A REPORT ON SUMMER INTERNSHIP AND INDUSTRY ANALYSIS

OF ROBERT BOSCH

A report submitted in partial fulfillment of the requirements for the award of the
Degree of

MASTER OF BUSINESS ADMINISTRATION

Of
MAHATMA GANDHI UNIVERSITY, KOTTAYAM, KERALA

Submitted by
HEMANTH BABU
Reg No:190031000973

Under the guidance of

Prof. Baiju P Samuel

June 2020

DC School of Management and Technology

Pullikkanam, Vagamon, Idukki 685503
Tel: 04869 – 248322, 248323
 DECLARATION

I Hemanth Babu hereby declare that the internship study of Robert Bosch submitted
to Mahatma Gandhi University is a record of the original work done by me and no part
of it has been submitted earlier for Degree, Post-Graduation or similar of any other
University or Institution.

Place: Vagamon Name: Hemanth Babu

Date: Roll No: 190031000973

Signature:
 D C School of
Management
and Technology
One School Avenue
Pullikkanam PO,
Vagamon,
Idukki - 685 503, Kerala,
India
Phone:( 91-4869)
202110
Fax: (91-481) 2564758
Web: www.dcschool.net
E-mail:
[email protected]

Date 01/06/2020

CERTIFICATE

This is to certify that the project report entitled “Internship at Robert Bosch ”, is a

bonafide record of the work done by Hemanth babu , Reg No 190031000973 under my

guidance, in partial fulfilment of the requirement for the award of Degree of Master of

Business Administration of Mahatma Gandhi University, Kottayam, Kerala and to

endorse that this work has not been submitted by him/her for the award of any other

degree, diploma or title of recognition earlier.

Prof. Baiju P Samuel (Faculty Guide)

This report has been accepted and forwarded to the University for evaluation based on
the recommendation of the Faculty Guide.

Principal

External Examiner 1 External Examiner 2

Signature Signature
Name Name
Date Date

Admissions Office: DC Kizhakemuri Edam, Good Shepherd Street, Kottayam 686 001. Kerala, India
Phone: 0481-2563226, 2301614, Mob: 9745607093/9846869231 e-mail: [email protected] Portal: www.dcsmat.ac.in
Web:www.dcschool.net
 ACKNOWLEDGEMENT

On the successful completion of my Internship Study, I express my deep sense of

gratitude to my Internship Guide Prof Baiju P Samuel for his valuable guidance and
support.

I express my sincere thanks to Brig. M C Ashok Kumar (Director) and Dr. Sreekanth
S V (Principal) for all the encouragement and help extended during this course of
project.

I proudly utilize this opportunity to express my deep sense of gratitude to Prof. Pramod
Kumar (Batch Coordinator) for the kind of assistance and guidance given to me for the
preparation of this project.

Finally, I think my heart felt thanks to the Almighty God my Parents and friends , who
empowered me to complete my study.

Hemanth Babu
 LIST OF CONTENTS
SL CHAPTER PAGE.NO
NO
1. AN OVERVIEW OF THE INDUSTRY
1-2
1.1 Brief History of the Industry
1.2 Business Process of the organisation 3-4

1.3 Market Demand and Supply – Contibution to GDP – 4-6

Revenue Generation
1.4 Level and type of Competition – Firms operation in the
Industry
6-8
1.5 Pricing strategies of the Industry 8
1.6 Prospects and Challenges in the Industry 8-14

1.7 Key Drivers of the Industry 15-18

1.8 Starlwarts in the Industry
18-19

2. COMPANY PROFILE

2.1 Brief History of the company 21-23

2.2 Business Process of the Organisation 23-24
2.3 Competitors of the company 24
2.4 Strategies-Business, Pricing, Management 24
2.5 CSR Activities 25
2.6 Export/Import 26
2.7 Collaboration and Expansion 27-29
2.8 SWOT Analysis of the company 29-32

3. INDUSTRY ANALYSYS
Porters 5 forces models/ Environmental scanning (PEST 34-47
Analysis)
4. DISCUSSION
4.1Objective Assessment – observation by the Candidate
about the organisation 49-51

4.2 Specific Learning Outcome

52

5. FINDINGS – Summary of findings – Critical Observation by

the candiadate about indistry Organisation
54-56

BIBLIOGRAPHY 57
6.
 EXECUTIVE SUMMARY
This internship is about the company Robert Bosch. They manufacture and
trade products as diverse as diesel and gasoline fuel injection systems, automotive
aftermarket products, auto electricals, special purpose machines, packaging
machines, electric power tools and security systems. Bosch, is a German multinational
engineering and technology company headquartered in Gerlingen, near Stuttgart,
Germany. The company was founded by Robert Bosch in Stuttgart in 1886. Bosch is
92% owned by Robert Bosch Stiftung, a charitable institution.

This intership study is done to study and understand about the company and
the conglomerate industry, which includes the business process, customers of the
company, the strategies that company have adopted and the SWOT analysis.This
report also goes through the history, business process, major players and challenges
faced by the industry.
 INTRODUCTION

This internship report, is about Robert Bosch, a German multinational engineering

and technology company headquartered in Gerlingen, near Stuttgart , Germany. This
internship also looks into the conglomerate industry and its trends including the major
players in the industry and the challenges face by the industry. This report is divided
into five chapters, the first chapter comprises of a brief history of the company Robert
Bosch, the products of the company, customers and competitors, the business
strategies, CSR activities of the company along with the collaborations and expansion
plan of the company and the first chapter ends with the SWOT analyses of the
company. The second chapter gives an overview of the conglomerate industry, it
starts with a brief history of the industry, and gives a bird’s eye view of the business
process, market demand and supply of the conglomerate industry, the types of
competition, the pricing strategies, the challenges, the key drivers and ends with the
stalwarts in the industry.

The third chapter focuses on the industry analysis using the Porter’s 5 Forces Model
and Environment Scanning with PESTEL Analysis of Robert Bosch. The fourth chapter
is the discussion which includes the objective assessment and the learning outcomes
of this internship. The fifth chapter is findings that summarises the internship with key
findings about Robert Bosch and the conglomerate industry along with the risks in the
organisation. This report ends with the bibliography and the sources used for the
completion of this internship report.
 OBJECTIVES OF STUDY

1. To study the company in detail.

2. To understand the strategies adopted by the company,
3. To gain knowledge about business process of the company.
4. Analysis of the industry .
5. To know the present Status of the company and industry.
 CHAPTER 1
AN OVERVIEW OF THE INDUSTRY
1.1 BRIEF HISTORY OF THE INDUSTRY
1.2 BUSINESS PROCESS OF THE INDUSTRY
1.3 MARKET DEMAND AND SUPPLY CONTRIBUTION TO GDP-REVENUE
GENERATION
1.4 LEVEL AND TYPE OF COMPETITION
1.5 PRICING STRATEGIES IN THE INDUSTRY
1.5 PROSPECTUS AND CHALLENGES IN THE INDUSTRY
1.7 LEY DRIVES IN THR INDUSTRY
1.8 STARLWARTS IN THE INDUSTRY
 An Overview of the Industry
One of the ten largest companies in Germany, Robert Bosch GmbH is best
known as a worldwide supplier of automotive equipment, with world leadership in fuel
injection systems and antilock brakes. The company has also developed into a world
leader in various other areas, including communications and radio technology, traffic
management systems, power tools, household appliances, terotechnology,
automation technology, and packaging machines. Its operations are divided into four
business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and
Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH
and its roughly 440 subsidiary and regional companies in some 60 countries. Including
its sales and service partners, Bosch is represented in roughly 150 countries. Since
1964, 92 percent of the company has been owned by the Robert Bosch Foundation
(the Bosch family owns the remaining 8 percent), which runs the company on the basis
of nonprofit principles and uses its share of company profits to fund various
philanthropic programs. So, it is safe to say that Bosch belongs to conglomerate
industry. A conglomerate is a multi-industry company – i.e., a combination of
multiple business entities operating in entirely different industries under one corporate
group, usually involving a parent company and many subsidiaries.

1.1Brief History of Conglomerate Industry

A conglomerate is a corporation made up of a number of different, seemingly unrelated

businesses. In a conglomerate, one company owns a controlling stake in a number of
smaller companies which conduct business separately. The first major conglomerate
boom occurred in the 1960s, and things escalated from there.

Large conglomerates diversify business risk by participating in a number of different

markets, although some conglomerates, such as those in mining, elect to participate
in a single industry.

Conglomerates are large companies that are made up of independent entities that
operate in multiple industries. Many conglomerates are multinationals and multi-
industry corporations. Every one of a conglomerate's subsidiary businesses runs
independently of the other business divisions, but the subsidiaries' management report
to the senior management of the parent company.

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Taking part in many different businesses help a conglomerate's parent company cut
back the risks from being in a single market. Doing so also helps the parent to lower
costs and use fewer resources. But there are times when a company grows too big
that it loses efficiency. In order to deal with this, the conglomerate may divest.

There are many different types of conglomerates in the world today, from
manufacturing to media to food. A manufacturer may begin by making and selling its
own products. It may decide to expand into the electronics market, then moving into
another industry like financial services. A media conglomerate may start out owning
several newspapers, then purchase television and radio stations, and book publishing
companies. A food conglomerate may start by selling potato chips. The company may
decide to diversify, buying a soda pop company, then expand even more by
purchasing other companies that make different food products.

Conglomerates in the 1960s

Conglomerates were popular in the 1960s and initially overvalued by the market. Low-
interest rates at the time made it so leveraged buyouts were easier for managers of
big companies to justify because the money came relatively cheap. As long as
company profits were more than the interest needing to be paid on loans, the
conglomerate could be ensured a Return on Investment (ROI).

Banks and capital markets were willing to lend companies money for these buyouts
because they were generally seen as safe investments. All of this optimism kept stock
prices high and allowed companies to guarantee loans. The glow wore off of big
conglomerates as interest rates were adjusted as a response to steadily rising inflation
that ended up peaking in 1980.

It became clear that companies weren’t necessarily improving performance after they
were purchased, which disproved the popularly held idea that companies would
become more efficient after purchase. In response to falling profits, the majority of
conglomerates began divesting from the companies they bought. Few companies
continued on as anything more than a shell company.

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1.2 Business Process of the Industry

Process Excellence is a key goal of Bosch Logistics. The development of logistic

processes along the entire supply chain is highly valued. Process management is
focused in the areas of design, planning, procurement, (source), the production
(make), and the distribution (deliver) logistics. As a successful business process
outsourcing service provider, they undertake and optimize processes that are not
'core' for the customers.

