Major change occurred

Increasing Ties with GM in the Early 21st Century

Spurred in part by the 1998 creation of DaimlerChrysler AG, which shook up the global auto industry,
GM and Suzuki strengthened their relationship. In 1998 the companies agreed to jointly develop
subcompact cars for the European market, and GM spent about $318 million to increase its stake in
Suzuki to 10 percent. Early in 2000 their jointly developed European car, the Suzuki Wagon R+/Opel
Agila, began coming off assembly lines in Hungary (through Magyar Suzuki) and Poland (through an Opel
plant--Adam Opel AG being a GM subsidiary). The partners were also active on the South American
continent: In April 2000 production of the Grand Vitara began at General Motors de Argentina S.A. The
companies also were collaborating in Colombia, Ecuador, and Venezuela.
In June 2000 Osamu Suzuki, who had served as president of Suzuki Motor since June 1978, became
chairman and CEO of the company. The longtime leader, who had married a granddaughter of the
company founder and took his wife's family name, had built Suzuki into a global powerhouse through
his consistent focus on small cars, cost-containment, and conservative fiscal practices, as well as an
aggressive approach to expanding into developing markets. Taking over as president and COO was
Masao Toda, who had been a vice-president in charge of technology, manufacturing, and purchasing.
Toda remained president until April 2003, when he stepped down for health reasons and was replaced
by Hiroshi Tsuda, a senior managing director.
Suzuki and GM strengthened their alliance in September 2000, placing further emphasis on Suzuki's
position as GM's small-car partner. GM subsequently injected about $600 million into Suzuki in January
2001 to increase its stake to 20 percent. As part of the deal, GM Chairman John F. Smith, Jr., gained a
seat on the Suzuki board, becoming the first outsider to hold such a position. Part of the money
invested into Suzuki went toward the start-up of production in Japan of a new jointly developed all-
wheel-drive compact car, the Chevrolet Cruze. Japanese sales of the Cruze began in October 2001, and
then exports of the vehicle to Australia began in April 2002 where it was sold as the Holden Cruze by a
GM subsidiary, Holden, Ltd.
On the motorcycle front, meanwhile, Suzuki and the other "Big Four" Japanese motorcycle makers (the
others being Honda, Yamaha, and Kawasaki Heavy Industries, Ltd.) had for years faced heightened
competition from newly insurgent European and U.S. manufacturers as well as from Chinese companies
making pirated copies of their machines. Responding to such threats, Suzuki and Kawasaki announced
in August 2001 that they had entered into a cooperation agreement whereby they would jointly
develop new motorcycle models and would unify their parts procurement and production operations to
cut costs. In an unrelated development, Suzuki in May 2002 began manufacturing products in the
United States for the first time when a plant in Rome, Georgia, run by U.S. subsidiary Suzuki
Manufacturing of America Corporation began turning out all-terrain vehicles (ATVs).
Also during 2002 Suzuki converted two of its key overseas production joint ventures--Maruti Udyog in
India and P.T. Indomobil Suzuki International in Indonesia--into consolidated subsidiaries by acquiring
majority control of the ventures. Suzuki now held a 54.2 percent stake in Maruti Udyog and 90 percent
of Indomobil Suzuki. In July 2003 the Indian government sold 25 percent of its remaining interest in
Maruti Udyog to the public through an initial public offering (IPO).
As part of GM's 2002 takeover of the remnants of the bankrupt Daewoo Motor Company of South Korea,
Suzuki laid out $89 million for a 15 percent stake in GM Daewoo Auto & Technology, the South Korean
company that GM formed as a successor to Daewoo Motor. The first outcome of this new alliance was
the introduction of two new Suzuki models into the U.S. market in the fall of 2003, both of which were
rebadged Daewoo models. The Verona, a five-passenger sedan competing directly against such top-
sellers as the Toyota Camry and Honda Accord, marked Suzuki's entrée into the midsize segment of the
car market, while the Forenza was marketed as a "premium" compact sedan. These vehicles were the
first of nine new vehicles that Suzuki planned to introduce into the U.S. market over a five-year period,
during which time the firm aimed to roughly triple its U.S. sales from the 68,000 it sold in 2002 to
200,000 by 2007. Meantime, plans were being made for Suzuki to begin selling GM Daewoo models in
Japan under the Chevrolet brand in either late 2003 or early 2004.
At the same time that Suzuki was attempting to triple its U.S. sales, its legal battle against Consumers
Union continued. By 2002 the ruling that had awarded $90 million to a woman paralyzed in a Samurai
rollover accident had been overturned. Suzuki's lawsuit against Consumers Union was dismissed in 2000,
but Suzuki won an appeal to a U.S. Court of Appeals, which in 2002 ordered the case to trial.
Consumers Union then filed an appeal to the U.S. Supreme Court.
Principal Subsidiaries: Bell Art Co., Ltd.; Enshu Seiko Co., Ltd.; Hamamatsu Pipe Co., Ltd.; Snic Co.,
Ltd.; S. Tech Co., Ltd.; Suzuki Akita Auto Parts Mfg. Co., Ltd.; Suzuki Business Co., Ltd.; Suzuki
Hamamatsu Auto Parts Mfg. Co., Ltd.; Suzuki Marin Co., Ltd.; Suzuki Nousei Center Co., Ltd.; Suzuki
Precision Industries Co., Ltd.; Suzuki Toyama Auto Parts Mfg. Co., Ltd.; Suzuki Transportation and
Packaging Co., Ltd.; Suzuki Works Techno Ltd.; Suzuki Australia Pty. Ltd.; Suzuki Austria Automobil
Handels G.m.b.H.; Cambodia Suzuki Motor Co., Ltd.; Suzuki Canada Inc.; Suzuki Motor de Colombia
S.A.; Suzuki France S.A.; Suzuki International Europe GmbH (Germany); Magyar Suzuki Corporation
(Hungary); Maruti Udyog Ltd. (India; 54.2%); P.T. Indomobil Suzuki International (Indonesia; 90%);
Suzuki Italia S.p.A. (Italy); Myanmar Suzuki Motor Co., Ltd.; Suzuki New Zealand Ltd.; Pak Suzuki Motor
Co., Ltd. (Pakistan); Suzuki Motorcycles Pakistan Ltd.; Suzuki Philippines Inc.; Suzuki Motor Poland
Ltd.; Suzuki Auto Madrid S.A. (Spain); Suzuki Motor España, S.A. (Spain); Thai Suzuki Motor Co., Ltd.
(Thailand); Thai Suzuki Trading Co., Ltd. (Thailand); Suzuki GB PLC (U.K.); American Suzuki Motor
Corporation (U.S.A.); Suzuki Manufacturing of America Corporation (U.S.A.).
Principal Competitors: Toyota Motor Corporation; Nissan Motor Co., Ltd.; Honda Motor Co., Ltd.;
Mitsubishi Motors Corporation; Mazda Motor Corporation; Yamaha Motor Co., Ltd.; Ford Motor
Company; DaimlerChrysler AG; Hyundai Motor Company.

Unlike Tata Motors, Maruti backs LPG

Our Corporate Bureau / New Delhi July 20, 2006

Maruti Udyog (MUL), the largest domestic carmaker, today put its weight firmly behind LPG (liquefied petroleum gas)
as the alternative fuel of choice, while arch rival Tata Motors enhanced its association with CNG (compressed natural
gas).
 
“Our information is that CNG prices are artificially low and may undergo a major change. Besides CNG is available
only in three-four cities,” MUL Managing Director Jagdish Khattar said at the launch of a new-look Wagon R and the
Duo Wagon R, which can run on both petrol and LPG.
 
Maruti does produce some units of Omni, the van fitted with the CNG mode and mostly seen as taxis in Delhi.
 
However, the company seems reluctant to expand the CNG portfolio, owing to the availability issue and the price
uncertainty factor.
 
On the other hand, Tata Motors today launched the CNG version of its hatchback, Indica, and estate, Indigo Marina,
that comply with the Bharat Stage-III emission norms. However, a company statement said it was also working on
LPG offerings on its car range, which would be launched soon.

Maruti to hold its own for model touch-ups

Parvathy Ullatil, TNN, Dec 19, 2006, 01.45am IST

MUMBAI: India's largest car maker Maruti Udyog will increasingly work independently on model
upgrades and collaborate with parent company Suzuki Motor on all new model launches.

Maruti intends to launch a new car and two model upgrades every year, which means Maruti's R&D team
will work independently on the facelifts and collaborate with Suzuki on designing and developing new
models right from scratch.

This follows a recent communication from its Japanese parent to step up its local R&D efforts. "We
received a message from Suzuki saying Maruti should 'grow up' and help Suzuki's other global
subsidiaries.
Suzuki says it is short of manpower in Japan and it has to divide its attention between Hungary, China
and India. They are pushing us to do our own work now as making major changes in cars is a time-
consuming process," said Mr Jagdish Khattar, MD, Maruti Udyog.

About 20-30 Indian engineers had worked with their Japanese counterparts for two years to help design
the Swift, a hatch-back car and make it suitable for Indian conditions. Maruti is expected to play an
incremental role in all future product launches, said Mr Khattar.

Maruti has budgeted around 4% of its turnover for R&D and is setting aside a major portion of land at its
new Manesar facility for a test track. Suzuki is investing in training Indian engineers, who spend two to
three years in Japan learning the ropes.

