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Management of Technology and Innovation (MoT) for Competitiveness: Diagnosing Problems at Vonda Motors*

CASE STUDY, STRATEGY
ET Cases - FLAME, 9 Pages
AUTHOR(S) : Kirankumar S. Momaya, Shailesh J. Mehta School of Management, IIT Bombay

Case Preview

Management of Technology and Innovation (MoT) for Competitiveness: Diagnosing Problems at Vonda Motors

 

Pramod Khattar, CEO of Vonda Motors, was puzzled as he reflected on years of initiatives to stem loss of market share in India. Vonda Motors has been a leading two wheeler manufacturer of India for quite some time. The firm has grown tremendously along with growth of market. Massive gap between demand and supply during 1980s and other situations encouraged focus only on select operational capabilities. Although margins were quite healthy, the firm did not feel necessary to invest in innovation and technological capabilities needed to enhance customer base and satisfaction.

Liberalization in India that was started in 1991 has been a paradigm shift creating new opportunities and gaps in ‘profitable growth ‘ for Vonda. This eluded many initiatives. Shift from ‘blaming poor performance to external factors’ to ‘opening mind to internal problems and opportunities’ took many years. The management perceived that problem was with specific functional area such as operations, HR or marketing and applied fixes, including one related to IT (from simple in-house systems and database management systems to ERP and SCM software), but problem was still getting aggravated.

Technology drives choices for customers and dynamics of firms and industries, hence its proper management can have major implications for firm’s competitiveness as well as for economy and society. The enhancement of competitiveness of firms1 depends upon the effective management of engineering, technology and innovation. Firms in many developed countries have better understanding about capabilities needed for management of technology and innovation (MoT) and their linkages with different factors of competitiveness, but firms in emerging countries can have major gaps.......................

Background

Since the introduction of new products such as motorcycles, Vonda Motors (Vonda) has been transforming on multiple fronts to achieve competitiveness. Vonda has origin in machine works and did a major break-out to manufacture complete two wheeler in India under license of an international player. It took decades, before it thought of minor revision of scooter models. Liberalization of automobile industry that started in early 1980s opened doors for entry of stronger players from abroad. Japanese players were most aggressive and took joint venture (JV) route to spark a revolution, ‘100 cc motorcycle revolution in India’. These motorcycles helped transform industry dominated by brands such as Bajaj in scooters, and Bullet, Rajdoot, Jawa, Yezdi, etc. in fuel guzzling heavy motorcycles.............

Problems of Competing with Goliaths

Problems in some Indian contexts can remain hidden from even top management for long enough when turn-around become very challenging. Hiding problems is a common practice in many organizations in India, as culture of using phrases such as ‘No Problem’ is ingrained deeply. Vonda cannot escape from macro problem affecting the automotive industry in India such as gaps in international competitiveness across levels: firms, industry and country. Focusing on firm level, performance levels on technology, productivity, quality, etc. had major opportunities for improvement at Vonda, particularly to compete against international giants................

Diagnosing Gaps in Capabilities

Competitiveness of firms, supply chains, platforms and systems are being shaped by management of technology. Competitiveness will depend on how well organizations manage their technological resources and innovation processes (from NPD to platforms and biz models). Emphasizing technology as the engine of production systems capable of competing in a global environment, they insisted that policies at both the national and the firm level had to be well integrated and harmonized.............

Exploring Positions and Steps in the Journey to Build Technological Capabilities

Having faced several survival struggles since liberalization, the firm wanted to go more systematically in diagnosing gaps in capabilities. Journey from ‘Learning to Assemble’ to next levels has been very challenging for many Indian players, particularly when much stronger Japanese players have started entering the market with superior products. Old hat of jugaad13 can help fix burning problems, but may be of very limited value as compared to systematic innovation needed to survive increasing intensity of international competition...........

Learning to Transfer and Absorb Technologies

Importance of process innovation capabilities can be very high in this stage. While often considered to be the easiest among innovation capabilities, process innovation capabilities are more complex as compared to operating process capabilities. Once basic foundations are built, firms can start initiatives on capabilities for technology transfer and absorption. Effective technology transfer can be very challenging as it involves capabilities from technology need identification, deciding on technology package (& pricing) and selection to actual transfer and absorption............

Break-out Towards New Product Development Level

Building NPD capabilities demands a major break-out from earlier stages. Products are more tangible and visible, as compared to process innovation – which is often focused on efficiency improvements for cost reduction and inside an organization. There are levels in terms of novelty for products. For instance, a product that is new to a company need not be new to the market or based on entirely new technology. New markets can also have stiff climb in terms of complexity and risks are involved. For instance, new market in other state – but within India – requires much lower additional capability building as compared to the new international markets in challenge countries (such as advanced countries)...........

What Innovation Capabilities are Needed for Future?

Open to learn from lost opportunities of improvement in the past, Pramod Khattar, CEO of Vonda Motors, was keen to identify candidate capabilities needed for future. He wanted to leverage unfolding opportunities early on, before they become challenges due to gaps in MoT and related capabilities. Sudden jump in R&D expenditure by Hero MotorCorp detected in quick benchmarking was probed further. Slew of new product concepts Hero MotorCorp is developing indicates seriousness with which some firms are moving towards higher level elements of MoT..............

