maruti strategy

Group “1”

Dinesh

Lakkana

Anuruddika

Sathees

Shammika

Niroshan

Business Environment & Strategic Analysis

Case Study On

Maruti Udyog Limited

Case Introduction

Maruti Suzuki India Limited (MSIL) is primarily in the business of manufacture, purchase and sale of motor vehicles and spare parts (automobiles).

The Company is a subsidiary of Suzuki Motor Corporation

Suzuki Motor Corporation is a pioneer and market leader in small car manufacturing segment in Japan. Further, Suzuki Motor Corporation is also a market heavy weight in motorcycle manufacturing sector.

Driving the most luxurious car has been made possible by the stiff competition in the automobile industry in India

Every other day, we have been hearing about some new launches, some low cost cars - all customized in a manner such that the common man is not left behind.

History of Maruti

Maruti Udyog Limited (MUL) : established in February 1981,.

Through an Act of Parliament, To meet the growing demand of a personal mode of transport caused by the lack of an Efficient public transport system.

The actual production commenced in 1983 with the Maruti 800, based on Suzuki alto kei, after the joint venture agreement with Suzuki Motor Company of Japan,

Today, it is the largest automobile company in India.

Market leader in the car segment, both in terms of volume of vehicles sold & revenue earned.

In 1983 Maruti had 883 employees, Rs.607 Mn of Capital & Rs.17Mn Profit without tax.

But, in 1999 maruti had 5700 employees & 6854.54Mn

Full Privatization of Maruti in June 2003 with the launch of an IPO

Maruti Udyog Limited was renamed as Maruti Suzuki India Limited. (17 Sept. 2007,)

18.28% of the company is owned by the Indian government, & 54.2% b Suzuki of Japan.

History of Maruti Cont……

The Path to Success of Maruti

Team Work & Recognition that each employee’s future growth & prosperity is totally dependent on the company’s growth & prosperity

Strict Work Discipline for Individuals & Organization

Constant efforts to increase the productivity of labour and capital

Steady improvement in quality and reduction in cost

Customer orientation

Long term objectives and policies with the confidence to realize the goals

Respect of law, ethics & human beings

Government18%

Suzuki54%

IPO20%

Others8%

Maruti’s Share

Harpal Singh, the first Maruti owner, still drives the car after 31 years.

Plant at Gurgaon in Haryana

MAJOR COMPETITORS

Industry Analysis

Current market share of different companies

SWOT Analysis of Maruity

STRENTHSContemporary

technologyJapanese Management

practices After sale services

DistributionDiversification & R&D

WEAKNESSStill depends upon

SUZUKI COPORATION

10% components are manufactured outside

IndiaStill considered as poor

man’s brandUnaccustomed to

international standards or keen competition.

Competitive Forces in Indian Passenger Car Market

Competitor AnalysisHyundai Motors India Limited

Hyundai Santro- Positioning- Pricing Strategy

Tata Motors

Tata Indica - Flagship Brand- Positioning- Pricing Strategy

Cost leadership

Cost focus

Key Strategic Initiatives by Maruti

A. Turnaround Strategies

In wake of diminishing profits and market share Maruti initiated strategic responses with India’s liberalization process:

to

This can be observed from mission statement of Maruti

1984: “Fuel efficient vehicle with latest technology”

1987: “Leader in domestic market & be among global players in the overseas market”

1997: “Creating customer delight and shareholders wealth”

• 15-30 lakhs

Vitara

• 5-10 lakhs

Baleno,SX4

• 3-5 lakhs

Zen, wagon R, Versa, Swift

• Below 3 lakhs

Maruti800, Alto, Omni

B. Current Strategies1. Pricing Strategy – Catering to all segments

Caters to all segment and has a product offering at all price points.

Their pricing strategy is to provide an option to every customer looking for up gradation in his car.

Key Strategic Initiatives by Maruti Cont..

2.Offering one stop to customers or Creating different revenue streams

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

1. Maruti Finance

2. Maruti Insurance

3. Maruti Driving School (MDS)

4. Maruti True Value

5. N2N

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

3. Repositioning of Maruti products Whenever Maruti’s brand grew old or its sales started dipping ,it made the following

efforts in the same field:

Omni – interiors & exteriors, Omni cargo,& CNG Omni

Versa – slashed prices by decreasing engine power

Esteem – new look to boost sales

Baleno – price slash from 1999 (7.2lacs) to 2003 (5.46) WagonR – modifications in engine and sporty look

Zen - Modified 4 times and special editions

Maruti 800 - Introduced modified accessories .

