Competing through capabilities – Learning Paper – Launch of Bajaj Qute to Indian roads

Story: Bajaj is planning to launch Bajaj Qute, an alternative to three-wheelers like auto rickshaws, towards the end of 2017. Bajaj Qute was first seen at the Auto Expo 2008 and formally launched in September 2015. However, not meeting the safety standards resulted in the temporary halt in the sales of Qute. With the recent introduction of Quadricycle as a category of motor vehicles in India, the gates were opened for a smooth launch for Qute into Indian automobile industry. Qute was started initially as a joint project with Renault under the name RE60. After Renault parted ways with the project, Bajaj developed the product on its own renaming the product as Bajaj Qute. 

Application of Resource based view lens:

Producing an ultra-low-cost car itself at a price point of around $2000 (₹1.3 Lakh approx.) is a result of various resources coming together. Bajaj has the experience of manufacturing vehicles in 2, 3 and as well as 4 wheelers and the learning curve that has been developed helped Bajaj in producing Qute. The result can be attributed to the Path Dependence the firm has developed over a period of 70 years in Indian Automobile industry. This path dependency may also result in casual ambiguity making it difficult for competitors to imitate and create a product that is cost-effective and efficient in performance at the same time. But, the competition in Indian automobile market is intense with home players like the Tata, Mahindra who not only share the same access to the resources in India but also to the value system owing to the Indian origin for these firms. Each of these firms has their own casual ambiguity in their firm’s successes and it won’t be difficult to imitate the success in achieving a low cost four-wheeler. In fact, Bajaj Qute itself is an another attempt to successfully capture the price sensitive market where Tata tried entering with their flagship low cost four wheelers, Tata Nano.   

Bajaj may have a valuable resource in the form of Bajaj Qute but this resource definitely doesn’t qualify the other parameters in RBV like Imitability, Rarity & Nonsubstitutability. The fact that Qute is being launched as a substitute to the conventional auto rickshaws in India, questions the substitutability of the resource. With increasing focus on the low-cost car segment by other automobile manufacturers and the access to same resource pool questions the Imitability of the resources for Bajaj and it is definitely not rare considering the specifications and engineering design of the product. Hence Bajaj should strategize to convert this valuable resource to a VRIN resource (Valuable, Rare, Inimitable and Nonsubstitutable) resource to gain a competitive advantage over other competitors.

There is still a question about acceptance this product from customers which make this product a valuable resource in the first place. Bajaj is betting on the hope that this will replace vehicles in small commercial passenger vehicles like auto rickshaws. Only time will tell if Qute will become a valuable resource for Bajaj and if that happens will Bajaj able to convert Qute from a Valuable resource to a VRIN resource.

Link to the source article: http://www.businesstoday.in/sectors/auto/bajaj-qute-india-launch-this-year-mileage-36kmpl-features/story/257666.html