and motivates him or her to answer all the question satisfactory.
Samples: Since I have to make a survey of various type of industries in Ludhiana which are using Cold Rolled (C.R.) Steel Strips/Sheets, thus I have taken a proper sample in proportion of various industries giving due weight age to number of various type of industries using C.R.Steel Strips/Sheets in Ludhiana.
NUMBER OF AUTOMOBILE INDUSTRY = 27
NUMBER OF BICYCLE INDUSTRY = 21
NUMBER OF OTHER INDUSTRY = 12
SUGGESTIONS & RECOMMENDATIONS RECOMMENDATIONS
The customers of CR Steel Strips/Coils perceive quality as the most important factor while while purcha purchasin sing. g. More More custom customers ers will will be attrac attracted ted toward towardss the produc products ts if qualit quality y para parame mete ters rs such such as surf surfac acee fini finish sh,, peel peelin ing g off off etc. etc. are are impr improve oved d upon upon by gett gettin ing g continuous feedback on the quality and other services provided by the company. The second most important factor is delivery system and price. The price should be competitive with the other suppliers. The third most important factor is Credit policy of the company. Better credit facility should be given to the customers and payment norms should be simplified. Quality should be used to cover the price. Improvement in quality, Services, Delivery and Rate reduction should be made to further increase the market share and to attract the new customers of C.R. Steel Strips/ Sheets. There are some Suggestions, which should be considered in the future for better customer satisfaction. These are: ➢
Prices should be competitive.
➢
Delivery should be on time as per Quantity scheduled.
➢
Lifting of Material should quickly after the sale for better customer satisfaction
➢
Better credit facility should be given to the customers
➢
In future to attract the new customers Discount should be given.
➢
Commun Communica icati tion on channel channelss should should be improv improved ed for provid providing ing the maximu maximum m
satisfaction.
LIMITATIONS OF STUDY ➢
Presence of Human Error: - Some respondents have not given the proper
answers, they are not aware of the objectives undertaken for research purposes.
➢
Time Constraint: - Time has also affected the research due to less availability
of number of days; survey was conducted in few days.
➢
Theree was was no prope properr recor record d main mainta tain ined ed by the the Technical Technical Complexities: Complexities: - Ther
customers about the consumption of C.R. Steel Strips/ Sheets.
➢
Non Co-oper Co -operation ation of some so me Responde Res pondent nts: - Some Respondents did not properly
co-operated for giving answers, the basic reason was non-availability of time.
➢
Respondent Biasness: - Some companies were very much favor in one company
but they were unable to provide logic behind it.
CHAPTER-3
Ques1. What type of products do you manufacture?
%AGE OF
NO. OF
RESPONDENTS
RESPONDENTS
Automobile parts
45%
27
Bicycle parts
35%
21
Others
20%
12
TYPE OF PRODUTS
INFERENCE The graph represents that 45% of the industries that use cold rolled steel in Ludhiana are manufacturing automobile parts, 35% of the industries manufacturing bicycle parts & rest of them i.e. 20% industries are manufacturing Stampings, Radiators, White Goods etc.
Ques2. What is your status in supply chain?
STATUS IN SUPPLY
%AGE OF
NO. OF
CHAIN
RESPONDENTS
RESPONDENTS
1st tier
50%
30
2nd tier
23.33%
14
3rd tier
26.67%
16
1 tier
2 tier
3 tier
27%
23%
50% 50%
INFERENCE The major amount of industries using cold rolled steel (50%) in Ludhiana comes in 1st tier means they are direct vendors of the industries like Hero cycles, Hero Honda Motors Limited, Maruti Udyog Limited etc.The 23.33% of industries comes in 2nd tier that are vendors of 1st tier industries & 26.67 % industries comes in 3rd tier that are vendors of 2nd tier industries.
STATUS IN
AUTO
BICYCLE
OTHER
INDUSTRY
INDUSTRY
INDUSTRIES
1st tier
19
8
3
2nd tier
6
5
3
3rd tier
2
8
6
SUPPLY CHAIN
INFERENCE The graph indicates the distribution of various industries under different levels of supply chain. This analysis will be further helpful in analyzing the impact of market fluctuations among various industries.
Ques3. Do fluctuations in market affect your buying behavior?
