The TVS-Suzuki Break-Up


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Case Details:

Case Code : BSTR028
Case Length : 11 Pages
Period : 1992-2002
Organization : TVS Suzuki
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobile & Automotive

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS

The Differences

Differences between TVS and Suzuki first surfaced in 1992, when TVS approached Suzuki for more funds and technology for new models, to meet the intensifying competition in the motorcycle segment.

Reportedly, Suzuki not only refused to provide funds and technology for the new models, but also created road blocks to the management instead of helping them. A company watcher said, "Everything without exception had to be approved by Suzuki." TVS Suzuki was thus left with no option but to use its internal accruals for putting in place the turnaround strategy. Instead of getting new technology from Suzuki, TVS Suzuki had to re-engineer the basic Suzuki models, which led to the launch of the Samurai and the Shogun. The next major dispute between the two parties arose in the mid 1990s, when Suzuki, which had around 26% stake in the company's equity holding, expressed its desire to increase the equity holding...

The Road Ahead

Many industry watchers claimed that it was too far-fetched to think about writing TVS off. They pointed out that the company could still think of sourcing the design and development from abroad.

Analysts also opined that other than the Fiero, Max 100 and the Samurai, there was no technological collaboration from Suzuki and the transition period of 30 months was long enough for TVS to become technologically self-reliant. Meanwhile, the company's name was changed to TVS Motor Company Limited in November 2001. In December 2001, TVS Motor Company opted for an early end to the licensing agreement with Suzuki and asked for expiry of the agreement by the end of April 2002. According to reports, the early end of the agreement would result in substantial savings for the company in the form of royalty which it would have had to pay Suzuki. In early 2002, with the company having secured around 33,000 bookings for the Victor, analysts claimed that it was just a matter of time before TVS was accepted to have mastered the four-stroke technology...

Exhibits

Exhibit I: Suzuki - Global Presence
Exhibit II: TVS - Product Portfolio
Exhibit III: A Note on Two - Wheelers
Exhibit IV: TVS Suzuki - Shareholding Pattern
Exhibit V: TVS Suzuki - Sales & Production Break Up

 

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