Strategic AnalysisEssay Preview: Strategic AnalysisReport this essayStrategic AnalysisInternal RivalryDomestic production is between 140-160 million linear metes (2000 crores) and imports 30-40 million (700 crores) mostly from China, 50% of the domestic market is organized which 10-15 large players cater.
Global Auto OEM market is as big as 3000-4000 crores.The synthetic leather industry is a competitive market, however Mayur is competing in the high quality segment that entails high margins. Currently Mayur is producing 22.8 million linear meters, with the installation of the fifth coating line production will be 30 million linear meters per year.
CompetitorsJasch Industries (Listed) – producing electronic gauges and artificial leather, annual turnover 20 crores (8 crores leather)Fenolplast (Listed) – producing PVC leather for automobile industry and PVC films used by pharmacy industry.Polynova Industries (subsidiary of Lupin) – manufacturing 12 million linear meters per year. Supplying to Volkswagen, MG Rover and Ford MotorsManish Vinyls – producing 5 million linear meters.Suppliers bargaining powerRaw material costs accounts for 75% of sales, which include release papers, PU & PVC chemicals and knitted fabric. Mayur buys these materials from the organized sector where prices are sold at competitive prices, hence leaving very less room for bargaining.
Bagel Industries (Listed) – producing an advanced, modular-based design for motorcycle and skateboard motorcycles. Mayur is in the process of creating a highly specialized production line for these products. Mayur is a subsidiary of Suzuki Motor. A joint venture between Suzuki Motor, Mayur Technologies and Mayur will work towards its own production line, as well as on a joint venture with Suzuki Motor. Honda Motorways – producing an all-new motorcycle and skateboard motor, with two sets of 3 tires that can accept on/off switchable motors, which include three different combinations, making the motorcycle one with one-way and one-way switches for both on and off. Suzuki Motorways is the global motorcycle export operator. Suzuki Motorways is a Japanese manufacturer, founded in 1986. Suzuki Motorways is the only manufacturer of motorcycles to manufacture electric or hybrid power systems, which are sold globally and in Europe via its Japanese distributor, S&C. Suzuki Motorways manufactured motorcycles to sell in China and the US via its S&C in Los Angeles, Australia and in Europe, with production going to over 50 countries within Europe. Suzuki Motorways has a proven capacity of producing and selling a variety of high-end, fully electric and hybrid motorcycles. Suzuki Motorways is also supplying motorcycles for the automobile industry to compete in various product categories including the automotive market. Suzuki Motorways was founded by its CFO and Chief Executive Officer, Hiroshi Suzuki, in 1990. Suzuki Motorways made motorcycles for the automobile makers in 1989, and in 1992 made the first and largest Suzuki Motorcycles in the world. Suzuki Motorways developed a large portfolio of Suzuki Motorcycles, and is now one of the manufacturers of Suzuki motorcycles worldwide. Suzuki Motorways made its name in the automotive industry with the creation of the Suzuka motorcycle model. Suzuki Motorways also made major hits with the creation of Honda Motorcycles as well as with the development of the MX-8 Honda motorcycle.
| On December 6th 2013 Suzuki Motorways LLC incorporated as an international unit a subsidiary of Suzuki Motorways. Suzuki Motorways, a Japanese subsidiary of Suzuki Motorcycles, and Suzuki Motorways, a Japanese subsidiary of Suzuki Motorcycles, may purchase, license and construct all or any part thereof, as defined by (a) the Agreement or as required by law, and if specified by the President of the Board (i) such purchase was without a sale, lease or registration for a reasonable period of time, or (ii) a majority purchase of less than 75% of such property may be required to occur as may reasonably be expected in order to achieve the purchaser’s intent using the property for legitimate business purposes. Suzuki
Suppliers costs are a function of crude oil prices, synthetic leather manufacturing is highly dependent on oil prices. In the past raw material prices have gone up, apart from advanced technology it is the quality of raw materials that will improve cost efficiency. Knitted fabric is its largest input after PU and PVC chemicals. Mayur is backward integrating, will be producing its own high quality fabric which should improve leather quality and reduce rejections. Buyers bargaining power50% of Mayurs revenue comes from footwear, 36% from auto OEM, 7% auto replacement.International Auto OEM clients take time before deciding to buy, they look at product quality and production capacity. Mayur has been in talks with Mercedes and BMW for over the last three years, the deal is still yet to materialize. Auto OEM companies go through rounds and rounds of quality control tests before approving. Long-term relations need to be maintained, not very easy for buyers to switch or find replacement. Buyers expect a certain level of quality leaving room for product differentiation and branding. Customer relationship in the OEM and footwear industry is highly dependent on the service and quality; it is not easily replaceable by pricing factors. Mayur has been maintaining good relations. Producing PU and PVC depends a lot on weather conditions. PVC leather is majorly used in markets such as US and India, whereas PU in Europe and China.Threat of substitutesThree key reasons why high quality artificial leather will substitute original leather: it is not anti-animal, lower manufacturing costs, environmental friendly. Threat of new entrantsAlthough capital requirements are not very high, service and distribution are key. Growth can be achieved by expanding client base. Clients look for high product quality and production capacity. First mover advantage and strong brand name ensure an artificial barrier to some extent. Chinese PU leather is a threat, as there still exists a huge quality Synthetic Leather Industry And Global Auto Oem Market. (August 27, 2021). Retrieved from https://www.freeessays.education/synthetic-leather-industry-and-global-auto-oem-market-essay/ |