They have been managing customers for their clients for over 25 years. This
experience allows them to take care of the clients' customers more efficiently and
cost effectively than would be possible in-house. By outsourcing their non-core
business processes, their customers can focus on their core business. The most
important factor is that the company guarantee to improve their customers' business
outcomes, by handling areas in which they can deliver an extremely high standard,
with elevated levels of quality, efficiency and flexibility.

People, Technologies and Processes

To ensure the company always deliver optimum quality, Bosch Communication Centre
sets high standards when selecting and training their agents, by maintaining a high
rate of permanent associates, by relying on state-of-the-art telecommunication
solutions and by applying their performance management system.

International Business Process Outsourcing

Established in 1985 as a security monitoring centre and provider of communication
services, Bosch Communication Centre today ranks among the leading international
providers of business process outsourcing services.
Employing some 5,000 associates in Europe, Asia and South America, Bosch
Communication Centre provides and optimizes business processes for its customers.
The high quality standards for which Bosch is famous worldwide are continued in the
services they offer. They work in the following key functional areas: marketing and
sales, customer services, finance and accounting, security and safety, facility
management, purchasing, logistics and production, IT and technology, and HR
management in over 30 languages.

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Bosch as a brand has a reputation for quality and reliability earned over more than a
century that you know you can trust. Bosch Communication Centre can offer the
following benefits:

• Quality through process expertise, quality management in accordance with

international standards and strict data protection.
• Efficiency through 25 years of BPO expertise and synergy effects within
established teams with sound market knowledge.
• Flexibility through an international network and, optionally, onshore, nearshore
and offshore solutions.

1.3 Market Demand and Supply

Supply and demand comprise the fundamental concept on which the company’s global
economy stands. Evidence of this comes in the form of every country's money supply
policies. Supply and demand remain relevant to every business, from the corner
barbershop to the multi-billion-dollar petroleum conglomerate. Companies that supply
goods and services provide one side of the equation and an individual or another
company provide the other side consumerism.

1.3.1 Contribution to GDP

As expected, the global economy cooled further in 2019. One reason is the global
trade conflict between the United States and China, in which the two countries have
imposed tit-for-tat tariffs, the burdens of which are considerable. Moreover, the slower
pace of growth in China had global economic repercussions. In Europe, meanwhile,
the persistent uncertainty surrounding the United Kingdom’s withdrawal from the
European Union curbed economic growth. Bosch’s expectation of a marked fall in
global economic output in 2019 thus proved correct. That said, at 2.5 percent, the pace
of growth was somewhat higher than the 2.3 percent that was forecast. In 2018, global
GDP still grew by as much as 3.2 percent. At a mere 1.2 percent, GDP growth for
Europe as a whole lagged well behind the previous-year figure of over 2 percent, as
expected. This also applies to the European Union, which posted GDP growth of just
1.2 percent, although its GDP grew 2 percent in the previous year. At just 0.6 percent,
the pace of economic growth in Germany slowed more significantly than anticipated.

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However, they had already expected growth to be lower than 1 percent. This was due
in particular to sluggish global trade, which hit Germany’s heavily export-oriented
industry disproportionately hard. Economic growth in eastern Europe also slowed to
just 1.2 percent, compared with 2.5 percent the previous year.

Indian Economic situation

Though 2018-19 started out on a promising note with first quarter GDP registering a
growth of 8 percent, by the time as fiscal year ended, the GDP declined to 5.8 percent
in the last quarter. This was primarily attributed to the severe liquidity crisis in the
second half of the financial year and the pre-election spending cuts. The key event in
India was the victory of the Modi-led NDA with a higher majority than 2014. This
assures political stability for next 5 years and reinforces the hope for reforms to
continue. In order to address the cost and availability of finance, the Reserve Bank of
3 India has cut the benchmarked interest rates 2 times in financial year 2019-20 and
introduced measures to ease availability of credit. As per RBI estimates, The GDP
growth for 2019-20 will be around 6.9 percent on account of the drag in the first half of
the year. With crude oil prices hovering favourably at 60 dollar per barrel, normal
monsoon and seasonally strong expected consumption, there are brighter chances of
recovery in the second half of the year.

1.3.2 Revenue Generation

Bengaluru – Bosch Limited, a leading supplier of technology and services, posted

revenue from operations of INR 3,072 crores in Quarter 3 of FY 2017-18, registering
a 14.1 percent increase over the same period of the previous year on a comparable
basis. The total revenue from operations increased by 9.2 percent over the period
July-September 2017.

In this reporting period, Profit Before Tax (PBT) stood at INR 423 crores, a growth of
41.4 percent. This positive result was achieved on account of higher sales volume,
improvement in material and personnel cost. However, the net Profit After Tax (PAT)
from continuing operations increased by 30.9 percent mainly due to marginal increase
in effective tax rate. The company’s income from operations of INR 8,532 crores

5
duringthe period April-December 2017 grew by 8.4 percent over the same period of
previous year.

The Profit Before Tax (PBT) during the period April-December 2017 at INR 1,411
crores declined marginally by 1.5 percent compared to the same period of the previous
year mainly due to lower non-operating income. Net profit from continuing operations
stood at INR 937 crores for the same period. Net profit for previous year period April-
December 2016 included income from sale of the Starter Motors & Generators
Business.

“Bosch is offering the right technologies to shape the future while also taking care of
the core businesses. They expect to remain on a path of growth in both areas in the
current business year and are well prepared”, stated Mr. Soumitra Bhattacharya,
managing director, Bosch Limited, and president Bosch Group in India, while
announcing the results for Quarter 3.

Overall, Bosch Limited’s Mobility Solutions businesses grew by 17.8 percent and
outperformed the automotive market which grew by 14.0 percent (excluding two-
wheeler) in this period. Key performing divisions were the Gasoline Systems business,
which registered an impressive growth of 37.1 percent. Sales of the Diesel Systems’
division registered a similar growth of 33.6 percent supported by higher demand and
price for new generation products with the changes in emission norms with effect from
April 2017. Bosch’s Automotive Aftermarket division witnessed a stable growth of 4
percent after recovering from GST transition. It was impacted by low availability of
working capital with channel partners, and a reduction in the company’s Car
Multimedia business.

With regard to the company’s business beyond the Mobility Solutions sector, the
divisions Security Systems, Packaging Technology and Thermotechnology achieved
double-digit growth, while the Energy Solutions business saw a decrease. This led to
an overall decline of 3.1 percent

1.4 Level and Type of Competition – Firms Operating in Industry

Conglomerate mergers are alleged to be anticompetitive because they create the

possibility of reciprocal dealings and predatory pricing, and reduce the number of

6
potential competitors. Indeed, the courts have given considerable weight to these
charges in recent years and the antitrust agencies have practically equated potentiality
with actuality. These alleged possible offenses have been overemphasized and given
excessive attention. As will be noted below, it is often costly, and hence bad business
policy, to engage in reciprocity and predatory pricing. Conglomerate mergers also
have been criticized as anticompetitive because they contribute to the reported
increase in the proportion of assets held by the largest companies, so-called
aggregate concentration. Aggregate concentration has not been considered "central
either to the interpretation of existent antitrust statutes, or for that matter, to the
traditional analysis of economic behaviour." However, the Supreme Court has referred
to the congressional concern over increasing aggregate concentration. Nevertheless,
the emphasis in the Court's merger decisions has been upon the extent of
concentration in specific product and geographic markets- market concentration. The
pertinent data and factors affecting the significance of aggregate concentration and
market concentration are reviewed below. Before examining the areas in which
conglomerates are alleged to affect competition, it is useful to review briefly the
definition and relative importance of conglomerates.

Potential Competition

In recent years, the concept of potential competition has assumed an increasing role
in antitrust policy. In its Merger Guidelines, the Department of Justice stated that
potential competition "may often be the most significant competitive limitation on the
exercise of market power by leading firms as well as the most likely source of
additional actual competition." In 1969, the Department of Justice attacked several
mergers as being anticompetitive on this ground. Thus, in its complaint concerning the
LTV-Jones & Laughlin Steel merger it stated: Potential independent competition by
LTV and J&L Steel may be diminished in the steel industry, in other markets in which
only one of them presently competes, and in certain other markets in which neither of
them presently competes.

Potential competition influences the activities of active competitors in a negative

manner. Its existence creates a barrier to the ability of active competitors to take
advantage of their position by raising prices, deteriorating quality, using antiquated
marketing methods, limiting output, or refraining from innovation. According to Corwin

7
Edwards, potential competition also tends to reduce the likelihood of collusive
agreement, to moderate the restrictions in agreements actually made, to lessen the
restrictive effect of concentrated control over production or purchases, and to diminish
the advantage which the most powerful enterprise can obtain through coercion.

It is easy enough to enumerate the benefits that allegedly flow from potential
competition but it is virtually impossible in most situations to determine the extent to
which they are effective. There is a fairly sizeable zone within which prices could be
set before their height triggers the entry of new competitors; and in markets
characterized by competitive pressures, price will probably be held below the level at
which potential competition will have any real significance. In other words, while the
actions of actual competitors can have prompt results, particularly in areas such as
price, quality, market shares, and innovation, the restraints exercised by potential
competition are very much weaker and often may not be too effective.

1.5 Pricing Strategies

Bosch follows different pricing strategy for different product categories, which is
analysed in the Bosch marketing mix. For OEM customers, the prices are fixed
depending on the relationship with the customer and also the quantity of products
bought by the customer. It also depends on the bargaining power of the customer and
how important it is for the company. For home appliances, Competitive Pricing
Strategy is followed to compete strongly with the other big competitors in this segment.
Bosch products are of premium quality and are aimed at middle and upper middle-
class customers.

1.6 Prospects and Challenges in the Industry

When they first began discussing the future of conglomerates, or indeed, if there was
a future for them, there was much furore in office. Some colleagues believed that
conglomerates were here to stay; others said that there was really no such thing as a
classic conglomerate in Indian business. Others were somewhere in between. The
thing is, with so much dissent within a small group, I realised it would be necessary to
first define a conglomerate and then see where Indian companies fit in.So, to start at
the very beginning, what is a conglomerate? The Oxford English Dictionary says a
conglomerate is “a large corporation formed by the merging of separate and diverse

8
firms”. Succinct, but not detailed enough. Investopedia offers a little more: “In a
conglomerate,” it says, “one company owns a controlling stake in a number of smaller
companies, which conduct business separately. Each of a conglomerate’s subsidiary
businesses runs independently of the other business divisions, but the subsidiaries’
management reports to senior management at the parent company.”