What started with a chance meeting between Mr Khattar and the senior MD(Engineering) of Suzuki
Motor (SMC) on the stairway in Suzuki's headquarters six years ago has grown into a fairly large
operation today with three divisions employing over 250 engineers.

Nearly 90 of these engineers have been trained in Japan by SMC and Suzuki has committed to extending
further help by stationing four senior engineers from Japan in India to train and guide the team here.

Maruti kicked off its R&D operations six years ago and its first baby was the Zen facelift in 2003-end. This
was followed by the Esteem facelift and the Swift collaboration.

When the Zen Estilo was unveiled earlier this month, the R&D team at Maruti Udyog had much to
celebrate as the new car came fitted with over 91% of local components. This is considerably higher than
the indigenisation on cars launched by any of Suzuki's other subsidiaries, usually around 60-65%, and
helped Maruti keep the cost of the car competitive.

There are speculations that the R&D team at Maruti may be slowly inching towards an indigenously
designed car. " Suzuki is not in a hurry and neither are we. At the end of the day in terms of quality, safety
emission etc we have not reached the top level. Suzuki has to step in there and revalidate our efforts," said
Mr Khattar.

Need for change ____________________

Corporate Social Responsibility

 
Maruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management and the employees in steering
Maruti Suzuki towards long term sustained growth in harmony along with the interests of the stakeholder.  

The role of the CSR department is to professionalize CSR activities in Maruti Suzuki and strengthen the mechanisms
involving the activities. Significant efforts have been taken to contribute to society at large, through its corporate activities,
especially in the areas of Road Safety and Vocational Training. Maruti Suzuki has set up dedicated teams with requisite
expertise to steer the social projects.

CSR Concepts
 
Maruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management and the employees in steering
Maruti Suzuki towards long term sustained growth in harmony along with the interests of the stakeholder.  

The role of the CSR department is to professionalize CSR activities in Maruti Suzuki and strengthen the mechanisms
involving the activities. Significant efforts have been taken to contribute to society at large, through its corporate activities,
especially in the areas of Road Safety and Vocational Training. Maruti Suzuki has set up dedicated teams with requisite
expertise to steer the social projects.

Compliance
 
To sustain being the preferred supplier of our cars to our customers, Maruti Suzuki abides by the statutory rules that need to
be complied with. We make sure that all necessary regulatory and mandatory requirements for road worthiness as certified
by ARAI are in place in each of the cars that we roll out. Our processes and systems too strictly adhere to and abide by to
the above rules.

Maruti Suzuki to promote aspiring engineers

Maruti Suzuki and Society of Automotive Engineers (SAEINDIA) signed an agreement on Monday to support the SUPRA
SAEINDIA 2011 competition. This competition promotes young engineering talent for automobile engineering and facilitates
participants to conceive, design and fabricate formula-1 style sports cars. 

The agreement was signed by Shashank Shrivastava, Chief General Manager (Marketing) Maruti Suzuki and V Sumantran
Chairman, SUPRA SAEINDIA, in the city. 

On the occasion, Shashank Srivastava, Chief General Manager (Marketing) Maruti Suzuki said, “Just in the past five years
the average age of our car buyers a drop of 10 years For these younger customers, we make youthful and energetic cars,
while not compromising on the value of fuel efficiency.”

SUPRA SAEINDIA contest originated through the Society of Automotive Engineers (SAE International) USA promises a
level playing field to budding under graduate and post graduate engineers across India.

The contest provides an opportunity to showcase their skills, understanding and passion for automobiles.

The contest will see 44 teams create their dream cars and test at the renowned Madras Motorsport Club race tracks near
Chennai. The winning car will be displayed at Asia Pacific Automotive Conference at Chennai in Oct‘11 and Auto Expo’12.

At the time of the ACM last year, there was cautious optimism that the
Indian economy would recover faster than the rest of the world. This
actually happened and the GDP growth in 2009-10 was 7.4%. This year we
may see 8.5% growth. I am happy to report that Maruti Suzuki could
establish a new record and cross the significant milestone of selling
over a million cars in the last financial year. We were helped by the
progressive policies of the government which provided stimulus for
growth. However, our performance would not have been possible without
the unwavering confidence and trust which the market displayed in the
products and services offered by the Company. Equally, all our
employees, and particularly those in the production and related areas,
performed brilliantly and despite the shortage of installed capacity
still managed to manufacture 100,000 cars in a month and a million cars
in the year. It is this spirit of can do, shall do which has taken
Maruti Suzuki to where it is today. The company works as a single
team, and there are no distinctions between management and workers when
it comes to furthering the interests of the company.
Domestic consumption is what drives the growth of the Indian economy.
The events which take place in the rest of the world cannot
automatically be applied to India for making investment decisions or
policy, though we should not also ignore that input. Exports do get
impacted when there is a global recession, but since exports are a
small part of total domestic consumption, the impact is not very
significant. However, Maruti Suzuki as a company should perhaps
deliberately not attempt to export a large part of its production, but
keep exports at about 15% of output. We should concentrate more on the
domestic market. To keep our market share, not only should we
adequately increase manufacturing capacity, but also remain very aware
of the changing consumer tastes and demands and be flexible in making
quick adjustments. Secondly, sound financial practices both at the
national and the company levels are essential for successfully meeting
any unexpected developments anywhere in the world.The Company meets
this requirement in every possible way, and I look for your continued
support for such policies. We will also continue, with the involvement
of our employees to look for all possible ways to reduce costs and
improve productivity. Thirdly, we need to rapidly develop our own
capacity to develop and design products. This is an area of priority
for us and with the help of Suzuki we are investing heavily in research
and development.

The Indian economy is expected to see very good growth in the next few
years. As per capita incomes rise above US$ 1500, we may reach an
inflexion point where the demand for cars becomes significantly higher
than in the past. We have to be prepared to expand capacities to meet
that demand when it comes. Fortunately, our cash reserves will enable
us to do so, without the risk of high leverage. Prudent financial
policies have been adopted by us to prepare for such a situation in the
future.

An area of concern is infrastructure, particularly urban

infrastructure. The highway construction programme has now picked up
speed and that is welcome indeed. However, state governments seem
almost helpless in improving urban infrastructure. While public
transportation is being improved in some cities, it has to be realized
that this will never replace the use of private transportation. Those
with rising incomes will aspire to own their own means of
transportation. Local and state governments have to build this into
their plans and display political will in implementing programmes to
improve urban infrastructure. The Company is trying to create the
infrastructure which will enable drivers to be properly trained before
they are given licences. We hope this will increase safety and reduce
accidents. However, without substantial improvements in infrastructure,
the extent of improvement will remain small. All of us need to put
pressure on our political leaders to quickly look at urban
infrastructure development, as otherwise cities will descend into
chaos.

The rapid growth of the automobile sector is putting pressure on the

component industry. Large investments need to be made to keep up with
the growing needs of components. In addition, the component
manufacturers now need to invest in building engineering and R&D
capacities. We cannot remain dependant forever on foreign suppliers for
component design as this will greatly handicap us in meeting the needs
 of our customers in reasonable periods of time. The Tier 2 and Tier 3
vendors will, in particular, pose problems as their capabilities to
make investments and improve technology is limited. The Tier 1 vendors
have to find a solution to this problem. I believe the component
industry now has the opportunity to move to the next level, but to do
so it will have to adopt the best corporate governance practices and
become totally professional in their management.

The Indian economy, and our industry, is faced with high attrition
rates. This is the result of a shortage of well educated and
experienced managers, engineers and skilled personnel. The problems of
the education sector are immense and will impact the growth of the
Indian economy. I believe we need more radical thinking and actions if
this vital sector is to support the rising aspirations of our
population. Industry needs to recognize the seriousness of the
situation and join hands with the government to find workable
solutions.

A company can only have sustainable growth if its stakeholders

interests are well looked after. The Company has always adopted
business processes that inherently promote the well being of its
customers, vendors, dealers, employees, shareholders, community, and
the environment.

changes in the workforce and culture due to change process_____________________

Towards the Next Orbit

Aug 16th 2010

By Savreen Gadhoke
December 2010 will stand witness to the assembly of a galaxy of renowned thought leaders for the
National HRD Network Global Conference on Towards the Next Orbit. Established in 1985, the National
HRD Network (NHRDN) is a not-for-profit association of over 8500 professionals voluntarily committed to
promote the HRD movement in the country. NHRDN serves the HR community through its 30 Chapters
and a vibrant National Secretariat spread across the country. The annual conference, the signature event
of NHRDN, will not only consider the array of forces that will play a pivotal role in the emergence of a
new business landscape, but will also be critical in understanding the business models, management
practices and processes to propel the country and organizations to the next orbit. While understanding
the nuances of doing business in the next orbit is important, it’s equally critical to understand why this
particular theme has been chosen for the annual conference. In a prelude to the National HRD Network
Global Conference on Towards the Next Orbit,People Matters brings an exclusive insight into what led to
the deliberation of this theme by taking the views of imminent personalities and thought leaders from the
field of Human Resources.
Time for latest technology
S.K. CHATURVEDI, Conference Chairman
Chairman & Managing Director, Powergrid Corporation of India
“Indian business houses need to re-look on the past practices and make for total overhaul of system
procedures. With the opening of the economy, FDI is being encouraged for the acceleration of the
economic environment of the country. And unless Indian industries change themselves, they will not be
able to cope up with the advancements in technology, which these foreign organizations will bring with
them. So it is time that we move to the next orbit and adopt the latest technology that will bring us at
par with any global organization in terms of doing business. Indian companies need to change not only
from the point of view of adopting the latest technology, but their thinking and mindset toward issues like
tackling competition, exploring new opportunities, identifying new markets, et al. Indian businesses need
to completely cut-off from the past legacies. It is not just a matter of financial security; that is now a
thing of past. People are now looking for something more in terms of job satisfaction. With increased
levels of education, a large chunk of the working population now falls into the double income group
category and their aspirations are high, which have to be addressed by the HR manager. So it is time
that companies become active and alert in addressing such employee aspirations.”

