This case study provides a detailed exposition of Bajaj Auto's changing strategies pertaining to the Indian two-wheeler market over a period of more than three decades. The material is presented in the backdrop of Bajaj Auto discontinuing the production of its longstanding workhorse and national icon - the Chetak scooter - in December 2005. The evolving market dynamics and Bajaj Auto's responses to the same are also explained in the context of relevant conceptual framework, making it a useful resource for classroom discussion.

In December 2005, the "Chetak" scooter, the enduring workhorse of Bajaj Auto Limited was finally laid to rest when the company stopped its production. For more than three decades, it had ruled the two-wheeler market in India, and enabled Bajaj Auto to enjoy market share in excess of 75% and rise to become the world's largest scooter manufacturer. Hamara Bajaj (Our Bajaj) was truly the Indian family vehicle of the seventies and eighties, so that Bajaj Auto could, with a degree of credibility, lay claim to the advertising tagline: "The grand picture of a resurgent India" (Buland Bharat ki Buland Tasveer). By the turn of the century (1999-2000) however, the "shadow of decline", to quote Levitt, was beginning to show. Bajaj lost its position as the world's largest scooter manufacturer; and by 2009, the company had withdrawn from it staple product, the scooter. Now, in 2010, it has initiated a major brand makeover, including a move to drop the Bajaj brand name from its products altogether. Ironically, the company's stock price has appreciated considerably. How could such an iconic brand suffer such major decline? To find an answer, this case study analyzes the factors that led to this circumstance in the light of established strategic frameworks.

Chandler (1962), based on his classic studies of major US corporations, stated that "structure follows strategy," i.e., changes in corporate strategy lead to changes in organizational structure. He also concluded that as organizations grow, they transform from one structural make-up to another as they expand. These changes happen because the old structure, having been stretched to its limit, causes inefficiencies detrimental to the functioning of the organization and therefore needs to be addressed.

While analyzing the factors that led to the decline of General Motors, The Economist wrote: "GM's architect, Alfred Sloan, never had Henry Ford's entrepreneurial or technical genius, but he had organization. He designed his company around the needs of his customers (a car for every purse and purpose). The divisional structure he created in the 1920s, with professional managers reporting to a head office through strict financial monitoring, was adopted by other titans of American business, such as GE, DuPont and IBM before the model spread across the rich world. Although this model was brilliantly designed for domination, when the environment changed, it proved disastrously inflexible. The problem in the 1970s was not really the arrival of better, smaller, lighter Japanese cars; it was GM's failure to respond in kind. Rather than hitting back with superior products, the company hid behind politicians who appeared to help it in the short term. Rules on fuel economy distorted the market because they had a loophole for pickups and other light trucks - a sop to farmers and tool-toting artisans. The American carmakers exploited that by producing squadrons of SUVs, while the government restricted the import of small, efficient Japanese cars. If Detroit had spent less time lobbying for government protection and more on improving its products it might have fared better. Sensible fuel taxes would have hurt for a while, but unlike market-distorting fuel-efficiency rules, they would have forced GM to evolve."

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