So now they know. But are Indian companies conglomerates then? Some, like L&T,
are classic conglomerates. The $17 billion firm (13 on the 2017 Fortune India 500) has
various divisions including infrastructure development, hydrocarbon engineering,
metro and civil construction, shipbuilding and defence, IT, financial services, and real
estate. Others like the $103 billion Tata group are structured more like business
houses, with one flagship holding firm (Tata Sons) serving as the lead promoter of
over 100 operating companies (many of them separately listed on the bourses)
engaged in businesses as diverse as salt, steel, automobiles, and software. Then
there’s the Piramal Group (financial services, pharmaceuticals and real estate) and
the Adani Group (ports, power, infrastructure, edible oil and real estate)—with various
listed and unlisted businesses—and other family-controlled businesses.

Classic conglomerates or not, the fact is most large Indian companies are diversified
entities, and most of them identify as conglomerates. Most of them have a single
owner, the family, and most power is centralised there. One of the big reasons for this,
says Tarun Khanna, Jorge Paulo Lemann professor at Harvard Business School and
director of Harvard’s Mittal Institute, is the lack of large institutional players in business.
Like most other emerging markets, India’s network of independent intermediaries
providing supporting services—market research firms, consultancies, and capital
market advisory services—is still in its early stages; Khanna calls this an “institutional
void” in his book Winning in Emerging Markets, co-authored by Krishna Palepu.

When you don’t have such external support mechanisms, it becomes much harder for
a standalone entity to survive the ravages of competition, uncertainty and turf wars,”
says Khanna, who serves on the boards of many Indian companies. “So business in
India has taken the shape of a group structure where other group members can help
out.”Ajay Piramal, chairman of the $2 billion Piramal Group, explains that functioning
like a business group with the promoter holding a significant majority aids sustainable
business and long-term value creation. A business group, which has delivered robust
9
return on equity and capital over years and enjoys a stable credit rating, will always be
the first to attract capital.

Speaking about the power of the group structure, Piramal says that when his group
sold its domestic pharmaceuticals business to Abbott in 2010 for $3.7 billion, there
was intense pressure on him to return the cash to shareholders. But he knew the
promoters could create greater value with the capital generated.

“We took a conscious decision to retain the cash in the company and generate further
value, which would also be in our best interest,” says Piramal. “Over the last six years,
we have created more than 40% annual [market] value year-on-year and beaten every
index. Since we are a conglomerate, we had cash available with us and other
advantages like a brand name and the ability to recruit high-quality people.”

Indian conglomerates have not had a similar history to their counterparts in the West.
Here, diversified conglomerates were not so much because of strategic thinking as
necessity. Harsh Mariwala, chairman of consumer goods giant Marico, explains that
the Indian entrepreneurial landscape is dominated by business families, which started
with modest standalone businesses. These enterprises did well and the promoter
families decided to reinvest the cash from them into newer businesses. In the post-
Independence, pre-liberalisation years, the government handed out licences for
manufacturing goods that it believed were necessary. So, a company manufacturing
toothpaste could end up with a licence to make light-bulbs. For companies with cash
to invest, this was a good way to expand and diversify.

The story of the accidental conglomerate is undoubtedly fascinating. But even more
fascinating is the story of how these conglomerates have managed to hold on to their
markets and even consolidate and grow in the face of challenges.

Take the tale of the 149-year-old Tata group. Just like GE entered the home loans
business before the subprime mortgage crisis of 2008 and got singed, Tata Steel, too,
made an audacious $11.7 billion purchase of Anglo-Dutch steelmaker Corus in 2007,
just before the global financial meltdown. Tata Steel Europe (as Corus is now called)
is bleeding cash to keep operations running every day. Tata Steel has now decided to

10
run the European business in an equal joint venture with German firm Thyssenkrupp.
(The Tata group declined to comment for this story.)

Tata has also faced challenges with other group companies like Tata Motors, Tata
Teleservices, and Indian Hotels. Though a leader in the commercial vehicles market,
Tata Motors’ domestic passenger vehicles business has floundered over the years,
losing market share to the likes of Maruti Suzuki, Hyundai, and Mahindra & Mahindra.
Moreover, the Nano, a small car, once touted to be the cheapest in the world, has
been a failure, with just one car made this June. Elsewhere, after years of incurring
losses and fighting a battle with its Japanese partner, NTT DoCoMo, to offer the latter
an exit, Tata Teleservices is being given away to Bharti Airtel. The loss of Rs 27,500
crore it posted in FY18 (on account of massive write-offs) was the largest loss in a
single fiscal year reported by any Indian company ever.

Then there was the bruising boardroom battle between former Tata Sons chairman
Cyrus Mistry (who was sacked in October 2016), and Tata Trusts, a clutch of
philanthropic entities that control 66% of Tata Sons, including the trusts’ chairman and
Tata Sons’ former boss Ratan Tata. The much-publicised row, now mired in litigation,
brought several troubling issues out of the closet, including allegations of
mismanagement and corporate governance lapses. For the first time, Tata Sons and
Tata Trusts had different heads, which led to a lack of alignment between the interests
of the two sets of stakeholders in the Tata empire.

The larger issue that the Tata-Mistry feud points towards is the potential pitfall of
having a complex organisational structure with cross-holdings between various group
entities. Tata Trusts holds 66% of Tata Sons, which then owns the single largest stake
in most Tata group companies.

Add to this a quest to raise capital for shoring up its holding in group companies,
thereby getting greater dividends and protecting them from attempted hostile
takeovers, which has led to a complex web of cross-holdings, which is confusing to
say the least. While Tata Sons holds a direct stake in all operating companies, some
of them like Tata Power, Tata Global Beverages, and Indian Hotels hold stakes in the
parent company as well. Also, various operating companies hold stakes in each other.
But here’s where being a diversified conglomerate helps. Despite the challenges, the

11
Tata group’s market capitalisation rose close to fourfold over the last decade to Rs
9.36 lakh crore. And information technology company Tata Consultancy Services
(TCS), the proverbial jewel in the crown, accounts for close to 82% of the group’s
market value.

Tata Sons has announced its intention of acquiring stakes held by group firms in listed
entities like Tata Chemicals and Tata Power, which will also help these companies to
pare debt. Tata Power is selling its stake in Tata Communications; Tata Steel and Tata
Motors are also paring their holdings in each other. Tata Sons, the buyer of these
stakes, has mobilised resources to fund the purchases by issuing debentures to raise
Rs 3,300 crore; it has also sold 2% of TCS for around Rs 9,000 crore, which again
serves as an example of how the business group structure helps.

Simplifying structures is one of the more obvious ways in which Indian conglomerates
their holdings in each other. Monetising assets and capital allocation is another.

Piramal, who is also an independent director on the board of Tata Sons, says it is
important for leaders of large organisations to take a hard look at their business
portfolio from time to time and dispassionately decide on which business to let go of.

Citing his own example, Piramal says that his group decided to divest the textiles
business when it became clear that homegrown textile mills won’t be able to stand up
to foreign competition. Then again, even as Piramal’s domestic pharma business was
doing well, it was sold to Abbott in 2010.

“My role is that of a trustee for my stakeholders. When we got the value that we did
for the pharma business—9.5 times of sales and 30 times the operating profit—we
realised there was no way that we could get to a similar value ourselves,” says Piramal.
“We also predicted that the industry was going to go through some difficult times from
a pricing and regulatory standpoint.” Piramal emphasises that in diversified business
groups, the group chairman cannot —and should not—be in charge of running all
operational businesses. “The role of a chairman is not to run all businesses but select
the best person to run them; ensure the values of the group are applied uniformly;
make the right capital allocation and keep the image of the group intact,” he adds.L&T
is another conglomerate that has decided to divest non-core assets to deleverage

12
 itself, focus on its key competence areas of construction and engineering. The new
philosophy is part of a five-year business plan called ‘Lakshya’ (meaning target),
through which it seeks to double its revenues to around Rs 2 lakh crore by 2021. In
May 2018, L&T announced that it had agreed to sell its electrical and automation
business to Schneider Electric for Rs 14,000 crore. L&T declined to comment for the
story.

Challenges

The transition to greener and cleaner technologies and management practices is not
an easy one for business, and it is especially challenging for multi-industry, multi-
national conglomerates.

Most large business conglomerates have the following features:

1. A combination of businesses operating in different industry sectors: primary (raw

material extraction), secondary (manufacturing and construction) and tertiary
(services)
2. A combination of old and new businesses

3. Operations in multiple countries

For business conglomerates, the sustainability strategy flows from the top, following
from the group-wide sustainability vision. Customizing the sustainability message
of the top management to individual companies (discrete strategic business units)
within the group is a challenge.

Companies within the same group, but operating in different industry sectors face
different sustainability issues. While businesses engaged in raw material extraction
such as mining, oil gas, forestry, fisheries and agribusiness are faced with the
problem of mitigating impacts resulting from unsustainable extraction, businesses in
the manufacturing sector have to manage the impacts caused due to inefficient use of
materials and energy and due to emissions and waste emanating from their
operations. Service industries operating in the IT, telecommunications, retail and
financial services sectors seem to have small environmental impact (except energy
and material consumption of their commercial installations) but, in reality, their impacts

13
are quite significant – while the impacts of retail companies lie in their supply chains,
those of the financial service companies arise out of the projects they finance or insure.
In fact, being customer-facing, service sector companies have to be more cognizant
of their environmental impacts.

Another challenge conglomerate face in making the sustainability switch comes when
they have a mixture of old and new manufacturing units. Old factories face the classic
problem of having been locked into decades-old technology and machinery, compliant
with the regulatory requirements of the time when they were deployed. With time,
however regulations are bound to get more stringent and transition to cleaner and
more efficient technology either requires huge investment or retrofitting. Pre-empting
change in regulation is thus a very important strategy to ensure smoother transition in
the future. A similar problem is faced when a conglomerate purchases a business –
the business brings with it a legacy of environmental performance which may not be
easy to reverse.

Multi-national conglomerates have unique hurdles to overcome to make the

sustainability transition. When a conglomerate has operations located in different
countries, it has to be cognizant of compliance requirements specific to those
countries. In such a case, it pays to go beyond compliance and be an industry leader
in environmental performance – it is easier to apply consistent performance norms
across all locations.

Notwithstanding their diverse challenges, large conglomerates are the ones who have
the wherewithal to blaze a trail towards greater business sustainability.

1.7 Key Drivers of the Industry

Automotive Company

Economic Conditions:

The first key driver is economic conditions. When economic conditions are favourable,
people are more likely to purchase new vehicles giving momentum to the industry.
Slowdown in economic output leads to reduced consumer and business confidence
and levels of vehicle consumption goes down. Automotive manufacturers need to plan
capacity to achieve economies of scale. Companies plan their capacities based on

14
their sales predictions which are totally dependent on economic cycles. The capacity
issue has a strong influence on industry economics as vehicle prices are calculated
on forecast capacities and reduced capacity means higher unit costs. Vehicle makers,
therefore, get heavily impacted due to economic conditions.