It’s no more business; it’s a fierce battle field

PADMA SHRI DR. PRITAM SINGH, Conference Academic Chairman
Professor of Eminence, MDI Gurgaon; Former Director IIM Lucknow and MDI
“Doing business has turned into an intense war zone. Companies don’t know where their enemies
(competition) are hiding and when will they strike. To fight such wars, businesses no longer need
business managers, but business warriors who can identify potential enemies and proactively prepare for
their strike. Therefore, the whole HR function needs to change if companies have to acquire business
warriors. In such a business environment, while stagnation is considered death and moving live; only
moving faster can be considered being alive for a business. And that’s why it’s important to move toward
the next orbit to keep yourself alive. To move to the next orbit, it is imperative that companies first set-
off old learnings and adopt new processes & practices. Not only the HR function but also the business
model needs to evolve. Hitherto, businesses followed a model of vertical integration. But now, business
models are no more vertically but virtually integrated. Key components like technology are globally
outsourced and this translates that having a virtually integrated model will require an entirely different
mindset, processes and even workforce; hence it is imperative to move toward the next orbit in terms of
business strategies, managerial processes and leadership styles.”

Leaders must incorporate emerging trends in business strategies to excel globally

N.S. RAJAN, National President - NHRD Network
Partner, EMEIA, People & Organization Leader, Global Leader-HR Advisory, Ernst & Young
“The global emerging business landscape is posing challenges to organizations that have never been
experienced before. At macro level, the downturn has brought higher involvement from government in
the private sector in terms of funding the crisis. The financial markets too have undergone a radical
change amidst the economic turmoil and this has led to far more due diligence since money has become
tight and has put remuneration under spotlight. As per the E&Y Global Survey, matured economies grew
by 1.3% in 2010 as against the 5.3% experienced by emerging economies, which has made emerging
markets spearheading global growth. For companies to succeed in this new scenario, they will need to
focus on using technology oriented services such as analytics based decision making, connectivity
platforms, etc, to turn around their functioning; incorporate the need for protecting the environment by
bringing Resource Efficiency Agenda into the boardrooms; overcome the talent challenges such as ageing
population, vulnerable labour segments, executive pay, etc. derived from the workforce composition in
each economy. The government too will have to play an increasing role in the new business environment
by introducing public financing for social sectors, sponsor social security and employer retirement
schemes, and encourage public savings. Leaders must incorporate these emerging trends 
in their business strategies to survive, grow and excel globally.”
Companies need to shift from tangibles
S.Y. SIDDIQUI, Regional President - North, NHRD Network
Managing Executive Officer - Administration (HR, Finance & IT), Maruti Suzuki
“Over the last 15-20 years, companies developed their competitive edge by sharpening their expertise
and core competence, and in the process, achieved incremental growth. But what we are experiencing
now is a distinct change as part of the globalization process; we are seeing a change in the way
businesses are done. So much so that the very definition of the term ‘competitive edge’ is no longer
dependant on tangibles such as cost, technology, et al, but is shifting on the intangibles like speed,
customer responsiveness, employee capability and commitment, inspirational work culture, et al. So, it is
time that companies work toward building capabilities around intangibles for business growth. When we
look at the NHRDN Conference in December 2010 and talk about the Next Orbit, it simply means that the
way we used to do business may no longer be effective. Now we need to focus on the intangibles to
build our Competitive Edge which primarily leads to the criticality of Talent Perspective, Innovation driven
Work Culture and the Top Leadership role. The Business Strategy linked with these perspectives can lead
to new opportunities and potentialities in an intensely competitive business environment.”

It is time the HR function makes itself obsolete

AQUIL BUSRAI, Former Executive Director-HR, IBM, Currently CEO, aquil busrai consulting
“The Indian economic scene has been on an upswing not only in the IT or ITES Sector - though it has
been more visible here - but also in other sectors like Infrastructure, Retail, Hospitality and even
Manufacturing sectors. This growth has meant increasing demand for talent and increasing pressures on
organisations to attract as well as retain quality talent to fuel this growth. Handling people issues has
therefore become a business imperative which actually affects the bottom line. As business moves to the
next orbit, it is increasingly expecting its support functions like HR to act in a more proactive manner to
handle the uncertainties and become effective partners. It is therefore time for the HR function to make
itself obsolete in its current role of simply providing support as asked for by the business - instead HR
itself has to move to the next orbit of facilitating business growth and performing larger contributory role.
Line managers need to take the responsibilities of handling people issues and HR function needs to apply
its expertise to equip these line managers to play the new role. HR managers need to move beyond just
tracking attrition and retention figures and be equipped to take calculative steps in facilitating business
decisions. They need to develop a more holistic business mindset and participate in environment
scanning, understanding business trends, assessing what competition is doing and what new methods
and technology is coming on the horizon. And how all these will impact people issues. It is only with this
additional knowledge that HR will become a better business partner.”

HR - Key differentiator in business

DR. Y. V. VERMA
Chief Operating Officer, LG India
“With the globalization taking place rapidly and the diffusion of technology and related R&D and
knowledge, there is an unprecedented change in the current business scenario. The world has become a
global village with the advancement of technology and rapid development. Factors such as enhanced
knowledge base, increased competition and speedy growth across sectors have ultimately led to the
formulation of the theme ‘Toward the Next Orbit’. The conference provides a global platform to have
interface with CEOs/Business Leaders/HR Professionals not only from India, USA, UK, Europe, APAC and
South East Asian countries to discuss and share the views on HR Talents, trainings, research and trends
and practices of Corporate India. Presently HR and Leadership is an integral part of an organization and
Human Resources. However, going forward, Human Resources will be the key differentiator in
businesses. The role of the HR will become very crucial in providing breakthrough solutions to
organization success.”

India is very rich in intellect and talent

P.V. RAMANA MURTHY
Vice President - HR, Hindustan Coca Cola Beverages
“India, with its booming economy is largely being reckoned as the next emerging nation. World’s top
companies are focusing on India as well as on China for establishing businesses and expanding their
footprint. Talking of India and China, there is a fundamental difference between the two nations. One is
the demographic dividend. While China has an ageing population, India is relatively younger. Whatever
qualities China had in terms of its people is backfiring now with a majority of its population growing old.
Secondly, India as a nation is very rich in intellect and talent. Each country has a unique trait about its
talent pool – you find good leadership in USA, and discipline in Japan. For India, its strength lies in its
intellect. The third aspect is that the boundaries of the global environment have erased. The world is
becoming smaller and the aspiration of the new age managers are becoming global. Given this scenario,
in the next orbit, there will exist a business environment, which will have no boundaries and people with
greater intellectual capabilities will run the organizations. And to be prepared for such a new business
environment, it is imperative that organizations should continuously brace themselves and its people to
build such intellectual capabilities which will enable them to create winning organizations.”

Workforce reduction & HR competencies: an

exploratory study.
Publication: Indian Journal of Industrial Relations Format: Online
Publication Date: 01-JUL-10 Delivery: Immediate Online Access
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Article Excerpt
Importance of Competency

Designed to help an organization meet its strategic objectives through building human resources
capability, competency modeling has been in existence since the 1970's. An approach to
competencies gained momentum by McClelland's (1973) research. There is a growing level of
interest in managerial competencies and managerial performance with a wealth of literature
(Boyatizs 1982, Spencer & Spencer 1993).

The dictionary (Oxford) meaning of "competence" is the ability or the state of being competent
("competent" meaning adequately qualified or capable). However, research literature in HR has
brought out differences between the two terms "competence" and "competency". As per Rowe
(1995), "competence" means a skill and the standard of performance while "competency" refers
to behaviour by which it was achieved. Thus, competence describes what people do and
competency describes how people do it.
Whiddett and Hollyforde (2004) viewed that all aspects of competency framework should be
behaviour-based. According to Boyatzis (1982), "A job competency is an underlying
characteristic of a person in that it may be a motive, a trait, a skill, an aspect of one's self-image
or social role, or a body of knowledge which s/he uses". Referring to competency of a HR
professional, Chanda and Kabra (2000) were of the view that 'the competency of a professional is
determined through his/her level of knowledge, capacity to utilize skills and personal attitudes
and values towards the HR function'. Spencer and Spencer (2008) defined competency as "an
underlying characteristic of an individual that is causally related to criterion-referenced effective
and/or superior performance in a job".

Workforce Reduction Scenario

During economic slowdowns, workforce reductions have become common, though it should be
ideally seen as a last resort. The ultimate purpose of downsizing boils down to lowering the
operating expenses by employee elimination to achieve greater profits for the company (Nair
2008). But the hidden costs are often ignored. It is not only the victims who are affected but the
survivors are equally affected.