Product life cycle of Maruti

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

4. Customer Centric ApproachMaruti has successfully shed off the public sector laid back attitude image & has inculcated the customer-friendly approach in its organization culture.

Maruti employees & dealers are answerable to even a single complain

There are instances of cancellation of dealership based on customer feedback

Changed their showroom layout

Trained Sales Executives

Customer complain handling cell under CRM department

Maruti Call center brings Maruti closer to its customer

Loyalty Programmes

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

5.Committed to motorizing India

Making things simple for Indian consumers to upgrade from two-wheelers to the car.

Partnership with SBI & its associate banks took organized finance to small town people to buy Maruti cars. Eg. Rs.2599 scheme

Free maintenance with little extra EMI

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

6. Disinvestment & IPO of Maruti Udyog LimitedBiggest privatization in India till date worth of Rs. 2,424 Crore, on the investment of Rs 66 Crore

The best part of the deal is the Rs.1,000 Crore control premium the government extract from SMC.

No interference of Ministers & Bureaucrats

Suzuki became the Decision maker of MUL

Two Mega investment plans. Eg. A new car plant & an engine & transmission manufacturing plant

Suzuki proposed two-wheelers facility in India, 51% Stake of Maruti

IPO

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

7. Realization of Importance of Vehicle Maintenance Services MarketOld days simple three-box flowchart – Vendor, Factory & Dealer

New scheme began in 1999 revolves around the total lifetime value of the car

Only catering approximately 20000 vehicles through its service stations everyday

Conducting free service workshops to encourage consumers to come to their Service stations

Increased the service stations to 1567 across 1036 cities

Every regional office is having separate service & maintenance department

Key Strategic Initiatives by Maruti Cont..

B. Current Strategies Cont…

8. Playing on Cost LeadershipPrice dictator in Indian automobile industry

Low cost provider of Car

Lowest car on road is Maruti 800

Maruti achieves this through continuous improvement in operational efficiency & productivity

50% improvement in productivity & 30% reduction in cost in three years

Impressive Sales & profits via productivity & cost cuttings

Increased focus on vendor management

Encouraging vendors to develop R&DAppling IT to manufacturing

• Vehicle Tracking System• e Nagare System

Key Strategic Initiatives by Maruti Cont..

C. Major Future Strategies1.Phasing out Zen in 2007

Alto launched to take over Maruti 800 in future

Phasing out of Maruti 800 faced lots of resistance from dealers all over

Another reason not phasing out was the fear of brand shift of customers to competitors’ product

Swift launched in May, 2005 to phase out Zen, since it had already two modifications

Major reason behind this was cannibalization of Wagon R & Swift due to overlapping of price Band

Rational decision to kill a product before it starts facing the decline stage in PLC

Key Strategic Initiatives by Maruti Cont..

C. Major Future Strategies Cont….

2. Maruti plans for a Big Diesel Foray

3. Maruti plans for a new engine & transmission plant

Key Strategic Initiatives by Maruti Cont..

C. Major Future Strategies Cont….

4. India as export hub for Maruti

Europe70%

Asia12%

Africa7%

Americas9%

Oceania2%

Chart Title

Key Strategic Initiatives by Maruti Cont..

C. Major Future Strategies Cont….

5. Maruti Emerging as R&D Hub for Suzuki Motors Corporation

Low cost in India for infrastructure & R&D

India growing as an export hub

Suzuki’s investment in India

Key Success Factors of Maruti

1. The quality advantage

2. A buying experience like no other

3. Quality service across 1036 cities

4. One stop shop

5. The low cost maintenance advantage

6. Lowest cost of ownership

7. Technological advantage

Future Challenges

Perception Change

Growing Competition in Compact Cars

New Emission Norms

Rise in Petrol Price & Growing Popularity of Others Substitute Fuels like CNG

Ageing- models will models will face extinction

Conclusion

Maruti Udyog limited had a prime objective to meet the growing demand of a personal mode of transport

Things are now changing with LPG polices and disinvestment; the real competitions has already began.

The smarter will certainly will be next leader, but till then...Maruti Suzuki will going to the brand .

Maruti Suzuki’s presence in India (as on march 31st 2012)

Maruti Suzuki’s global presence(exports in 2011-12)

Maruti should improve it’s after sale service because its hits badly car market share.

Show room demonstration should be given at frequent time interval and feed back should be considered positively.

The marketing managers should make better relations with dealers and reputation of the company.

Customer considers quality as their first preference, so the company should give more stress on this.

Suggestion

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