Consumer Demand and Interests:

The second key driver is consumer interest, their preferences and demand. There is
a growing demand for more choice. Volume production may become similar to that for
premium cars, with a greater number of vehicles being made to order on the basis of
a multi-option choice. The market for niche vehicles is growing, as consumers demand
more variation of body shape and styling. This has led to a variety of body shapes
being constructed on standard platforms.

There is an increased awareness of occupant and pedestrian safety, and consumers

also look for greater fuel economy, exemplified by the growing rise of fossil fuel prices.
Consumer are becoming more aware of specifications and looking for inclusion of
more on-board electronics and telecommunications systems. Automobile safety is
tremendously important to consumers in all markets and consumers are willing to pay
more for vehicles with safety features.

Technological Innovations:

The fourth key driver influencing automotive industry significantly is Technology.

Automotive companies seek to take advantage of sophisticated technology to address
the competitive pressure and to meet increased customer expectations on quality and
cost. Technological advances help them add value to their vehicles and offset the
squeeze on costs and profit margins. Technology also helps them meeting the
demands of environmental legislation. It is through technology that manufacturers are
able to address consumer demands for increased safety and sophistication.

Other innovations that consumers are interested in include features that improve
navigation, like GPS, and features that enhance entertainment, including satellite radio
and in-car access to digital music. In terms of the vehicle, the innovations that are
likely to be in demand are more electronics and telematics, move to a 42-volt electrical

15
system, safety improvements, electrically controlled steering, braking, ABS and
suspension. There might be continued development of electric, hybrid and fuel cell
drives, especially for city cars and fleet vehicles.

Features likely to be introduced could be sophisticated route guidance, inter-model

route planning, lane guidance and proximity radars for speed control and warning
systems. The consumer in this sector always demands innovation and technology-
driven innovations such as fuel-efficient, safer, more comfortable low-emission
vehicles will shape the future of the industry.

Power Tools Company

One of the major users of power tools is the automotive industry that uses power tools
for manufacturing and assembly of vehicles. The increasing global automotive sales
are promoting the growth of the power tools market. The rise in automotive sales is
being driven by several factors such as demand from developing countries, low oil and
gas prices, increased demand for SUVs and trucks in the US, and growing demand
for electric vehicles (EVs).

Many countries are trying to shift towards renewable energy technologies to minimize
vehicle emissions and environmental pollution. They are encouraging the adoption of
EVs and hybrid vehicles. During the forecast period, the adoption of EVs is expected
to increase as more countries push towards the use of clean energy vehicles and more
manufacturers introduce EVs to the currently unpenetrated markets.

Power tools are usually used in the construction industry. These tools are necessary
to carry out construction operations such as cutting, drilling, and grinding. They are
basically support tools that are used to increase the efficiency and productivity of labor
at construction sites. Thus, growth in the global construction activities will have a
positive impact on the global power tools market. Globally, the US is one of the largest
markets for construction, both in terms of value and volume.

16
 Engineering/Manufacturing Company

Engineering services market intelligence report offers a detailed overview of the critical
cost drivers and category management insights that can aid in devising a sustainable
procurement strategy for the engineering services. This engineering services market
intelligence report also highlights the current supply market developments to help the
buyers choose the appropriate vendors who can promise a steady supply assurance
along with quality solutions.

This engineering services market intelligence report has highlighted the following
factors to play critical roles in influencing category spend. They include:

• Technology adoption is key to improving category cost savings

• Rising employee expenses is a key concern for service providers

• Purchase the full engineering services market intelligence report to know more about
the complete scope of this report

Household Appliances Company

Household appliances market is expected to reach an estimated value of $324.2 billion

by 2019. The major drivers of the household appliances industry are increase in per
capita income, consumer spending, housing activities, and increasing urbanization.
The home comfort segment depicted the highest growth rate among all five segments
in 2013.

New product development, increasing urbanization, and rising working class

population are the driving forces of the household appliances industry. Implementation
of technological changes in household appliances will possibly further drive this
industry.

17
1.8 Stalwarts in the Industry

Tata Group

Tata Group is an Indian multinational conglomerate holding company headquartered

in Mumbai, Maharashtra, India. Founded in 1868 by Jamshedji Tata, the company
gained international recognition after purchasing several global companies. One of
India's largest conglomerates, Tata Group is owned by Tata Sons. It is one of the
biggest industrial groups in the country, founded 153 years back in 1868. Each Tata
company operates independently under the guidance and supervision of its own board
of directors and shareholders. Significant Tata companies and subsidiaries
include Tata Chemicals, Tata Communications, Tata Consultancy Services, Tata
Consumer Products, Tata Elxsi, Tata Motors, Tata Power, Tata Steel, Voltas, Tata
Cliq, Titan, Trent (Westside), Taj Hotels, Tata Projects, and Jaguar Land Rover.

Adithya Birla Group

Aditya Birla Group, is an Indian multinational conglomerate headquartered in Worli,

Mumbai, Maharashtra, India. It operates in 34 countries with more than 120,000
employees worldwide. The group was founded by Seth Shiv Narayan Birla in
1857. The group has interests in viscose staple fibre, metals, cement (largest in India),
viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators,
financial services, and telecom. The group had a revenue of approximately₹3,42,930
crore (US$48.3 billion) in year 2019. Aditya Birla Group surpassed Tata Group to
become the largest Indian private conglomerate with revenue of just over US$110
billion and RIL with revenue of US$90 billion.

Wipro

Wipro (formerly, Western India Palm Refined Oil Limited, legally Wipro Limited) is an
Indian multinational corporation that provides information technology, consulting and
business process services. It is headquartered in Bangalore, Karnataka, India. In
2013, Wipro separated its non-IT businesses and formed the privately owned Wipro
Enterprises.

18
Bajaj Group

Bajaj Group, is an Indian multinational conglomerate company founded by Jamnalal

Bajaj in Mumbai in 1926. Bajaj Group is one of the oldest and largest conglomerates
based in Mumbai, Maharashtra. The group comprises 37 companies and its flagship
company Bajaj Auto is ranked as the world's fourth largest two- and three-wheeler
manufacturer. Some of the notable companies are Bajaj Auto Ltd, Bajaj FinServ Ltd,
Hercules Hoists Ltd, Bajaj Electricals, Mukand Ltd, Bajaj Hindustan Ltd and Bajaj
Holding & Investment Ltd. The group has involvement in various industries that include
automobiles (2- and 3-wheelers), home appliances, lighting, iron and steel, insurance,
travel and finance.

Mahindra Group

THE Mahindra Group is an Indian multinational conglomerate holding company

headquartered in Mumbai, Maharashtra. It has operations in over 100 countries
around the globe. The group has a presence in aerospace, agribusiness, aftermarket,
automotive, components, construction equipment, defence, energy, farm equipment,
finance and insurance, industrial equipment, information technology, leisure and
hospitality, logistics, real estate, retail, and two wheelers. It is considered to be one of
the most reputable Indian industrial houses with market leadership in utility vehicles
as well as tractors in India.

19
 CHAPTER 2
ORGANIZATION PROFILE

2.1 BRIEF HISTORY OF THE ORGANISATION

2.2 BUSINESS PROCESS AND PRODUCTS
2.3 COMPETITORS OF THE COMPANY
2.4 STRATEGIES BUSINESS PRICING
2.5 CSR ACTIVITIES
2.6 EXPORT/IMPORT
2.7 COLLABORATION AND EXPANSION PLANS
2.8 SWOT ANALYSIS

20
 BOSCH Ltd.

Company Profile

2.1 Brief History of the company

History Of Robert Bosch

1886–1920

In 1886, Robert Bosch founded the “Workshop for Precision Mechanics

and Electrical Engineering” in Stuttgart. This was the birth of today’s globally operating
company on 15 November 1886.One year later ,Bosch presented the first low voltage
magneto for gas engines.

From 1897, Bosch started installing better designed magneto ignition devices into
automobiles and became the only supplier of a truly reliable ignition within the industry.
In 1902, the chief engineer at Bosch, Gottlob Honold, unveiled the high-voltage
magneto ignition system with spark plug. This product paved the way for Bosch to
become a leading automotive supplier.

The first factory was opened by Bosch in Stuttgart in 1901. In 1906, the company
produced its 100,000th magneto. In the same year, Bosch introduced the 8-hours day
for workers. In 1910, the Feuerbach plant was founded and built close to Stuttgart. In
this factory, Bosch started to produce headlights in 1913. In 1917, Bosch was
transformed into a corporation.

Until 1945
In 1926, Bosch started to produce windshield wipers, and in 1927, injection pumps for
diesel. Bosch bought the gas appliances production from Junkers & Co. in 1932. In
the same year, the company developed its first power drill and presented its first car
radio.

As early as the end of 1933, negotiations between ROBERT BOSCH AG and

the National Socialists began on relocating parts of armaments production to the
interior of Germany. Bosch founded two such alternative plants in 1935 and 1937. In
1937, Bosch AG became a limited liability company. They had to produce accessories
for German Luftwaffe aircraft. In Hildesheim, a secret plant for the entire electrical

21
equipment of tanks, tractors, and trucks of the Wehrmacht was built. In 1944, 4,290
men and women worked in the Trillke factory, 2,019 of whom were forced laborers,
prisoners of war and military internees. During the Second World War, a total of 2,711
people who had been deported to Germany from the occupied countries had to work
at the Bosch plant in Hildesheim.

In the last years of the war, no new German tank ever drove without the starter
elements from the Bosch factory in Hildesheim. Bosch also had a monopoly position
in the outfitting of German Luftwaffe aircraft. During the war, production was further
decentralized, Bosch produced in an ever-larger number of factories, and relocated
parts of its production to 213 plants in more than 100 locations. On 12 March 1942,
the company's founder, Robert Bosch, died at the age of 80.

Until 2000
After the second world war, Bosch established a partnership with the Japanese
company Denso. In 1964, Robert Bosch Stiftung was founded. Bosch founded a new
development centre in Schwieberdingen in 1968, and the headquarters moved
to Gerlingen in 1970.

In 1981, the company participated on an equity basis in the Telefonbau & Normal Zeit
GmbH that was renamed Tele Norma in 1985, and acquired completely in 1987. In
1994, this part of the company was renamed as Bosch Telecom GmbH.