A downsizing exercise can be said to be successful only when it can be seen that the survivors
are adapting to the situation comfortably. It has been suggested that layoff survivors experience
stress that is as great, or even greater than, the stress felt by those who have been laid off
(Kaufman 1982). Studies have shown that downsizing can have profound effects on survivors'
behaviour including trust and morale (Fisher 1991), job involvement (Allen et al 2001),
withdrawal (Brockner 1990), work effort, productivity (Brockner et al 1992), and organizational
attachment (Spreitzer & Mishra 2002).

Research has suggested that that the role of HR, whilst crucial in sustaining a well motivated
workforce has become very wide-ranging. If organizations are serious about achieving the
envisaged benefits of downsizing, the implementation of effective people-management strategies
is very important. The role calls for a range of skills (of HR professionals), competencies and
knowledge and understanding of organizational development, employee development, new
forms of employee relations, and enhanced methods of using competencies to include behaviours
such as managing ambiguity, insecurity and uncertainty (Kochanski 1996). Since downsizing is
going to continue due to global changes and no organisation can predict as to when it might have
to go for the same, it is important to realise that the right way to handle survivors is a challenge
for which organisations should be geared up. In this scenario it has increasingly been felt that
along with the corporate changes, HR competencies should also take shape in order to be able to
contribute as a value added function.

Rationale & Objective of the Study

In a workforce reduction scenario it becomes a bigger challenge for HR professionals as to how

to smoothen the exit process of the victims and keep the survivors motivated. Since decades,
competencies have been used in the context of selection, performance appraisal, training and
development. The present authors have tried to look into competencies (of HR professionals) in a
workforce reduction scenario. The research was conducted keeping in mind the suggestions
given by senior managers from the industry during interactions for a larger study related to
workforce reduction. Majority of the practitioners, especially non-HR, pointed out that HR needs
to play a more active role in a...

Maruti Udyog Limited – Managing Competition Successfully

RUTI UDYOG LIMITED – Managing competition successfully

Maruti Udyog Limited (MUL) was established in Feb 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.
It was established with the objectives of - modernizing the Indian automobile industry, producing fuel
efficient vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of
the Indian population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company
of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest
technology as well as Japanese management practices. Suzuki was preferred for the joint venture because
of its track record in manufacturing and selling small cars all over the world. There was an option in the
agreement to raise Suzuki’s equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki
further increased its equity to 50% turning Maruti into a non-government organization managed on the lines
of Japanese management practices.

Maruti created history by going into production in a record 13 months. Maruti is the highest volume car
manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti
is one of the most successful automobile joint ventures, and has made profits every year since inception till
2000-01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high
depreciation on new model launches resulted in a book loss.

Read more: http://www.articlesbase.com/marketing-articles/maruti-udyog-limited-managing-competition-
successfully-723310.html#ixzz3qE0jaQv7 
Under Creative Commons License: Attribution

Workforce reduction & HR competencies: an exploratory study.

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with Business Execution Software Read the Whitepaper
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Abstract:
This study explores the competencies expected of HR professionals while handling the survivors in a downsizing
scenario and also describes how managerial competencies could change in importance during periods of significant
organizational transition. For the purpose of the study a competency enquiry list was generated through interaction
with senior industry professionals, both HR and non-HR. The list comprising 10 competencies was administered to 34
top level managers belonging to 4 organizations (where workforce reduction had happened in the recent past) in the
manufacturing sector in Delhi and NCR. The results of the study suggest that in a downsizing scenario the five most
important competencies expected to be possessed by HR professionals are business acumen, interpersonal
understanding, credibility, communication and ability to realign HR policies and practices.
Leadership_______________________________

Maruti Suzuki becomes the first advertiser in India to win the ...

Maruti Suzuki India Limited, country’s largest carmaker has won the prestigious MMA Asia Pacific and
the Global awards for its digital campaign –‘Sports Sponsorship goes mobile.’ The Awards are given to
companies for the best use of mobile media for branding purposes, both in the Asia Pacific region and
globally. The award ceremony was held at Los Angeles, USA, last week.

This is the first time that any Indian company has been chosen for these prestigious awards at a
global level. The awards Asia Pacific - Maruti Suzuki with Affle, Sports Sponsorship Goes Mobile and
Global - Maruti Suzuki with Affle, Sports Sponsorship Goes Mobile were announced by Global Mobile
Marketing Association (MMA) at the ceremony on November 17 at Mobile Marketing Forum in Los
Angeles. M/s Affle are Maruti Suzuki’s mobile media partner, whose products and services were used
to drive this campaign.

Maruti Suzuki had executed “Sports Sponsorship goes mobile” campaign in 2010 around two of the
largest sporting – The Indian Premier League (Cricket and FIFA World Cup. It was a two-month long
campaign which used multiple mobile media platforms like Affle’s SMS2.0, Mobile Internet, Voice
Portals and SMS advertising. The campaign reached to over 7 million users delivering unprecedented
engagement levels. With over 1.2 million engagements and a 7 % CTR (Click Through Rate), this
campaign played a very important role to get Maruti Suzuki connect with it’s target audience
effectively.

The MMA received hundreds of submissions from companies across the globe. Winners were selected
by the MMA Awards Selection Committee that's comprised of global industry leaders from wireless
carriers, technology and content providers, agencies, and industry publications. Speaking on the
occasion, Shashank Srivastava, Chief General Manager (Marketing), Maruti Suzuki said, “We are
delighted to have played a leadership role in use of mobile media in India and bring this global
recognition to India for the first time. This campaign was a result of our study of changing consumer
behaviour that showed a significant increase in the consumption of sports related content on the
mobile phones. Based on this, Maruti Suzuki launched this campaign to increase company’s
association with sports and build greater affinity with its target audience on their medium of choice. In
the traditional media as well, Sports is highly consumed by our target group- which is the growing
population of younger people in the country.”

- HR LEADERSHIP CONCLAVE 2010
Playing a significant role in infusing innovation, generating superior ... How does the HR
department firm up its plans? What are it resources and how ... Finance, IT & COSL), Maruti
Suzuki India Limited; Mr. RS Dabas, ... Chairperson: Mr. Jacob Peter, Lead Consulting Advisor
- People and Change Practice, KPMG ..
Human Resources Functional strategy, optimization & transformation:

With the complexity of business environment growing at an

unprecedented pace, the precipice on which the HR community rests is getting
deeper. It is actually testing times. Playing a significant role in infusing
innovation, generating superior business value, enhancing the leadership
quotient, building customer loyalty, facilitating market penetration has never
been mission critical for HR any time before.  How the HR
departments determine and successfully respond to these challenges will play a
key role in the ability of an organization to capitalize on growth opportunities.
As the environment is becoming conducive for adding substantial share holder
value, raising the overall performance capability of people has become a key
factor for growth.  For the first time, HR is going through baptism by fire. The
only way to come out stronger and capable to deliver is by focusing on three
interlinked aspects of performance: functional strategy, optimization &
transformation. How does the HR department firm up its plans? What are it
resources and how should it see its way forward?

 
Key Points of Discussion

 The need for realignment of priorities.

 
   Share holder value and HR maturity model. 
   How does human resources contribute to Business bottom line?
    Is the function dying from lack of line orientation?

Affle Clinches Two Prestigious MMA Global Awards For it’s

Path Breaking Mobile Marketing Campaign for Maruti
Suzuki on Airtel
Nov 23, 2010

New Delhi : Mobile media leader, Affle, today announced that it has won the  Mobile
Marketing Association’s(MMA) Global & Asia Pacific Mobile Marketing Awards, for the best use of mobile media for
branding purposes. These awards were won for Affle’s advertising for Maruti Suzuki, India’s largest car maker, for a
path breaking campaign which helped Maruti leverage sponsorship of top sporting events on airtel’s mobile platform.
To win this award, Affle documented a two-month campaign using multiple mobile media platforms like Affle’s
SMS2.0, Mobile Internet, Voice Portals & SMS advertising.
The campaign was a result of Affle, airtel and Maruti Suzuki’s study of changing consumer behaviour, which showed
a significant increase in the consumption of sports related content on the mobile phone. Taking this key factor into
consideration a campaign to increase Maruti Suzuki’s association with sports and to build greater affinity with its
target audience on their medium of choice was created. The uniqueness, scale and results for this campaign ensured
that it became the first Indian entry to win this award for the global category at the MMA.
“We are very pleased to receive this global recognition from the MMA for our work with Maruti Suzuki,” said Anuj
Kumar, Executive Director (South Asia), Affle. “We have always believed that mobile is the new mass media, and if
strategized & executed well, mobile campaigns can deliver significantly better results than other mass media. For this
particular campaign we integrated the brand experience across multiple mobile touch points and ensured that the
campaign reached to millions of users delivering unprecedented engagement levels. With over 1.2 Mn engagements,
a 7% CTR (Click Through Rate), and over 33% increase in Top of Mind awareness, this campaign today stands as a
great global case study on how mobile can be used effectively for brand building in a very scalable way”
“We are tremendously proud to have won this prestigious marketing award and delighted to have played a leadership
role in the evangelising the use of mobile media in India,” said Sunila Dhar, Asst. General Manager, Maruti Suzuki.
“Sports has been an important genre of advertising and of great relevance to our TG. Combining sports with the
digital medium has given us these stupendous results. We really value our partnership with Affle as they have always
brought to us the most cutting edge mobile communication products and solutions which have helped us connect
better with our target group. This particular campaign has been a great success for us as it helped build affinity &
engagement with our target audience and was instrumental in helping us significantly up our Awareness & Top of
Mind scores though a clutter breaking communication. We also received over 30,000 test drive requests as a result
which was a clear bonus from this branding activity.“
“It is now a well known fact that when it comes to innovation in mobile, the entire world is looking to the Asia Pacific
region on how to do it right,” said Rohit Dadwal, Managing Director, Mobile Marketing Association Asia Pacific
Limited. “With a market and consumer environment that is conducive to tremendous growth in this field, the APAC
region will continue to fascinate the world with its dazzling applications of mobile technology. Innovation in the region
is being spearheaded by such technologically advanced markets such as Japan, Singapore, Hong Kong, South
Korea etc. In addition, there are several developing nations that have growing populations and low PC penetration
rates making mobile their primary choice for web access and related services.”

