Industry PLC and SWOT

8/7/2019 Industry PLC and SWOT

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Industrial Life Cy cle

The industrial life cycle is a term used for classifying industry vitality over time. Industry life cyclclassification generally groups industries into one of four stages: pioneer, growth, maturity and decline.

In the pioneer phase, the product has not been widely accepted or adopted. Business strategies ardeveloping, and there is high risk of failure. However, successful companies can grow at extraordinarrates. The Indian automobile sector has passed this stage quite successfully.

In the growth phase, the product market has been established and there is at least some historical guide tground demand estimates. The industry is growing rapidly, often at an accelerating rate of sales anearnings growth. Indian Automotive Industry is booming with a growth rate of around 15 % annuallyThe cumulative growth of the Passenger Vehicles segment during April 2007 March 2008 was 12.1 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi PurpoVehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.0 percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light CommerciVehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales oGoods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percenduring April- March 2008 compared to the last year. Two Wheelers registered a negative growth rate of7.92 % during this period, with motorcycles and

electric two wheelers segments declining by 11.90 percent and 44.93% respect. However, Scootersand Mopeds segment grew by 11.64% and 16.63%respect. The growth rate of the automobile industryin India is greater than the GDP growth rate of theeconomy, sothe automobile sector can be very well be said to bein the growth phase.

As the product matures, growth slows as penetration reaches practical limits. Companies

began to focus on market share rather than growth. Industry demand tends to follow the overaleconomy, but the scope of growth of the automobile sector is very much possible in India due to theincreasing income of the middle class and their income as well as standard of living.


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4.) SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning procesEnvironmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W

and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of th

strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile secto

gives the following points:


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Strengths

Large domestic

market Sustainable

labor cost advantage

Competitive autocomponent vendor

base

Government incentives for manufacturing plants

Strong engineering skills in design etc

Weaknesses

Low labor productivity

High interest costs and high overheads make the production uncompetitive

Various forms of taxes push up

the cost of production Low

investment in Research andDevelopment Infrastructure

bottleneck

Opportunities

Commercial vehicles: SC

ban on overloading Heavy

thrust on mining and

construction activity

Increase in the income level

Cut in excise dutiesRising rural demand

ThreatsRising input costsRising interest ratesCut throat competition

Documents

Industry PLC and SWOT