Assignment Questions

I. How can we diagnose the stable positions, trends and gaps?
II. Which firm had very stable trends and sustainable positions?
III. ..........

Exhibits

Exhibit I: Net Sales Revenues of Leading Two Wheeler Manufacturers in India

Exhibit II: Net Foreign Exchange Earnings of Leading Two Wheeler Manufacturers in India

Exhibit III: R&D Expenditure of Leading Two Wheeler Manufacturers in India

Exhibit IV: Sample of Detailed Table of Quick Benchmarking

Teaching Note Preview

Management of Technology and Innovation (MoT) for Competitiveness: Diagnosing Problems at Vonda Motors

 

Synopsis

Vonda Motors, a leading manufacturer of two wheelers in India, has been keen to develop and launch new products indigenously for applications that were useful for mass markets in emerging countries such as India. Success is also needed in India, which is becoming intensely competitive market with presence of several technologically capable Japanese players and entry of firms from other developed or emerging countries. This case introduces the contexts of strategy and management of technology and innovation (MoT) for success of the new product development (NPD) within India and internationally. It also gives concepts and tools that are useful to diagnose the levels of capabilities on different elements of MoT for international competitiveness. The case deals with strategic and MoT issues of what capabilities shape differentiation and competitive advantage, how to diagnose level of capabilities and what maturity levels of dynamic capabilities to think about. Proper diagnostics of trends in positions of the firm and key competitors can have profound impact for strategic choices the firm makes about capabilities, products, exports, markets, internationalization and other factors shaping long term survival and competitiveness of the firm.

The case provides a rich context to get a glimpse of challenges many capable Indian firms are facing in their urge to leverage tech-saavy human capital to break-out to higher level of capabilities for differentiation. Capable manager who is given daunting task of managing technology to deliver on many fronts faces tough dilemma. Unfortunately, he/she has limited talent who can use relevant tools to address the basic issues that can evolve through use of the case, and help the firm break-out (BO) to next levels. The case and teaching note provides rich material for learning concepts, analysing issues, diagnosing positions and trends, and discussions on what capabilities the firm should focus on.

Learning Objectives

The case helps participants

• Understand context that can shape key strategic decisions, particularly related to technological or innovation capabilities
• Select key concepts of strategy, competitiveness and MoT such as competitive advantage, dynamic capabilities, technological innovation for diagnosis
• Evolve role and approach of quick benchmarking to find trends and gaps
• Evaluate elements of MoT of high relevance and relative positions of the firm at an instance and longitudinally

Expected Learning Outcomes

By systematically analyzing the case and associated tasks (e.g. assignments), the learner should be able to:

• Identify key MoT elements in the context
• Select criteria (or proxies) to assess relative positions
• Understand the dilemma the firm can be facing
• Evolve options for the firm to enhance MoT capabilities

Case Positioning and Setting

The case involves actions to implement strategy and decision making at the level of senior and middle management. It can be used in following courses or management development programs:

•Executive-level strategy/competitiveness/MoT programs: For learners who have rich corporate experience and understand challenges of strategy execution for international competitiveness. It can be used in programs such as innovation management, international business, competitiveness, growth strategies and other programs for top leaders.
•Senior MBA/Master of Management courses: The case may be found useful for courses such as corporate/competitive strategy, technology management and innovation management.
• MoT/Innovation management: For senior students in undergraduate programs in engineering/technology/business, who would like to explore the ideas of strategy, MoT, innovation and NPD.

The tools and the case has already been piloted in select MDPs and master of management (M.Mgt.) courses at IITB/SJMSOM for last 5 years..................

$5.48
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Product code: STG-1-0058, STG-1-0058A

Abstract

Capabilities related to management of technology and innovation (MoT) are becoming a necessity for cost competitiveness as well as differentiation in emerging era. Vonda Motors was in two wheeler segment that was at the cross road, as superior products from Japanese firms were sure to disrupt the market and Indian firms were far behind on capabilities. Diagnostics identified major gaps on key dimensions of process, product, technological innovation and other capabilities.

Post the diagnostics, the firm embarked on alternate options to bridge capability gaps on different levels of the ‘Elements of MoT’. After bridging lower level gaps, the firm embarked on an ambitious program of developing capabilities on complex elements from technology up gradation and New Product Development (NPD) to ‘international commercialization’. The case provides light on select key issues related to role of MoT for competitiveness. The case helps understand the context of decisions related to technological capabilities using a framework and associated tools. This case attempts to make some sense of the black box of MoT capabilities (including innovation capabilities) by using a simple yet powerful framework of ‘Elements of MoT capabilities’ to address key questions. The core question is how do MoT capabilities help for differentiation and competitiveness?

Pedagogical Objectives

Key objective of the case is to help the professionals learn ‘How to diagnose problems related to management of technology and innovation (MoT) for competitiveness’. Sub-objectives can be listed as:

  • Understand linkages between MoT and international competitiveness
  • Learn to identify different levels of MoT capabilities
  • Evolve role and approach of quick benchmarking to find trends and gaps
  • Evaluate elements of MoT of high relevance and relative positions of the firm at an instance

Functional areas

Business management case: Strategy and Management of Technology (MoT) / International Business (IB) / Innovation Management / NPD

* FLAME CASE CONFERENCE 2017

This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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