Maruti Suzuki: Buy

The company’s formidable array of products not only shielded it from the slowdown in demand last year but also
helped expand its market leadership in the A2 and A3 car segments.

S. Hamsini Amritha

The stock of Maruti Suzuki is one of the outperformers in the BSE Sensex basket over the past year. But the stock
remains a preferred exposure to capitalise on the recovery in automobile sales. Though concerns about a deficient
monsoon and a slowdown in exports next year have tended to impact the stock’s performance in recent weeks, the
company appears well placed to weather both risks and still deliver strong growth.
Investors with a moderate return target (10-15 per cent) can consider buying the stock currently at Rs 1467. This
translates into a PE multiple of 32 times trailing 12-month earnings, but one should keep in mind that earnings for the
company remained depressed for most part of last year.

The company’s formidable array of products not only shielded it from the slowdown in demand last year but also
helped expand its market leadership in the A2 and A3 car segments. The strong financial performance despite the
input cost continuing to remain stiff is yet another comforting factor for investors. However, given the way the stock
price has shot up in recent times, it may be ambitious to expect big returns in the near future.

Line ‘em up

From enjoying a 51.3 per cent market share in the A2 segment in 2007-08, Maruti Suzuki saw its market share
dipping to 46.8 per cent last year. However, the launch of A-Star and Ritz has helped Maruti quickly regain lost
ground and its market share now stands at 53.3 per cent in the A2 segment. This apart, the company also holds
leadership in the A3 or the entry-level sedan segment, with models such as the SX4 and Swift Dzire keeping demand
buoyant. Maruti’s market share in this segment is 42.7 per cent.

Though Tata Nano was perceived to be a big threat to Maruti initially, by taking away entry-level car buyers, concerns
on this front have been reduced by the fact that most of the bookings for the Tata Nano have been for its high-end
variant.

With the price differential between high end Nano variants and Maruti’s basic Alto quite narrow, a drastic shift to the
former appears unlikely. Diesel cars, which are grabbing an increasing share of the A2 and A3 car segments, may
have also helped the company maintain its position, given that Maruti’s top selling models such as Swift, A-Star, Ritz
and Swift Dzire come in diesel variants.

Year 2010 may see the unveiling of Suzuki Kizashi in India. This will mark the company’s entry in the premium sedan
or the A4 segment. Given that Kizashi is pitched against cars such as Toyota Corolla Altis, Honda City and Skoda
Octavia, breaking into this segment may take time.

With small cars hogging the limelight world over, Maruti plans to expand its production capacities and invest more on
its research and development activities. The company will deploy Rs 1,000 -Rs 1,500 crore, for the R&D unit with a
dedicated suppliers’ park and test-track in Rohtak. The company’s low debt:equity ratio and annual cash flows of over
Rs 1,000 crore from operations, suggest that the funding may not impose much of a burden. The recently developed
Manesar plant will see an increase in its production capacity, as the company proposes to gradually shift some of its
output from the Gurgaon plant.

Some concerns

Rural and semi-urban demand played a crucial role in Maruti weathering a tough market last year. Currently rural and
semi urban markets contribute 12 per cent of the company’s total sales. While the deficient monsoon may impact
rural sales temporarily, this impact is likely to offset by improved agricultural credit, the NREGA programme and
accelerated government spending on rural infrastructure projects.

The payment of the second tranche of Pay Commission arrears over the next couple of months, combined with
currently low interest rates, may also give a renewed boost to urban demand.

Exports account for 10 per cent of the company’s total sales and have been a growth driver for Maruti in recent
months.

At present, over 90 per cent of the cars are shipped to Europe. This trend may sustain till December 2009 or possibly
till March 2010, aided by the scrappage incentives currently being offered by Governments in many European
countries.

However, Maruti may face some uncertainty next fiscal, once these incentives are withdrawn. The company’s
strategy of expanding its target markets into Australia, West Asia and parts of Latin America may help reduce a huge
blip in exports.
Financial overview

The first quarter of FY-10 saw the company deliver strong profit growth after closing the previous fiscal year with a 30
per cent profit decline. Aided by excise duty cuts, net sales grew by 34 per cent, while net profit expanded by 25 per
cent.

In terms of risks, the company will continue to face operating cost pressures, as the cost of raw materials such as,
aluminium alloys and rubber have gone up by more than 50 per cent from their lows. A change in product mix in
favour of diesel variants will also add to cost. A sharp upward spiral in interest rates may also curb demand in the
hatchback segment.

Plan for change_____________________________\

Maruti plans a ‘Made in India’ Kizashi

Maruti India is finally set to shift its focus from entry level hatchbacks
and saloons to more premium cars. Maruti tried to capture this segment earlier as well with the Vitara but failed
miserably.
Now, it is all set to launch the new Kizashi in the Indian market by year end.
Maruti Suzuki, always considered an expert in the small car with 7 offerings in the segment, will have to change its
image for their premium offering – the Kizashi.
Priced around Rs 17 lakh – Rs 24 lakh, the new car will go head to head with Honda Accord, the Toyota Camry and
the Skoda Superb with a 2.4-liter petrol engine.
A Maruti Suzuki official -
We will get the confidence to make the sedan here only when we generate adequate sales volumes from the CBUs
and CKDs. We do have a plan, but there is a long time to it
But initially the Kizashi will be brought to Indian shores in the form of a CBU which means the base price is already
pushed up by more than 100 per cent (including countervailing duties, education cess and other levies).
If it generates adequate sales volumes, the strategy is to shift from CBU to CKD. But CKDs will also attract a 60%
duty. The rising yen cost is providing no relief either.
In order to counter these factors the company has a long term plan to manufacture Kizashi in India in its Manesar
plant.

Read more: http://indianautosblog.com/2010/11/maruti-plans-a-%e2%80%98made-in-india%e2%80%99-
kizashi#ixzz3q97m7I9K
Maruti Udyog Limited ? Managing Competition Successfully
MARUTI UDYOG LIMITED – Managing competition successfully
Maruti Udyog Limited (MUL) was established in Feb 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. It was established
with the objectives of – modernizing the Indian automobile industry, producing fuel efficient vehicles to conserve
scarce resources and producing indigenous utility cars for the growing needs of the Indian population. A license and a
Joint Venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki
acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices.
Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over
the world. There was an option in the agreement to raise Suzuki’s equity to 40%, which it exercised in 1987. Five years
later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-government organization
managed on the lines of Japanese management practices.
Maruti created history by going into production in a record 13 months. Maruti is the highest volume car manufacturer
in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti is one of the most
successful automobile joint ventures, and has made profits every year since inception till 2000-01. In 2000-01,
although Maruti generated operating profits on an income of Rs 92.5 billion, high depreciation on new model
launches resulted in a book loss.

How did the organization plan and strategize the entire change_________________________________

Cover Story - The Inside Out Strategy

Is Cover Story - The Inside Out Strategy

Apr 1st 2010

By Tejasvi Mohanram & Ester Martinez

Emerging economies today present a complex landscape of immense opportunity, disruptive low-cost
innovation and rapid power shifts, in the backdrop of hitherto unknown constraints and cut throat
competition. People Matters spoke to thought leaders in industry and academia about how business
leaders can thrive by viewing their business less in terms of products, services or processes and more in
terms of delivery capability & competencies – known and hidden – within their organizations.

Few companies and individuals epitomize Indian business success as Reliance Industries and Dhirubhai
Ambani. Armed with phenomenal business acumen, impeccable execution and fund-raising abilities,
Dhirubhai built Reliance into a business empire worth more than 100 billion dollars in a period of just 40
years. Undoubtedly one of the greatest success stories in corporate history from any part of the world
and an unparalleled blaze of wealth creation.
A closer examination at these 40 years reveals a familiar style by which Dhirubhai ‘out-strategized’ the
competition – Reliance would enter an industry with excess capacity and world-class technology, and
then mop up all excess demand in the industry by providing the best quality product at the lowest
industry margins.
While this strategy per se was potentially replicable, number of companies including public sector
companies tried to achieve low costs by putting up high-scale plants… and failed. Reliance’s strategy
worked because it was anchored in outstanding competencies. Reliance demonstrated the best project
management abilities and it still is a champion in executing large-scale complex projects. The company
virtually pioneered raising low-cost capital from broad-based equity markets in India and abroad. Further,
it could manage the regulatory environment, partly through an extensive network and system for
gathering and interpreting information — a key but often overlooked component. And it could move fast.
These core competencies allowed Reliance to set up its world-class plants of scale at the lowest capital
costs of any company in India.