The most relevant inventions of the company until 2000 were the oxygen
sensor (1976), the electric motor control (1979), the traction control system (1986), the
xenon light for cars (1991), the electronic stability control (1995), the common rail
direct fuel injection (1997), and the direct fuel injection (2000).

21st century
In 2001, Bosch acquired the Mannesmann Rexroth AG, which they later renamed
to Bosch Rexroth AG. In the same year, the company opened a new testing centre in
Vaitoudden, close to Arjeplog in north Sweden. A new developing centre in Abstatt,
Germany followed in 2004.

In 2002, Bosch acquired Philips CSI, which at the time was manufacturing a broad
range of professional communication and security products and systems
including CCTV, congress and public address systems. Important inventions in these
years were the electric hydraulic brake in 2001, the common rail fuel injection with

22
piezo-injectors, the digital car radio with a disc drive, and the cordless screwdriver with
a lithium-ion battery in 2003.

Bosch received the ‘Deutsche Zukunftspreis’ (German Future Prize) from the German
president in 2005 and 2008. A new development centre was planned in 2008
in Renningen. In 2014, the first departments moved to the new centre, while the
remaining departments followed in 2015.

In 2006, Bosch acquired Telex Communications and Electro-Voice. In 2009, Bosch

invested about 3.6 billion Euro in development and research. Approximately 3900
patents are published per year. In addition to increasing energy efficiency by
employing renewable energies, the company plans to invest into new areas such
as biomedical engineering.

China has developed into an important market and manufacturing base for Bosch. In
2012, Bosch had 34,000 employees and a revenue of 41.7 billion Yuan (about 5 billion
Euro) in China.

2.2 Business Process of the Organisation

Good process management provides transparency and clarity in the design,

management and continuous improvement of business processes. Process
Excellence is a key goal of Bosch Logistics. The development of logistic processes
along the entire supply chain is highly valued. Process management is focused in the
areas of design, planning, procurement, the production and the distribution logistics.
Planning logistics ensures integrated planning across all process areas from the
customers to their suppliers.
Procurement logistics ensure that materials are ordered frequently from the supply
partners and forwarded to the plants on time.
Configuring the material flows within the plants and providing the production and
assembly lines with the right materials is the responsibility of production logistics.
Distribution logistics is responsible for keeping their promise to the customer
regarding delivery performance, quality and cost. In terms of delivery performance,
they ensure direct, on time delivery to the automotive manufacturer's assembly line.
Warehouses ensure continuous material availability and a good delivery
performance, with reliable and cost-effective handling.

23
Transport logistics guarantee smooth and safe transport. The company' goal is to
keep costs and environmental pollution as low as possible. Methods developed
through process management are also actively applied in other working fields in the
area Purchasing and Logistics.
2.3 Competitors of the Company
Bosch’s top competitors include Parker-Hannifin, Sensirion, Siemens, Delphi
Technologies, Honeywell, Whirlpool and Techtronic Industries.

2.4 Strategies

2.4.1 Business Strategies:

Bosch uses a mix of demographic, psychographic and geographic segmentation

strategies. It uses differentiating targeting strategy and targets customers from
automobile companies, companies from diversified industries, upper-class social
group, Professionals & Executives 1.4.1 Business Strategies:

2.4.2 Pricing Strategies

The pricing strategy of the Bosch will focus on setting the list price, credit terms,
payment period and discounts. If Bosch decides to choose the price penetration
strategy, it will have to set the lower price than competitors. The company will be able
to win market share based on discounted pricing.

24
2.5 CSR Activities

Over the past 60 years, Bosch in India has created a space for itself in the society not
just as a technology and innovation pioneer, but also as a company that cares. The
corporate social responsibility endeavours, known as ‘Bosch Social Engagement’, aim
to make a difference in the communities in which Bosch operates. As illustrated below,
Bosch Social Engagement has three pillars: Bosch Limited CSR, Primavera and
Bosch India Foundation.

Primavera
Bosch Limited CSR (Funded and managed by Bosch India Foundation
Bosch employees)
• Vocational • Helping Children from • Holistic Village
training for school Below Poverty Line Development
dropouts leading families by providing • Vocational
to employment support for food, Training for
• Health, Hygiene education, healthcare Artisans
and Education for and vocational training
Government
School Children
• Neighbourhood
Projects Identified
as per local
society needs
around Bosch
locations

25
2.6 Export/Import

Bosch India Importers Bosch India Import Data

• Motor Industries Company Ltd • WASHING MACHINE
• Motor Industries Company Ltd WAB20267IN (BRAND BOSCH)
• Motor Industries Company Ltd CAPACITY 6 KGS
Pb No6802 • WASHING MACHINE SIWAMAT
• Motor Industries Company Ltd WAB16161IN (BRAND BOSCH)
Pb N CAPACITY 6KGS
• Blue Moon Impex • WASHING MACHINE
WAB16060IN (BRAND BOSCH)
CAPACITY 6 KGS
• HK902, 4 LINE CABLE KIT -
BOSCH TYPE 1(TEST BENCH
PARTS)
• COMPONENT/SPARE PART OF
CHAIN SAW MACHINE BOSCH
SPARK PLUG

Bosch India Exporters Bosch India Export Data

• Anmol Auto Electricals • TRANSFORMER TI073586 C-
• Kalyani Brakes Ltd BOSCH (They intend to claim
• Purple Seagull rewards under MEIS Scheme)
• Kalyani Brakes Limited • SPARE PARTS FOR ASHOK
• Autobest Enterprises LEYLAND VEHICLES -ACC
BRKT - BOSCH - 743A02VA0K
• PARTS & ACC.OF
AUTOM.VEH.:SA OF CAM
SHAFT BOSCH FIC (A.P.I.)
• MYKIE KICHEN ROBOT -
BOSCH MYKIE PROTOTYPES,
PART NO: 7646.302.606.218
• SPARE PARTS FOR ASHOK
LEYLAND VEHICLES -
INJECTOR DUMMY - DOST
BOSCH SYSTE, - PK500133

26
2.7 Collaborations and Expansion Plans

Bosch strives to forge alliances with a variety of partners from research and industry.
They are particularly interested in projects that have the potential to solve tomorrow’s
challenges today. That scenario provides the perfect opportunity for innovative ideas
to move rapidly into practice and gain a solid foothold. Their goal is to join the top
experts in realizing innovations which verifiably improve the quality of life. For this
reason, Bosch Research is involved in publicly funded projects. In such projects with
public funding, we bundle competencies with partners from business and science,
especially in the case of complex research projects in the pre-competitive sector,
which involve a high degree of risk in terms of their realizability.

The Bosch start-up platform “grow” is an in-house incubator that provides an open
space for entrepreneurs to flourish within the Bosch ecosystem. Putting radical ideas
into practice helps the company develop new, sustainable and profitable business in
new markets. Grow combines extensive experience and resources to help take ideas
to the next level. This is where young entrepreneurs can tap into their many years of
experience in innovation management, business development and company
formation. Grow also provides them with access to international expertise in a range
of technologies and methodologies. Grow’s offices are very different to those they
might find in a normal workplace. The incubator fosters an inspiring atmosphere in
bright, open-plan spaces. This is the perfect meeting point for people who are facing
the same challenges and hoping to share their visions and knowledge. Networking
and connectivity play a key part in efforts to transform radical ideas into new business
fields for Bosch. Grow offers the conditions people need to nurture their ideas and turn
them into a fully-fledged business. Bosch created the platform to support people’s
entrepreneurial spirit and ideas for new start-ups.

Bosch Limited inaugurates its expanded

Bosch Limited inaugurated its expanded Bidadi plant.
Bosch has inaugurated its expanded smart factory for mobility solutions in Bidadi
(Phase II), which is located some 35 kilometres from Bengaluru. The plant features
latest Industry 4.0 solutions and carbon-neutral technology. “Bosch is taking a further
step toward more efficient, more flexible, and sustainable manufacturing in India in
order to boost competitiveness and meet rising demand in the local market,” said

27
Volkmar Denner, chairman of the board of management of Robert Bosch GmbH. “The
new Bidadi plant will further boost India’s strong role in the Bosch Group’s global
network.” The company has invested 31 million euros in the new facility. The Bidadi
plant will accommodate almost 2,500 associates by the end of 2019.

The Bidadi plant will act as a local hub for development of Bosch powertrain solutions
and manufacture of automotive products such as common rail single cylinder pumps
and high-pressure rails. “It is important for Bosch to leverage their expertise in
manufacturing operations and combine it with technology and digitalization to build
lean manufacturing facilities,” said Soumitra Bhattacharya, the managing director and
president of the Bosch Group in India.

From Adugodi to Bidadi: one of Bosch’s largest ever relocation projects Bidadi Phase
I witnessed a shift of around 500 people from the existing manufacturing facility in
Adugodi to Bidadi, along with manufacturing operations for the new-generation
powertrain solutions products. Now, Phase II has witnessed the shift of around 2,000
people, as well as 760 units of machinery and equipment. This movement is one of
the largest relocation projects ever undertaken by Bosch. The former Adugodi
manufacturing site is being converted into a high-tech engineering centre and is slated
to become the largest Bosch technology campus outside Germany.

Sustainable manufacturing: Bidadi plant to be carbon neutral by 2020

Bosch plans to be fully climate neutral as early as next year. Its over 400 locations
worldwide, together with their engineering, manufacturing, and administrative facilities,
will no longer leave a carbon footprint. This will make Bosch the first major industrial
enterprise to achieve this ambitious goal in a little over a year. In line with this target,
the Bidadi plant has been built to be leaner and more sustainable. According to the
International Energy Agency, manufacturing accounts for around 32 percent of global
carbon dioxide emissions. To quote Dr. Volkmar Denner: “The current state of the
global ecosystem demands that organizations make concerted efforts to reduce their
global carbon footprint. At Bosch see climate action as their responsibility, and believe
they have to act now. The company has undertaken initiatives to build environmentally
friendly manufacturing sites across the globe, and the Bidadi plant is the latest result
of this effort.”

28
 The new facility is aligned with the blueprint of the “Carbon neutral – 2020” strategy,
with initiatives such as energy analytics, environmental initiatives such as tree
planting, the use of alternative fuel like Compressed Natural Gas for heating, and solar
power capacity of 8.7 megawatts peak in 2018. The sun accounts for approximately
30 percent of the power consumed by the plant. The facility is built to be environmental
friendly and is a landmark in manufacturing practices across India.