%AGE OF
NO. OF
RESPONDENTS
RESPONDENTS
Yes
60%
36
No
40%
24
OPTION
INFERENCE Out of the the tota totall numb number er of resp respon onde dent ntss 40% 40% of the the resp respond onden ents ts said said that that mark market et fluctuations do not affect their buying behavior while remaining 60% industries are affected by fluctuations in market. This shows that if there are market fluctuations, then there is a change in buying behavior i.e. while making purchase, the factors normally kept in mind are ignored & some other factors are considered keeping in view the prevailing circumstances.
1ST TIER
2ND TIER
3RD TIER
INFERENCE The above above graphs graphs show show the effect effect of fluctu fluctuati ations ons in market market on variou variouss indust industri ries es classified according to their status in supply chain. Through these we can infer that most
of the industries in 1 st tier are not very much affected by market fluctuations while 2nd tier industries are less affected by the same. 3rd tier industries are the most affected ones when market fluctuations take place.
Ques4. In which form do you buy steel?
FORM OF CR
%AGE OF
NO. OF
STEEL
RESPONDENTS
RESPONDENTS
CR Coils
25%
15
CR Strips
15%
9
BOTH
60%
36
INFERENCE The graph shows that most of the companies use both CR steel strips as well as coils in thei theirr manuf manufac actu turi ring ng oper operat atio ions ns.. CR stri strips ps are are purcha purchase sed d by very very less less numb number er of companies I.e. most of those which do not have their own CTL (Cut to Length) machines. So they specify their strip sizes according to their product requirements.
Ques5. Which grade(s) of steel do you purchase?
GRADE
PERCENTAGE
D
44
DD/EDD
36
MC-11,12
15
OTHERS
5
INFERENCE The percentage share of D (Drawing) Grade steel is much higher because it is the main material material grade used in manufactur manufacturing ing of bicycles bicycles & Large amount amount of D Grade steel is consumed by the Hero Cycles only. Moreover D grade steel is cheaper than other grades as it has lesser carbon content. Other higher grade steels like DD, EDD, MC-11, 12, IF etc are used in manufacturing other components that require more strength like auto parts, stampings, white goods etc.
Ques7. Which factors do you consider the most while purchasing CR steel? (Rank 1 – 5 in order of preference) ATTRIBUTES
AVERAGE RANKING AUTO INDUSTRY
BICYCLE INDU.
OTHERS
PRICE
2.33
1.57
3.25
QUALITY
1.89
2.29
3.01
DELIVERY TIME
2.11
2.86
2.99
CREDIT PERIOD
4.44
4.01
2.98
4.22
4.28
2.77
AFTER SALES SERVICE
INFERENCE
As the graph represents that most of the customers in Auto industry prefer Quality as the major factor while making purchase decision. Delivery time is another factor influencing their buying behavior followed by price and after sales service. It can be seen that in auto industry credit period allowed by the seller is given the lowest rank. This does not mean that this factor is not taken under consideration but it suggests that keeping in view the other factors, this attribute is given the lowest preference.
INFERENCE It can be seen very clearly that in bicycle industry highest preference is given to Price as an attribute while making purchase. The other factor influencing choice of buyers is quality followed by delivery time, credit period allowed & least preference is given to after sales service.
INFERENCE As the graph indicates that in other industries, after sales service & credit period allowed by sellers are major factors that influence the minds of customers while making purchase decision. Other factors are also closely held with all these attributes.
Ques8. From which supplier(s) you are buying presently?
INFERENCE A major chunk of Ludhiana CR steel users purchase CR steel from Hero Cycles CR Division. As per the graph Bhushan Steels is a major competitor of Hero CRD with almost 30% of total sales. Followed by Avon Group, Atlas strips, TATA, SAIL, etc.
Ques9. Do you have any expansion plans in near future?
INFERENCE As we know that bicycle as well as auto industry is expanding rapidly, so most of the organizations have expansion plans to cater to the increasing future market demand. 80% of the companies said that they have expansion plans in near future i.e. within a period of 1-2 years. The capacity is expected to increase by approx. 30%. This means that the future of CR Steel industry is very bright.
Ques11. What are the major quality related problems that you face while purchasing CR steel?
Pe Q ua rc Ov 6 en lit er Ca 7 ta y Wi m Ru 19 Re ge dt be sti lat Th h 8 r ng ed ic La 11 Pr kn mi Gr 4 ob es na ai le Pit s 5 tio n m te No n 40 op s d Pr en ob in INFERENCE le g m The above graph shows the major quality related problems problems as faced by customers. customers. Most of the customers customers do not face any kind of quality quality related problem. If at all, problems like rusting, steel being pitted, improper lamination, inappropriate thickness etc are faced by the custom customers ers.. If encount encountere ered d frequen frequentl tly, y, the custom customer er may reduce reduce the amount amount of purchasing from that particular seller and may shift to some other source.