Clearly, Reliance’s growth spiral was built on an iterative process. Its competencies in project
management, finance mobilisation and influencing the regulatory environment supported its high volume,
low-cost strategy built on creating mega capacities. Each large-scale project, in turn, allowed it to invest
more in and deepen those competencies, thus preparing the company for even larger projects and
greater cross-functional coordination.

While most can see the value in Dhirubhai’s strategy, the significance of deep-rooted market-beating
competencies at Reliance, around which the strategy was woven, is often overlooked. And herein lies a
strong message for business leaders today. In a period of phenomenal opportunity and cut-throat
competition, managers who are able to build generic, value-creating capabilities within their organizations
and leverage on them with relentless market focus, stand a great chance of creating dominant industry
players which exploit bulk of growth opportunities.

The idea of Core Competence as an Inside-out strategy was first put forth by Hamel and Prasad in 1990,
when they outlined what makes up the concept of core competence – It provides customer benefits, is
hard for competitors to imitate and can be leveraged across products and markets.

Competitive advantage comes not from imitation but from using organizational processes and design to
identify emerging competencies and build them into capabilities. Again, such disproportionate,
asymmetric, advantages are hard-to-imitate ways in which an organization differs from its rivals—
differences that could ultimately bring huge economic benefit. They may consist of outputs (such as
complex project execution that infrastructure leader L&T can deliver), relationships and alliances (such as
Tata Group’s network/contacts spanning generations, industries and countries), processes, nascent skills
and knowledge (as with BPO sector leader Genpact)—provided competitors cannot imitate these within
practical time and cost constraints. In fact, such competencies, because of their subtlety or uniqueness,
confer a head start and discourage imitation, and give the company a sustainable edge over competitors.

Increasingly, the competencies that afford companies such sustainable edge over rivals are moving from
the realm of tangibles to intangibles. Over the last couple of decades, many of the traditional tangible
sources of 
competitive advantage – technology, access to capital and product development have become
commoditized in most industries and, the source of competitive advantage has shifted to the intangible
strengths of an organization like organizational speed, culture and people. S.Y. Siddiqui, Managing
Executive Officer – Administration (HR, Finance & IT) at auto giant Maruti Suzuki, emphasises this
importance of intangibles. “Competitive edge will emerge from intangibles like speed, responsiveness,
commitment and people excellence. In the past, core competency used to emerge from tangibles like
technology, product road-map, quality control etc. Today, all these tangibles are replicable by
competitors across the world. You cannot really replicate intangibles because there is a high level of
ambiguity on how they are built”, he says.
Paradoxically, a continuous and intimate connection with the market and with customers is vital for the
Inside-out strategy. First, companies have to understand the competition in order to know how they are
unique. More 
importantly, they need to track customer reactions to discover which competencies are relevant. It is this
ability to constantly leverage on the intersection between the company’s emerging competencies and the
opportunities in the marketplace that is the fundamental strength of organizations based on capabilities.
Dr. Pritam Singh, Professor of Eminence, MDI elaborates “Inside must be linked and re-aligned as many
times as required with the outside for it to be a competitive strength. What differentiates successful
leaders and organizations is that they are able to ‘begin with the end’; they are able to look around, look
beyond and look within at the same time. Those leaders are able to hear the unheard sounds, they can
see the unobvious and they can synthesise purpose by combining the outside and the inside.”

In this context, it becomes crucial for leaders and organizations to constantly look for emerging
competencies, shortlist ones that could be built into market-beating capabilities, nurture these by building
organizational structures and processes around them and finally, pursue market opportunities that build
and leverage on these capabilities. And even more so for large organizations.

‘Discovering’ Competencies
To do well, companies need to develop important capabilities or resources that their rivals cannot. It is,
however, hard for them to develop these resources unless they already have some realized or potential
edge. The first step lies in discovering the competencies that underlie that edge.

Phanish Puranam, Professor of Strategy, London Business School, explains this succinctly “Capabilities
can be built up by design but some emerge through serendipity. A call centre may discover that in
analyzing call volume, they have the seedling of a data analytics capability. An IT outsourcer may find
that they have learnt enough about their client’s business to be able to offer business consulting advice.
This happens all the time, because what people learn and how this knowledge will prove useful is difficult
to anticipate perfectly. But being able to see it when it happens is vital as it can form the basis for
differentiation within the same business or diversification into a new one.”

A good place to begin the search for internal competencies is to find the more obvious external ones—the
reasons why clients and business gravitate to a company rather than its competitors. Managers might
look for the kinds of opportunities they can capture that their competitors cannot and vice versa. Robert
Kaplan, Professor of Management Practice at Harvard University, is a firm believer in the importance of
talking to clients for identifying competencies. “The most important way to identify competitive
advantage is to look outwards…talk to customers”, he says. “If you understand why customers chose you
to do business with over competitors, you have the most accurate response to the competency question.
Customers are like a mirror to the organization and companies can very easy let their advantage slip by
not being close to their customers.”
Tiger Tyagarajan, COO at Business Process Outsourcing major Genpact, explains this process of getting
customer feedback. “We have many processes and mechanisms that allow us to get ‘outside-in
feedback’…we do 
rigorous customer feedback processes…net promoter scores from about 2500 customer touch points
globally every 6 months. We have done this for 10 years without a break. The learnings from this and
other win-loss analysis when our leaders talk to customers when we win or lose business, are
tremendous.”
Competence search could also take place inside a company. In many cases, the most useful
‘asymmetries’ are buried deep within the organization and have to be traced back from surface level
abilities. This identication can take place by spotting pre-existing but unexploited assets or in an
evolutionary manner that requires managers to recognize an emerging edge, mostly in intangible assets
such as knowledge, relationships, and reputation.

Maruti Suzuki’s evolution into a company known for superior after-sales service and its developing a
comprehensive customer service network over the last decade began with both an inward and outward
search. In 2000, the company acknowledged the need to capture a greater portion the total lifetime
value of cars it sold, as more and more customers began changing cars at shorter intervals. The company
recognized its edge, in terms of scale, for providing a nation-wide servicing network and started building
on its existing service station base with a focus on developing superior maintenance services. A decade of
effort later, Maruti Suzuki today has an extensive network of more than 2500 service stations covering
1200 cities, which it plans to expand by 45% over the next 3 years. This strategic expansion has helped
Maruti Suzuki to capture a huge portion of the maintenance market and today allows the company to
compete not just on the basis of product and price, but also on the basis of superior after-sales service.

Nurturing capabilities
Competencies evolve into sustainable core capabilities largely through organizational design, which builds
and supports capabilities by embedding people and processes into a cohesive conguration. This involves
a combination of aligning people to leverage on the competencies using the right reward structures,
creating feedback mechanisms to reinforce organizational understanding of competencies and
institutionalizing knowledge through learning and development.
Organizational structure is the key to creating and sustaining capabilities according to Dave Ulrich, co-
founder of RBL Group. “Line managers are ultimately owners of the organization choices. HR
professionals are architects who offer insights and advice. Organizations should be designed around
capabilities, what they are known for by their customers”, he adds.
In general, aligning behaviour with core competencies is a key challenge in innovation-driven companies.
Nathaniel Sasikar, Vice President, HR at 3M explains how the right reward structure can drive such
behaviour – “High performance is a result of organizational alignment through business processes. For
example, new product sales is a key performance measure for all our sales employees. This ensures that
there is a hunger and support for selling new products, which in turn keeps the labs busy in creating
more new products. Thus we continue to innovate and invest in our people.”

At the heart of nurturing capabilities is the ability to create an organization that is capable of firmly
capturing the essence of any competency and making it more valuable to the organization than to its
competitors. A case in point is engineering and project management blue chip, Larsen & Toubro, which
has managed to leverage on its project management capabilities to an extent that today, the company
has little competition when to comes to the execution of mission-critical, capital-intensive, hi-tech
infrastructure projects. U. Dasgupta, Executive Vice President and Operating Company (OC) Head
Electrical and Automation OC at L&T, elaborates on how the company reinforces the understanding of
key competencies. “Balancing between action and reflection is an ongoing exercise and we have many
mechanisms to encourage this balance. We run learning sessions once the projects have been completed
to explore the learning opportunities from each project. We also use cross functional teams extensively,
to study past and current projects on how we can execute better, faster and cheaper.”

Ultimately, this process of designing structures, processes and policies with the objective to nurture and
institutionalize competencies is what results in the DNA of an organization. The right DNA for an
organization is capable of creating ‘virtuous spirals’ - a cycle of capability and aligned performance that
enhances reputation, brings opportunities and creates resources to ultimately plough back into capability
development. Organizational structure and design serve as a powerful tool in disseminating the capability
within the organization and in leveraging the capability across the right market opportunities.

What business are you in?

Arjun Singh, Asia Managing Director for Outsourcing - Global Business Services and Technology, at Hewitt
Associates recollects the large number of instances when market leaders fail to recognize their core
offering, like when Pepsi and Coke took a good many years to realize their business was beverages and
not colas – an oversight that saw them lose significant market share to iced teas, milk, juice and dairy
brands. Noting that companies with a strong ‘core’ withstood the recession better, he adds, “The market
pushes companies to understand what their core offerings are and what they do better than anyone else
can. Companies need to pick their core, and the market will punish or reward their competitive
positioning. In an ironic way, the recession of 2008-09 has really helped speed up this process because
companies have had to understand which parts are still crucial and which ones that they can give away,
or outsource to be able to build on their core capabilities”.