2.8 SWOT Analysis

Strengths of Bosch – Internal Strategic Factors

As one of the leading companies in its industry, Bosch has numerous strengths that
help it to thrive in the market place. These strengths not only help it to protect the
market share in existing markets but also help in penetrating new markets
Highly successful at market strategies for its products.
• Highly skilled workforce through successful training and learning programs. Bosch is
investing huge resources in training and development of its employees resulting in a
workforce that is not only highly skilled but also motivated to achieve more.
• Strong Brand Portfolio – Over the years Bosch has invested in building a strong brand
portfolio. The SWOT analysis of Bosch just underlines this fact. This brand portfolio
can be extremely useful if the organization wants to expand into new product
categories.
• Strong distribution network – Over the years Bosch has built a reliable distribution
network that can reach majority of its potential market.
• Successful track record of developing new products – product innovation.
• Strong Free Cash Flow – Bosch has strong free cash flows that provide resources in
the hand of the company to expand into new projects.
• Successful track record of integrating complimentary firms through mergers &
acquisition. It has successfully integrated number of technology companies in the past
few years to streamline its operations and to build a reliable supply chain.
• Superb Performance in New Markets – Bosch has built expertise at entering new
markets and making success of them. The expansion has helped the organization to
build new revenue stream and diversify the economic cycle risk in the markets it
operates in.

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 Weakness of Bosch – Internal Strategic Factors
Weakness are the areas where Bosch can improve upon. Strategy is about making
choices and weakness are the areas where an organization can improve using
SWOT analysis and build on its competitive advantage and strategic positioning.
• Not highly successful at integrating firms with different work culture. As mentioned
earlier even though Bosch is successful at integrating small companies it has its
share of failure to merge firms that have different work culture.
• The marketing of the products left a lot to be desired. Even though the product is a
success in terms of sale but its positioning and unique selling proposition is not
clearly defined which can lead to the attacks in this segment from the competitors.
• The profitability ratio and Net Contribution % of Bosch are below the industry
average.
• Investment in Research and Development is below the fastest growing players in the
industry. Even though Bosch is spending above the industry average on Research
and Development, it has not been able to compete with the leading players in the
industry in terms of innovation. It has come across as a mature firm looking forward
to bring out products based on tested features in the market.
• High attrition rate in work force – compare to other organizations in the industry
Bosch has a higher attrition rate and have to spend a lot more compare to its
competitors on training and development of its employees.
• Limited success outside core business – Even though Bosch is one of the leading
organizations in its industry it has faced challenges in moving to other product
segments with its present culture.
• The company has not been able to tackle the challenges present by the new
entrants in the segment and has lost small market share in the niche categories.
Bosch has to build internal feedback mechanism directly from sales team on ground
to counter these challenges.
Opportunities for Bosch – External Strategic Factors

• Government green drive also opens an opportunity for procurement of Bosch

products by the state as well as federal government contractors.
• Stable free cash flow provides opportunities to invest in adjacent product segments.
With more cash in bank the company can invest in new technologies as well as in

30
 new products segments. This should open a window of opportunity for Bosch in
other product categories.
• Lower inflation rate – The low inflation rate brings more stability in the market, enable
credit at lower interest rate to the customers of Bosch.
• The new taxation policy can significantly impact the way of doing business and can
open new opportunity for established players such as Bosch to increase its
profitability.
• Economic uptick and increase in customer spending, after years of recession and
slow growth rate in the industry, is an opportunity for Bosch to capture new
customers and increase its market share.
• The market development will lead to dilution of competitor’s advantage and enable
Bosch to increase its competitiveness compare to the other competitors.
• New customers from online channel – Over the past few years the company has
invested vast sum of money into the online platform. This investment has opened
new sales channel for Bosch. In the next few years, the company can leverage this
opportunity by knowing its customer better and serving their needs using big data
analytics.
• The new technology provides an opportunity to Bosch to practices differentiated
pricing strategy in the new market. It will enable the firm to maintain its loyal
customers with great service and lure new customers through other value-oriented
propositions.
Threats Bosch Facing - External Strategic Factors

• Changing consumer buying behaviour from online channel could be a threat to the
existing physical infrastructure driven supply chain model.
• Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.
• No regular supply of innovative products – Over the years the company has
developed numerous products but those are often response to the development by
other players. Secondly the supply of new products is not regular thus leading to
high and low swings in the sales number over period of time.
• Rising pay level especially movements such as $15 an hour and increasing prices in
the China can lead to serious pressure on profitability of Bosch

31
• As the company is operating in numerous countries it is exposed to currency
fluctuations especially given the volatile political climate in number of markets across
the world.
• Increasing trend toward isolationism in the American economy can lead to similar
reaction from other government thus negatively impacting the international sales.
• New environment regulations under Paris agreement (2016) could be a threat to
certain existing product categories.
• New technologies developed by the competitor or market disruptor could be a
serious threat to the industry in medium to long term future.

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 CHAPTER 3
INDUSTRY ANALYSIS

PORTER’S 5 FORCES MODELS/ENVIRONMENTAL SCANNING

PESTEL ANALYSIS

33
 PORTER’S 5 FORCES MODEL

Five forces model was created by M. Porter in 1979 to understand how five key
competitive forces are affecting an industry. The five forces identified are:

These forces determine an industry structure and the level of competition in that
industry. The stronger competitive forces in the industry are the less profitable it is. An
industry with low barriers to enter, having few buyers and suppliers but many substitute
products and competitors will be seen as very competitive and thus, not so attractive
due to its low profitability.

It is every strategist’s job to evaluate company’s competitive position in the industry

and to identify what strengths or weakness can be exploited to strengthen that
position. The tool is very useful in formulating firm’s strategy as it reveals how powerful
each of the five key forces is in a particular industry.

Threat of new entrants. This force determines how easy (or not) it is to enter a
particular industry. If an industry is profitable and there are few barriers to enter, rivalry
soon intensifies. When more organizations compete for the same market share, profits
start to fall. It is essential for existing organizations to create high barriers to enter to
deter new entrants. Threat of new entrants is high when:

• Low amount of capital is required to enter a market;

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 • Existing companies can do little to retaliate;
• Existing firms do not possess patents, trademarks or do not have established
brand reputation;
• There is no government regulation;
• Customer switching costs are low (it doesn’t cost a lot of money for a firm to
switch to other industries);
• There is low customer loyalty;
• Products are nearly identical;
• Economies of scale can be easily achieved.

Bargaining power of suppliers. Strong bargaining power allows suppliers to sell

higher priced or low-quality raw materials to their buyers. This directly affects the
buying firms’ profits because it has to pay more for materials. Suppliers have strong
bargaining power when:

• There are few suppliers but many buyers;

• Suppliers are large and threaten to forward integrate;
• Few substitute raw materials exist;
• Suppliers hold scarce resources;
• Cost of switching raw materials is especially high.

Bargaining power of buyers. Buyers have the power to demand lower price or higher
product quality from industry producers when their bargaining power is strong. Lower
price means lower revenues for the producer, while higher quality products usually
raise production costs. Both scenarios result in lower profits for producers. Buyers
exert strong bargaining power when:

• Buying in large quantities or control many access points to the final customer;
• Only few buyers exist;
• Switching costs to other supplier are low;
• They threaten to backward integrate;
• There are many substitutes;
• Buyers are price sensitive.

35
 Threat of substitutes. This force is especially threatening when buyers can easily find
substitute products with attractive prices or better quality and when buyers can switch from
one product or service to another with little cost. For example, to switch from coffee to tea
doesn’t cost anything, unlike switching from car to bicycle.

Rivalry among existing competitors. This force is the major determinant on how
competitive and profitable an industry is. In competitive industry, firms have to
compete aggressively for a market share, which results in low profits. Rivalry among
competitors is intense when:

• There are many competitors;

• Exit barriers are high;
• Industry of growth is slow or negative;
• Products are not differentiated and can be easily substituted;
• Competitors are of equal size;
• Low customer loyalty.

Although, Porter originally introduced five forces affecting an industry, scholars have
suggested including the sixth force: complements. Complements increase the
demand of the primary product with which they are used, thus, increasing firm’s and
industry’s profit potential. For example, iTunes was created to complement iPod and
added value for both products. As a result, both iTunes and iPod sales increased,
increasing Apple’s profits.

Bosch Porter’s Five Forces Analysis

Threat of New Entrants

• The economies of scale is fairly difficult to achieve in the industry in which

Bosch operates. This makes it easier for those producing large capacitates to
have a cost advantage. It also makes production costlier for new entrants. This
makes the threats of new entrants a weaker force.
• The product differentiation is strong within the industry, where firms in the
industry sell differentiated products rather a standardised product. Customers
also look for differentiated products. There is a strong emphasis on advertising

36
 and customer services as well. All of these factors make the threat of new
entrants a weak force within this industry.
• The capital requirements within the industry are high, therefore, making it
difficult for new entrants to set up businesses as high expenditures need to be
incurred. Capital expenditure is also high because of high Research and
Development costs. All of these factors make the threat of new entrants a
weaker force within this industry.
• The access to distribution networks is easy for new entrants, which can easily
set up their distribution channels and come into the business. With only a few
retail outlets selling the product type, it is easy for any new entrant to get its
product on the shelves. All of these factors make the threat of new entrants a
strong force within this industry.
• The government policies within the industry require strict licensing and legal
requirements to be fulfilled before a company can start selling. This makes it
difficult for new entrants to join the industry, therefore, making the threat of new
entrants a weak force.

Bargaining Power of Suppliers

• The number of suppliers in the industry in which Bosch operates is a lot

compared to the buyers. This means that the suppliers have less control over
prices and this makes the bargaining power of suppliers a weak force.
• The product that these suppliers provide are fairly standardised, less
differentiated and have low switching costs. This makes it easier for buyers like
Bosch to switch suppliers. This makes the bargaining power of suppliers a
weaker force.
• The suppliers do not contend with other products within this industry. This
means that there are no other substitutes for the product other than the ones
that the suppliers provide. This makes the bargaining power of suppliers a
stronger force within the industry.
• The suppliers do not provide a credible threat for forward integration into the
industry in which Bosch operates. This makes the bargaining power of suppliers
a weaker force within the industry.

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 • The industry in which Bosch operates is an important customer for its suppliers.
This means that the industry’s profits are closely tied to that of the suppliers.
These suppliers, therefore, have to provide reasonable pricing. This makes the
bargaining power of suppliers a weaker force within the industry.

Threat of Substitute Products or Services

• There are very few substitutes available for the products that are produced in
the industry in which Bosch operates. The very few substitutes that are
available are also produced by low profit earning industries. This means that
there is no ceiling on the maximum profit that firms can earn in the industry in
which Bosch operates. All of these factors make the threat of substitute
products a weaker force within the industry.
• The very few substitutes available are of high quality but are way more
expensive. Comparatively, firms producing within the industry in which Bosch
operates sell at a lower price than substitutes, with adequate quality. This
means that buyers are less likely to switch to substitute products. This means
that the threat of substitute products is weak within the industry.