Rating of HERO CYCLES LIMITED CR DIVISION IN TERMS OF FOLLOWING PARAMETERS a. Com Company pany imag imagee b. Delivery c. Confor Conforman mance ce with with specif specifica icatio tions ns d. Afte Afterr sal sales es serv servic ices es e. Response time f.
Accommodation of urgencies
ATTRIBUTES
PERCENTAGE RATING
COMPANY IMAGE
81.66
DELIVERY
52.66
CONFORMANCE WITH SPECIFICATIONS
91.66
AFTER SALES SERVICES
71
RESPONSE TIME
40
ACCOMMODATION OF URGENCIES
65
INFERENCE The graph very good image from graph indi indica cate tess that that HERO HERO CRD CRD enjo enjoys ys a very from the
customers’ point of view. More than 80% customers believe that HERO CRD is a well known and reputed company. This is a major factor considered while major factor that customers consider while making their purchase dec isions. Delivery does not get much rating essentially due to recession as there has been a
shortage of raw material in the market since couple of months. It was seen that the customers shifted to other suppliers owing to poor delivery by HERO CRD. The company gets high rating in conformance with specifications i.e. delivering
the material having exactly same chemical as well as mechanical properties as specified by the customers. The company was given average rating in terms of after sales service i.e. it is
neither too good nor too bad. The company is very poor in giving proper response response to customer’s grievances.
This factor may affect the company in a bad way. As the graph shows, HERO CRD is quite good in accommodating urgencies as
posed by the customers.
QUESTIONNAIRE Company name: ______________________________________________ Contact person: ___________________________ ______________________________________________ ___________________ Addr Addres esss
: ____ ______ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ __ ______________________________________________
Ques1. What type of products do you manufacture? a. Auto Automo mobi bile le part partss b. Bicy Bicycl clee par parts ts c. Others
Ques2. What is your status in supply chain? a. 1 tier
b. 2 tier
c. 3 tier
Ques3. Do fluctuations in market affect your buying behavior? a. Yes
b. No
Ques4. In which form do you buy steel? a. CR Coil b. CTL CTL (Cu (Cutt T To o Len Lengt gth) h)
Ques5. Which grade(s) of steel do you purchase? a. D
b. DD
c. EDD
d. MC-11
e. MC-12
f. IF
Ques6. What is your monthly requirement of CR steel grade wise? a. D
_____________________________ ____________________________ _ MT
b. DD/EDD _____________________________ MT c. MC-11/12 _____________________________ MT d. Others
_____________________________ ________________________ _____ MT
Ques7. Which factors do you consider the most while purchasing CR steel? (Rank 1 – 5 in order of preference)
a. Price b. Quality c. Lead time d. Cred Credit it faci facili lity ty e. Afte Afterr sal sales es serv servic ices es
Ques8. From which supplier(s) you are buying presently? Please specify the quantity also. a. _______ ___________ ________ ________ _______ _______ _____Qty _Qty _______ __________ ___ MT
b. _______ ___________ ________ ________ _______ _______ _____Qty _Qty ________ __________ __ MT c. _______ ___________ ________ ________ _______ _______ _____Qty _Qty ______ _________ ____ _ MT
Ques9. Do you have any expansion plans in near future & what will be your increased capacity? a. Yes
b. No
____________________________________MT (approx.)
Ques10. What quantity of your increased capacity of CR steel will you purchase from HERO CYCLES Ltd (CR Division)? ____________________________________ MT (approx.)
Ques11. What are the problems that you face while purchasing CR steel? a. ________ ____________ ________ ________ _______ _______ ________ ________ ________ _______ _______ ____ b. ________ ____________ ________ ________ _______ _______ ________ ________ ________ _______ _______ ____
Ques12. What are the suggestions that you can give to counter those problems?\ a. ________ ____________ ________ ________ _______ _______ ________ ________ ________ _______ _______ ____ b. ________ ____________ ________ ________ _______ _______ ________ ________ ________ _______ _______ ____
Rate HERO CYCLES Ltd (CR Division) in terms of following parameters: (Give rating from 1-5)
1 = Poor & 5 = Excellent
a. Com Company pany imag imagee b. Delivery c. Confor Conforman mance ce with with specif specifica icatio tions ns d. Afte Afterr sal sales es serv servic ices es e. Response time f. Acco Accomm mmod odat atio ion n of of ur urge genc ncie iess
Date:
(Signature)