The market can be viewed as a set of niches and opportunities that a company must choose from to
leverage its capabilities in the most effective manner. Fundamental to this is a deep-rooted
understanding of what the 
company’s core competencies are and where can these competencies be utilized for maximum economic
benefit.
The ITC story of the last few decades has been one of a company that was pushed to pick its core
offering carefully due to market conditions – operating as they originally were in one of the most
persecuted industries in the world. Over the last 3 decades, the company has diversified into hotels,
packaging, food, agri-business and apparel, with a clear understanding that the core competency of the
business is its depth of distribution, its brand-building capabilities, raw material sourcing and managing
outsourced activities. In effect, what seems like an unrelated diversification into FMCG, agri-commodities
and apparel is an application of the company’s capabilities to a new product sector.
In effect, a company’s business is not defined by the products, services it offeres or even by the
processes followes, but by a much more rich and complex definition of what the organization is capable
of delivering. This is also the central thesis behind the growing trend of outsourcing non-core activities –
companies that truly understand their core competencies can outsource non-critical activities and derive
benefits both in terms of reduced costs and increased organizational focus.

S C Bhargava, Executive Vice President and Head, Electrical and Automation Operating Company at L&T,
explains this from the perspective of his industry. “Outsourcing is used in two areas, either you are
looking at taking an advantage in terms of differential costs in any given area or you are looking at
building upon the strength of your outsourcing partner, as an alliance to build on their expertise. The
latter one might not be cheaper but it provides a higher output and creates opportunities for
improvement. In our case, customer centricity and excellence in execution are paramount… wherever we
are able to ensure that quality is maintained or improved we would look at using partners.”

At the end of the day, the Inside-out strategy is all about identifying the company’s core competencies
for which customers are willing to pay and continue doing business, followed by a relentless pursuit of
opportunities in the market place where these competencies can be leveraged. It also entails constantly
looking for emerging competencies within the organization that can exploit our view of external
opportunities and nurturing them by aligning people, creating feedback mechanisms and institutionalizing
knowledge.

The imperative for leaders, senior managers and HR professionals is to continuously map the external
world of customers & opportunities with the internal world of capabilities and manage change with the
firm knowledge that their company’s business is not defined by the products and services it delivers, but 
by the core delivery capability of their organization.
Evaluation ______________________________________________

OMPANY HISTORY AND BACKGROUND

The Evolution

Maruti’s history of evolution can be examined in four phases: two phases during pre-liberalization period
(1983-86, 1986-1992) and two phases during post-liberalization period (1992-97, 1997-2002), followed by
the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO).The first phase
started when Maruti rolled out its first car in December 1983. During the initial years Maruti had 883
employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such a modest
start the company in just about a decade (beginning of second phase in 1992) had turned itself into an
automobile giant capturing about 80% of the market share in India. Employees grew to 2000 (end of first
phase 1986), 3900 (end of second phase 1992) and 5700 in 1999. The profit after tax increased from Rs
18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started declining during 1997-2001.

During the pre-liberalization period (1983-1992) a major source of Maruti’s strength was the wholehearted
willingness of the Government of India to subscribe to Suzuki’s technology and the principles and practices
of Japanese management. Large number of Indian managers, supervisors and workers were regularly sent
to the Suzuki plants in Japan for training. Batches of Japanese personnel came over to Maruti to train,
supervise and manage. Maruti’s style of management was essentially to follow
Japanese management practices.

The Path to Success for Maruti was as follows:

(a) teamwork and recognition that each employee’s future growth and prosperity is totally dependent on the
company’s growth and prosperity (b) strict work discipline for individuals and the organization (c) constant
efforts to increase the productivity of labor and capital (d) steady improvements in quality and reduction in
costs (e) customer orientation (f) long-term objectives and policies with the confidence to realize the goals
(g) respect of law, ethics and human beings. The “path to success” translated into practices that Maruti’s
culture approximated from the Japanese management practices.

Maruti adopted the norm of wearing a uniform of the same color and quality of the fabric for all its
employees thus giving an identity. All the employees ate in the same canteen. They commuted in the same
buses without any discrimination in seating arrangements. Employees reported early in shifts so that there
were no time loss in-between shifts. Attendance approximated around 94-95%. The plant had an open office
system and practiced on-the-job training, quality circles, kaizen activities, teamwork and job- rotation.
Near-total transparency was introduced in the decision making process. There were laid-down norms,
principles and procedures for group decision making. These practices were unheard of in other Indian
organizations but they worked well in Maruti. During the pre- liberalization period the focus was solely on
production. Employees were handsomely rewarded with increasing bonus as Maruti produced more and sold
more in a seller’s market commanding an almost monopoly situation.

INDUSTRY ANALYSIS

GLOBAL FOUR WHEELER INDUSTRY

Evolution

The automobile industry has undergone significant changes since Henry Ford first introduced the assembly
line technique for the mass production of cars. Production concepts, processes and the associated
technologies have changed dramatically since the first cars were built. Some 70 years ago, car assembly
was primarily manual work. Today, the process of car assembly is almost fully automated. In the old days,
firms attached importance to the production of virtually every part in a single plant, while today, carmakers
concentrate on only a few specific production stages (i.e. car assembly). Parts and module production,
services and related activities have been shifted to other, specialised firms (outsourcing of production
steps).Since the 1980s, it has become clear that further productivity gains to retain competitiveness can be
possible only by outsourcing and securing greater flexibility. For example, firms, especially small car
producers whose markets have been threatened by imports, have diversified their production programmes
(e.g. by building off-road cars or convertibles) thereby introducing greater flexibility in the production
process. Also, firms and their production have become more internationalized in lieu of outsourcing.

Current Scenario

The global passenger car industry has been facing the problem of excess capacity for quite some time now.
For the year 2002, the global capacity in the automotive industry was 75 million units a year, against
production of only 56 million units (excess capacity estimated at 25%). Efforts to shore up capacity
utilization have prompted severe price competition, thus affecting margins and forcing fundamental changes
in the industry. The pressure on sales and margins is driving players to emerging markets in pursuit of
better growth opportunities and/or access to low-cost manufacturing bases.

• The concept of selling in the passenger car industry is changing from original sales towards lifecycle value
generation, encompassing financing, repairs & maintenance, cleaning, provision of accessories, and so on.

• Vehicle manufacturers are moving into completely new materials and technologies—partly guided by
environmental legislation—in striving to come up with radically different products. Some of these new
technologies involve parts that can be bolted on to an existing vehicle with relatively few implications for the
rest of the vehicle. Others are much more fundamental, and are likely to have a profound impact throughout
the supply chain. The examples include battery, electric or hybrid power trains, and alternatives to the all-
steel body. Carmakers are increasingly outsourcing component production, and focusing on product design,
brand management and consumer care, in contrast to the traditional emphasis on manufacturing and
engineering.

• The increasing need to attain global scales underscores the importance of platform sharing among
carmakers. All original equipment manufacturers (OEMs) are trying to reduce the number of vehicle
platforms, but raise the number of models produced from each platform. This means producing a number of
seemingly distinct models from a common platform. 

• As in manufacturing, distribution in the automobile industry is undergoing significant changes, involving

Internet use, retailer consolidation, and unbundling of services provided by retailers.

INDIAN FOUR WHEELER INDUSTRY

Evolution

The Indian automobile industry developed within the broader context of import substitution during the
1950s. The distinctive feature of the automobile industry in India was that in line with the overall policy of
State intervention in the economy, vehicle production was closely regulated by an industrial licensing system
till the early 1980s that controlled output, models and prices. The cars were built mostly by two companies,
Premier Automobiles Limited and HM. However, the Indian market got transformed after 1983 following the
relaxation of the licensing policy and the entry of MUL into the car market. In 1991, car imports were
insignificant, while component imports were equivalent to 20% of the domestic production, largely because
of the continuing import of parts by MUL. The liberalization of the Indian automotive industry that began in
the early 1990s was directed at dismantling the system of controls over investment and production, rather
than at promoting foreign trade. Multinational companies were allowed to invest in the assembly sector for
the first time, and car production was no longer constrained by the licensing system. However, QRs on built-
up vehicles remained and foreign assemblers were obliged to meet local content requirements even as
export targets were agreed with the Government to maintain foreign exchange neutrality. The new policy
regime and large potential demand led to inflows of foreign direct investment (FDI) by the mid-1990s. By
the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and Peugeot had started assembly operations in
India. They were followed by Honda, HMIL, and Mitsubishi. 

Current Scenario

Major Players
Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive Private Limited, Ford
India Limited, General Motors India Limited, Hindustan Motors Limited, Honda Siel Cars India
Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited, Skoda Auto India
Limited, Tata Motors Limited, Toyota Kirloskar Motors Limited.