Rivalry Among Existing Firms

• The number of competitors in the industry in which Bosch operates are very
few. Most of these are also large in size. This means that firms in the industry
will not make moves without being unnoticed. This makes the rivalry among
existing firms a weaker force within the industry.
• The very few competitors have a large market share. This means that these will
engage in competitive actions to gain position and become market leaders. This
makes the rivalry among existing firms a stronger force within the industry.
• The industry in which Bosch is growing every year and is expected to continue
to do this for a few years ahead. A positive Industry growth means that
competitors are less likely to engage in completive actions because they do not
need to capture market share from each other. This makes the rivalry among
existing firms a weaker force within the industry.
• The fixed costs are high within the industry in which Bosch operates. This
makes the companies within the industry to push to full capacity. This also

38
 means these companies to reduce their prices when demand slackens. This
makes the rivalry among existing firms a stronger force within the industry.
• The products produced within the industry in which Bosch operates are highly
differentiated. As a result, it is difficult for competing firms to win the customers
of each other because of each of their products in unique. This makes the rivalry
among existing firms a weaker force within the industry.
• The production of products within the industry requires an increase in capacity
by large increments. This makes the industry prone to disruptions in the supply-
demand balance, often leading to overproduction. Overproduction means that
companies have to cut down prices to ensure that its products sell. This makes
the rivalry among existing firms a stronger force within the industry.
• The exit barriers within the industry are particularly high due to high investment
required in capital and assets to operate. The exit barriers are also high due to
government regulations and restrictions. This makes firms within the industry
reluctant to leave the business, and these continue to produce even at low
profits. This makes the rivalry among existing firms a stronger force within the
industry.
• The strategies of the firms within the industry are diverse, which means they
are unique to each other in terms of strategy. This results in them running head-
on into each other regarding strategy. This makes the rivalry among existing
firms a strong force within the industry.

PESTEL ANALYSIS

A PESTEL analysis is a framework or tool used by marketers to analyse and

monitor the macro-environmental (external marketing environment) factors that
have an impact on an organisation. The result of which is used to identify threats
and weaknesses which are used in a SWOT analysis.

Political Factors
These are all about how and to what degree a government intervenes in the economy.
This can include – government policy, political stability or instability in overseas
markets, foreign trade policy, tax policy, labour law, environmental law, trade
restrictions and so on.

39
It is clear from the list above that political factors often have an impact on organisations
and how they do business. Organisations need to be able to respond to the current
and anticipated future legislation, and adjust their marketing policy accordingly.
Economic Factors
Economic factors have a significant impact on how an organisation does business and
also how profitable they are. Factors include – economic growth, interest rates,
exchange rates, inflation, disposable income of consumers and businesses and so on.
These factors can be further broken down into macro-economic and micro-economic
factors. Macro-economic factors deal with the management of demand in any given
economy. Governments use interest rate control, taxation policy and government
expenditure as their main mechanisms they use for this.
Micro-economic factors are all about the way people spend their incomes. This has a
large impact on B2C organisations in particular.
Social Factors
Also known as socio-cultural factors, are the areas that involve the shared belief and
attitudes of the population. These factors include – population growth, age distribution,
health consciousness, career attitudes and so on. These factors are of particular
interest as they have a direct effect on how marketers understand customers and what
drives them.
Technological Factors
We all know how fast the technological landscape changes and how this impacts the
ways they market their products. Technological factors affect marketing and the
management thereof in three distinct ways:
• New ways of producing goods and services
• New ways of distributing goods and services
• New ways of communicating with target markets
Environmental Factors
These factors have only really come to the forefront in the last fifteen years or so. They
have become important due to the increasing scarcity of raw materials, pollution
targets, doing business as an ethical and sustainable company, carbon footprint
targets set by governments (this is a good example where one factor could be
classed as political and environmental at the same time). These are just some of the
issue’s marketers are facing within this factor. More and more consumers are

40
demanding that the products they buy are sourced ethically, and if possible, from a
sustainable source.
Legal Factors
Legal factors include - health and safety, equal opportunities, advertising standards,
consumer rights and laws, product labelling and product safety. It is clear that
companies need to know what is and what is not legal in order to trade successfully.
If an organisation trades globally this becomes a very tricky area to get right as each
country has its own set of rules and regulations.
Ethical Factors
The most recent addition to PESTEL is the extra E - making it PESTELE or STEEPLE.
This stands for ethical, and includes ethical principles and moral or ethical problems
that can arise in a business. It considers things such as fair trade, slavery acts and
child labour, as well as corporate social responsibility (CSR), where a business
contributes to local or societal goals such as volunteering or taking part in
philanthropic, activist, or charitable activities.

Bosch PESTEL Analysis and Environment Scanning

The PESTEL analysis is a tool devised by Harvard professor Francis Aguilar to

conduct a thorough external analysis of the business environment of any industry for
which data is available. This is an important step for eventually devising a strategy that
can effectively manoeuvre the competition to maximize a firm's chances of
sustainability and profitability. PESTEL is an amalgam of initials of various factors that

41
not only affect Bosch but the entire industry as a whole- these factors are namely
Political, Economic, Social, Technological, Environmental and Legal.

PESTEL analysis provides valuable insight into the operating challenges that any
company in the industry appears to face, and so the company in question may face
as well. An understanding of the overall competitive landscape will prevent investors
and entrepreneurs from partaking in any risky ventures if the risk arises out of, say, an
unstable political regime or a sudden economic recession. This may be best
exemplified by the recent exit of the United Kingdom from the European Union. The
sudden fallout was political and caused many investors to pull out of new ventures and
halt their expansions, as the future became uncertain in the wake of this decision.

Political Factors that Impact Bosch

The political factors that may impact the profitability or chances of survival of the
company are quite diverse. The political risks vary from sudden changes in existing
political regimes to civil unrest to major decisions taken by the government. In cases
of possible multinationals, one may also include political factors that take place/ affect
not only the host country but also all countries that contain business operations, or
that may engage in trade with Bosch

To properly appraise the extent of the overall systematic political risk that Bosch may
be exposed to, the following factors should be considered before taking part in any
investments:

• The level of political stability that the country has in recent years.
• The integrity of the politicians and their likelihood to take part in acts of
corruption, as the resulting repercussions may lead to possible impeachments
or resignations of high-level government employees.
• The laws that the country enforces, especially with regards to business, such
as contract law, as they dictate what Bosch is and is not allowed to do. Some
countries, for example, prohibit alcohol or have certain conditions that must be
fulfilled, while some government systems have inefficient amounts of red tape
that discourage business.

42
 • Whether or not a company’s intellectual property (IP) is protected. For example,
a country that has no policies for IP protection would mean that entrepreneurs
may find it too risky to invest in Bosch
• The trade barriers that the host country has would protect Bosch; however,
trade barriers that countries with potential trade partners would harm
companies by preventing potential exports.
• A high level of taxation would demotivate companies like Bosch from
maximizing their profits.
• The risk of military invasion by hostile countries may cause divestment from
ventures.
• A low minimum wage would mean higher profits and, thus, higher chances of
survival for Bosch

Economic Factors that Impact Bosch

Economic factors are all those that pertain to the economy of the country that Bosch,
such as changes in the inflation rate, the foreign exchange rate, the interest rate, the
gross domestic product, and the current stage of the economic cycle. These factors,
and their resulting impact on aggregate demand, aggregate investment and the
business climate, in general, have the potential to make a company highly profitable,
or extremely likely to incur a loss. The economic factors in the PESTEL analysis are
macroeconomic.

The economic factors that Bosch may be sensitive to, and in turn should consider
before investing may include the following:

• The economic system that is currently operational in the sector in question-

whether it is a monopoly, an oligopoly, or something similar to a perfect
competition economic system.
• The rate of GDP growth in the country will affect how fast Bosch is expected to
grow in the near future.
• The interest rates in the country would affect how much individuals are willing
to borrow and invest. Higher rates would result in greater investments that
would mean more growth for Bosch.

43
 • However efficiently the financial markets operate also impact how well Bosch
can raise capital at a fair price, keeping in mind the demand and supply.
• The exchange rate of the country Bosch operates in would impact the
profitability of Bosch, particularly if Bosch engages in international trade. The
stability of the currency is also important- an unstable currency discourages
international investors.
• A high level of unemployment in the country would mean there is a greater
supply of jobs than demand, meaning people would be willing to work for a
lower wage, which would lower the costs of Bosch

Social Factors that Impact Bosch

The social factors that impact Bosch are a direct reflection of the society that Bosch
operates in, and encompasses culture, belief, attitudes and values that the majority of
the population may hold as a community. The impact of social factors is not only
important for the operational aspect of Bosch, but also on the marketing aspect of the
organization. A thorough understanding of the customers, their lifestyle, level of
education and beliefs in a society, or segment of society, would help design both the
products and marketing messages that would lead to a venture becoming a success.

The social factors that affect Bosch and should be included in the social aspect of the
PESTEL analysis include the following:

• The demographics of the population, meaning their respective ages and

genders, vastly impact whether or not a certain product may be marketed to
them. Makeup is mostly catered to women, so targeting a majority male
population would be less population than targeting a population that is mostly
female.
• The class distribution among the population is of paramount importance: Bosch
would be unable to promote a premium product to the general public if the
majority of the population was a lower class; rather, they would have to rely on
very niche marketing.
• To some extent, the differences in educational background between the
marketers and the target market may make it difficult to relate to and draw in

44
 the target market effectively. Bosch should be very careful not to lose the
connection to the target market's interests and priorities.
• Bosch needs to be fully aware of what level of health standards, reactions to
harassment claims and importance of environmental protection prevail in the
industry as a whole, and thus are expected from any company as they are seen
as the norm.

Technological Factors that Impact Bosch

Technology can rapidly dismantle the price structure and competitive landscape of an
industry in a very short amount of time. It thus becomes extremely important to
constantly and consistently innovate, not only for the sake of maximizing possible
profits and becoming a market leader, but also to prevent obsolescence in the near
future. There are multiple instances of innovative products completely redesigning the
norm for an entire industry: Uber and Lyft dominate the taxi cab industry; smartphones
have left other phones an unviable option for most et cetera.

The technological factors that may influence Bosch may include the following:

• The recent technological developments and breakthroughs made by

competitors, as mentioned above. If Bosch encounters a new technology that
is gaining popularity in the industry in question, it is important to monitor the
level of popularity and how quickly it is growing and disrupting its competitors’
revenues. This would translate to the level of urgency required to adequately
respond to the innovation, either by matching the technology or finding an
innovative alternative.
• How easy, and thus quickly, will the technology be diffused to other firms in the
industry, leading to other firms copying the technological processes/ features
of Bosch
• How much an improvement of technology would improve/ transform what the
product initially offers. If this improvement is drastic, then other firms in the
industry suffer more heavily.
• The impact of the technology on the costs that most companies in the industry
are subject to have the potential to increase or reduce the resulting profits
greatly. If these profits are great in number, they may be reinvested into the

45
 research and development department, where future technological innovations
would further raise the level of profits, and so on, ensuring sustainable profits
over a long period of time.

Environmental Factors that Impact Bosch

Different industries hold different standards of environmental protection in their head

as the norm. This norm then dictates what every company should aim for, in the least,
to prevent becoming the target of pressure groups and boycotts due to a lack of
environmental conscientiousness. A company in the textile industry, for example, is
not expected to incur the same level of pollution and environmental degradation as an
oil company. The new consumer, armed with the interest and the knowledge it carries,
prefers to give its business to companies it views as more ethical, particularly about
the environment in the wake of global warming.

The environmental factors that may significantly impact Bosch include:

• The current weather conditions may significantly impact the ability of Bosch to
manage the transportation of both the resources and the finished product. This,
in turn, would affect the delivery dates of the final product in the case of, say,
an unexpected monsoon.
• Climate change would also render some products useless. For example, in the
case of textiles, in countries where the winter has become very mild due to
Global Warming, warm winter clothes have much less of a market.
• Those companies that produce extremely large amounts of waste may be
required by law to manage their environmental habits. This may include
pollution fines and quotas, which may place a financial strain on Bosch
• If Bosch should (knowingly or unknowingly) contribute to the further
endangerment of an already endangered species may face not only the
consequences from the law but also face a backlash from the general public
who may then boycott Bosch in retaliation.
• While relying, in any percentage, on renewable energy may be expensive, it
often receives support not only from the government but also from its customer
base, who may be willing to pay a premium price for the products that Bosch
may produce.

46
Legal Factors that Impact Bosch

The government institutions and frameworks in a country, while technically also

political and thus subject to whichever political party holds the majority in a government
body, are also legal and thus should be considered in a PESTEL analysis. Often Bosch
policies on their own are not enough to efficiently protect Bosch and its workers,
making Bosch appear an undesirable place of employment that may repel skilled,
talented workers.

The legal factors that deserve consideration include the following:

• Intellectual property laws and other data protection laws are, as mentioned
earlier, in place to protect the ideas and patents of companies who are only
profiting because of that information. If there is a likelihood that the data is
stolen, then Bosch will lose its competitive edge and have a high chance of
failure.
• Discrimination laws are placed by the government to protect the employees and
ensure that everyone in Bosch is treated fairly and given the same
opportunities, regardless of gender, age, disability, ethnicity, religion or sexual
orientation.
• Health and safety laws were created after witnessing the horrible conditions
that employees were forced to work in during and directly after the industrial
revolution. Implementing the proper regulations may be expensive, but Bosch
has to engage in it, not only due to the law but also out of Bosch's personal
feeling of ethical and social responsibility to other human beings.
• Laws are also placed to ensure a certain level of quality or reasonable price for
certain products to keep the customer safe and prevent them for being
provided. The industries this applies to find often their costs elevated.

47
 CHAPTER 4
DISCUSSION

4.1 OBJECTIVE ASSESMENT

4.2 SPECIFIC LEARNING OUTCOME

48
 DISCUSSION
4.1 Objective Assessment
Observations
Robert Bosch have always focused on improving the quality of the life of people,
providing newer revenue-generating opportunities, and improving operational
efficiencies for enterprises through an array of solutions. With their unique ability to
offer end-to-end solutions that connect Sensors, Software, and Services, they enable
businesses to move from the traditional to digital, or improve businesses by
introducing a digital element in their products and processes.

With a global footprint and presence in US, Europe, Japan, China, and the Asia Pacific
region, they are at the forefront of designing, developing, and executing IoT
ecosystems through their all-encompassing capability within the 3 aspects of IoT –
Sensors, Software, and Services.

In the business year 2019, numerous successful products in the business sectors
enabled the Bosch Group to keep sales in the business year 2019 roughly on a par
with the previous year, at 77.7 billion euros, despite a challenging macroeconomic and
sector specific environment. Sales revenue fell by just 0.9 percent, and 2.1 percent
after adjusting for exchange-rate effects. The overall economic cooldown, the sharp
fall in both global automotive production and especially the weak state of previously
high-margin automotive markets such as China and India, the drop in the proportion
of newly registered passenger cars fitted with diesel engines, and other changes in
their markets all had a negative impact

The Bosch Group reports EBIT for 2019 of 2.9 billion euros, compared with 5.5 billion
euros the previous year. EBIT from operations fell from its previous year level of
5.5 billion euros to 3.3 billion euros. Apart from the further increase in upfront
investments in promising areas, this fall was chiefly due to the significant slowdown in
important automotive markets and to expenses for adjustment measures

49
Business Strategies of Bosch

• Leading position in the internet of things

Their goal is to become one of the world’s leading internet of things (IoT) companies.
The IoT is facilitating innovative, connected products and opening up additional
business opportunities in digital services. The goal is to use connected, intelligent
solutions to make life easier, more efficient, and safer for as many people as possible.
They regard their presence in diverse markets and industries as an advantage,
because of the many insights they gain as a result.

• Sustainability strategy

Bosch strongly believes that a social and ecological balance is needed to do business
successfully in the long term. For this reason, the company aims to secure its business
success in a way that preserves resources for current and future generations.

In line with its longstanding commitment but with a greater focus on social challenges,
Bosch has set itself clear sustainability targets.

Diversified offerings

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The operating business deals in core products such as brakes, controls, electronics,
electrical drives, starter motors & steering systems; fuel systems, generators,
industrial products, such as drives and controls, packaging technology and consumer
goods; and household appliances, power tools, security systems, thermo technology
and building products.
• Strong Network of Associate companies
Co-creation of the offerings with the help of the associates in different countries is
what helping the company in being Glo-cal while at the same time being competitively
ahead of its competitors. It has 133,974 associates in Germany, 102680 in Europe
(excluding Germany), 42627 in America and 110000 in Asia and other countries.

51
 4.2 Specific Learning Outcome
• The main objective of this internship was to learn more about the business
processes, business activities, strategies of Robert Bosch, and other managerial
process involved in the company, and it indeed helped me to get an overall
knowledge of the same.
• I was able to understand how important is to have a strong R&D department in a
company, as it has helped Bosch to innovate new technologies and make the life
of people much easier.
• Bosch taught me how a brand should create a reputation for quality and reliability
of its products.
• The marketing mix of Bosch helped me to understand importance of following
different pricing strategies for different product catergories.
• Bosch teaches us how importand it is improve people’s quality of life with the
products and services that are provided by a company Robert Bosch ones said “It
is my intention, apart from the alleviation of all kinds of hardship, to promote the
moral, physical and intellectual development of the people.”.

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 Chapter 5

FINDINGS: SUMMARY OF THE FINDINGS - CRITICAL OBSERVATION BY

THE CANDIDATE ABOUT THE INDUSTRY AND ORGANISATION.

OBSERVATION ABOUT THE INDUSTRY AND ORGANISATION

53
 FINDINGS
Observations about the industry

• A conglomerate is one very large corporation or company, composed of

several combined companies, that is formed by either takeovers or mergers.
In most cases, a conglomerate supplies a variety of goods and services that
are not necessarily related to one another.
• One of the primary arguments for the formation of conglomerates is something
known as “synergy” – the combined energies of multiple companies coming
together to produce independent goods and services under one parent
company’s management.
• The major potential drawback to conglomerates is the inherent vulnerability
that stems from such wide exposure. When many diverse companies are
producing goods and services, the danger of the conglomerate becoming
spread too thin is a potential weak link that can bring the conglomerate down.
• Every successful needs to master the art of bringing diverse companies
together and establishing a form of cohesion that enables the group of
companies to act as one successful entity that can wear multiple hats.
• Conglomerates come with both risks and rewards. For some firms, the
formation of a conglomerate enables them to stay afloat and increase
profitability by being able to lean on the combined efforts and resources of
multiple companies. For others, too much diversity proves to be a ticket to
disaster. Finding the sweet spot that lies between a profitable addition or two
and taking on too much to manage is what makes for a successful
conglomerate.

Observations about the Company

• Robert Bosch founded the “Workshop for Precision Mechanics and Electrical
Engineering” in Stuttgart. This was the birth of today’s globally operating
company. Right from the start, it was characterized by innovative strength and
social commitment.
• The Bosch Group generated sales revenue of 77.7 billion euros in 2019.
Despite significant market setbacks, therefore, this almost matched the

54
 previous-year figure of 78.5 billion euros. Sales revenue fell by just 0.9 percent,
and 2.1 percent after adjusting for exchange-rate effects
• Bosch manufacturing plants have already deployed connected solutions for improving
plant efficiency and delivering better results on cost, quality and delivery.
• Bosch Energy & Building Solution division achieved substantial growth of 63.6
percent over the previous year due to successful execution of solar project
orders.
• In the case of Mobility Solutions, the Bosch Group competes mainly with a small
number of large automotive suppliers, although new competitors are emerging
from the IT and internet sectors.
• Automotive Technology is the largest business segment of Bosch in India,
supplying to the local automotive industry, and exporting components
overseas.

The Bosch Power Tools division in India is the market leader in the segment, offers
a complete range of Power Tools.

Risks in the organisation

• The operating business of the Bosch Group is affected by fluctuations in

exchange and interest rates. The aim of business policy is to limit these risks.
The company’s strategy of maintaining a strong global presence with local
production and worldwide purchasing activities generally reduces currency
risks.
• The Bosch Group’s largest single risks classified as particular risks are attacks
on its core IT processes and, increasingly, its connected products as well as
data protection risks.
• Risks from the use of software-based products and solutions on the internet of
things (IoT) arise from connected hardware products, software, or data being
misused or wrongly used with respect to intellectual property protection or data
privacy in an environment that is becoming ever more complex, especially in
public cloud environments
• In addition, liability risks arise in connection with the outage or disruption of complex
systems relating to their products and services, such as manufacturing equipment that
is a component for automated driving.

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• The global spread of the coronavirus suggests there will be significantly
negative effects on the pace of global economic growth, and especially on the
conglomerate markets.

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finance/conglomerate

https://corporatefinanceinstitute.com/resources/knowledge/deals/conglomerate/

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analysis

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history

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