Current scenario in Passenger Car Category

The dominant basis of competition in the Indian passenger car industry has changed from price to price-
value, especially in the passenger car segment. While the Indian market remains price sensitive, the
stranglehold of Economy models has been slackening, giving way to higher-priced products that better meet
customer needs. Additionally, a dominant trend in the Indian passenger car segment is the increasing
fragmentation of the market into sub-segments, reflecting the increasing sophistication of the Indian
consumer.  With the launch of new models from FY2000 onwards, the market for MUVs has been redefined
in India, especially at the upper-end. Currently, the higher-end MUVs, commonly known as Sports Utility
Vehicles (SUVs), occupy a niche in the urban market, having successfully shaken off the tag of commercial
vehicles attached to all MUVs till recently. Domestic car manufacturers are now venturing into areas such as
car financing, leasing and fleet management, and used-car reconditioning/sales, to complement their
mainstay-business of selling new cars.

COMPETITIVE FORCES IN INDIAN PASSENGER CAR MARKET

Critical Issues and Future Trends

The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. This is
related to the quantum of investments made by the players in capacity creation and the selling price of the
car. The amount of investment in capacities by passenger car manufacturers in turn depends on the
production

Threat from the new players: Increasing

·         Most of the major global players are present in the Indian market; few more are expected to enter.

·         Financial strength assumes importance as high are required for building capacity and maintaining
adequacy of working capital.

         Access to distribution network is important.

         Lower tariffs in post WTO may expose Indian companies to threat of imports.

Rivalry within the industry: High

·         There is keen competition in select segments. (compact and mid size segments).

·         New multinational players may enter the market.

Market strength of suppliers: Low

         A large number of automotive components suppliers.

         Automotive players are rationalizing their vendor base to achieve consistency in quality.

Market strength of consumers: Increasing

·         Increased awareness among consumers has increased expectations. Thus the ability to innovate is
critical.

·         Product differentiation via new features, improved performance and after-sales support is critical.

·         Increased competitive intensity has limited the pricing power of manufacturers.

Threat from substitutes: Low to medium

         With consumer preferences changing, inter product substitution is taking place (Mini cars are being
replaced by compact or mid sized cars).Setting up integrated manufacturing facilities may require higher
capital investments than establishing assembly facilities for semi knocked down kits or complete knocked
down kits. In recent years, even though the ratio of sales to capacity (an important indicator of the ability to
reach break-even volumes) of the domestic car manufacturers have improved, it is still low for quite a few
car manufacturers in India. India is also likely to increasingly serve as the sourcing base for global
automotive companies, and automotive exports are likely to gain increasing importance over the medium
term. However, the growth rates are likely to vary across segments. Although the Mini segment is expected
to sustain volumes, it is likely to continue losing market share; growth in the medium term is expected to be
led largely by the Compact and Mid-range segments. Additionally, in terms of engine capacity, the Indian
passenger car market is moving towards cars of higher capacity. This apart, competition is likely to intensify
in the SUV segment in India following the launch of new models at competitive prices.

Read more: http://www.articlesbase.com/marketing-articles/maruti-udyog-limited-managing-competition-
successfully-723310.html#ixzz3qE02whAW 
Under Creative Commons License: Attribution

What OD interventions did the organization choose in the entire process and how were they
implemented_______________________
The Path to Success for Maruti was as follows:
(a) teamwork and recognition that each employee’s future growth and prosperity is totally dependent on the
company’s growth and prosperity (b) strict work discipline for individuals and the organization (c) constant efforts to
increase the productivity of labor and capital (d) steady improvements in quality and reduction in costs (e) customer
orientation (f) long-term objectives and policies with the confidence to realize the goals (g) respect of law, ethics and
human beings. The “path to success” translated into practices that Maruti’s culture approximated from the
Japanese management practices.
Maruti adopted the norm of wearing a uniform of the same color and quality of the fabric for all its employees thus
giving an identity. All the employees ate in the same canteen. They commuted in the same buses without any
discrimination in seating arrangements. Employees reported early in shifts so that there were no time loss in-between
shifts. Attendance approximated around 94-95%. The plant had an open office system and practiced on-the-job
training, quality circles, kaizen activities, teamwork and job- rotation. Near-total transparency was introduced in the
decision making process. There were laid-down norms, principles and procedures for group decision making. These
practices were unheard of in other Indian organizations but they worked well inMaruti. During the pre-
liberalization period the focus was solely on production. Employees were handsomely rewarded with increasing bonus
asMaruti produced more and sold more in a seller’s market commanding an almost monopoly situation

KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED
Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about 84% of the market
till 1998. With increasing competition from local players like Telco, Hindustan Motors, Mahindra & Mahindra and
foreign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry structure in India has
changed in the last seven years and resulted in the declining profits and market share for Maruti. At the same time
the Indian government permitted foreign car producers to invest in the automobile sector and hold majority stakes.
In the wake of its diminishing profits and loss of market share, Maruti initiatedstrategic responses to cope with
India’s liberalization process and began toredesign itself to face competition in the Indian market. Consultancy
firms such as AT Kearney & McKinsey, together with an internationally reputed OD consultant, Dr. Athreya, have
been consulted on modes of strategy and organization development during the redesign process. The redesign process
saw Maruti complete a Rs. 4000 mn expansion project which increased the total production capacity to over
3,70,000 vehicles per annum. Marutiexecuted a plan to launch new models for different segments of the market. In
its redesign plan, Maruti, launches a new model every year, reduce production costs by achieving 85-90%
indigenization for new models, revamp marketing by increasing the dealer network from 150 to 300 and focus on
bulk institutional sales, bring down number of vendors and introduce competitive bidding. Together with the
redesign plan, there has been a shift in business focus of Maruti. When Maruti commanded the largest market
share, business focus was to “sell what we produce”. The earlier focus of the whole organization was “production,
production and production” but now the focus has shifted to “marketing and customer focus”. This can be observed
from the changes in mission statement of the organization:
1984: “Fuel efficient vehicle with latest technology”.

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

1997: “Creating customer delight and shareholders wealth”.

Focus on customer care has become a key element for Maruti. IncreasingMaruti service stations with the scope of
one Maruti service station every 25 km on a highway. To increase its market share, Maruti launched new car
models, concentrated on marketing and institutional sales. Institutional sales, which currently contributes to 7-8%
of Maruti’s total sales. Cost reduction and increasing operating efficiency were another redesign variable. Cost
reduction is being achieved by reaching an indigenization level of 85-90 percent for all the models. This would save
foreign currency and also stabilize prices that fluctuate with exchange rates. However, change in the mindset was not
as fast as required by the market. Maruti planned to reduce costs, increase productivity, quality and upgrade its
technology (Euro I&II, MPFI). In addition, it followed a high volume production of about 400,000 vehicles / year,
which entailed a smooth relationship between the workers and the managers.
Post 1999, the market structure changed drastically. Just before this change,Maruti had wasted two crucial years
(1996-1998) due to governmental interventions and negotiation with Suzuki of Japan about the break-up of the share
holding pattern of the company. There was a change in leadership, Mr. Sato of Suzuki became the Chairman in June
1998, and the new Mr.J. Khatter was appointed as the new Joint MD. Khatter was a believer in consensus decision
making and participative style of management.As a result of the internal turmoil and the changes in the external
environment, Maruti faced a depleting market share, reducing profits, and increase in inventory levels, which it had
not faced in the last 18 years.
After their fall in market share they redesigned their strategies and through their parent company Suzuki they learned
a lot.The organizational learning of Maruti was moderately successful, the cost was relatively inexpensive as Maruti
had its strong Japanese practices to fall back upon. With the program of organizational redesign, rationalization of
cost and enhanced productivity, Maruti bounced back to competition with 50.8% market share and 40% rise in profit
for the FY2002-2003.

B) CURRENT STRATEGIES FOLLOWED BY MUL

I.       PRICING STRATEGY – CATERING TO ALL SEGMENTS
Maruti caters to all segment and has a product offering at all price points. It has a car priced at Rs.1,87,000.00 which
is the lowest offer on road. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. Their
pricing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of
having so many product offering is to be in the consideration set of every passenger car customer in India. Here is
how every price point is covered.

II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS
Maruti has successfully developed different revenue streams without making huge investments in the form of MDS,
N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle free and
helps building customer satisfaction.

Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this
and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a
Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up with 8
finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI
Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-Ashok
Leyland Finance).
Maruti Insurance : Insurance being a major concern of car owners. Maruti has brought all car insurance needs
under one roof. Maruti has tied up with National Insurance Company, Bajaj Allianz, New India Assurance and Royal
Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-
free claim assistance it’s your dealer who takes care of everything. Maruti Insurance is a hassle-free way for customers
to have their cars repaired and claims processed at any Maruti dealer workshop in India.
True Value – Initiative to capture used car market
Another significant development is MUL’s entry into the used car market in 2001, allowing customers to bring their
vehicle to a ‘Maruti True Value’ outlet and exchange it for a new car, by paying the difference. They are offered loyalty
discounts in return.This helps them retain the customer. With Maruti True Value customer has a trusted name to
entrust in a highly unorganized market and where cheating is rampant and the biggest concern in biggest driver of
sale is trust. Maruti knows its strength in Indian market and has filled this gap of providing trust in Indian used car
market. Maruti has created a system where dealers pick up used cars, recondition them, give them a fresh warranty,
and sell them again. All investments for True Value are made by dealers. Maruti has build up a strong network of 172
showrooms across the nation. The used car market has a huge potential in India. The used car market in developed
markets was 2-3 times as large as the new car market.

N2N: Car maintenance is a time-consuming process, especially if you own a fleet. Maruti’s N2N Fleet Management
Solutions for companies, takes care of the A-Z of automobile problems. Services include end-to-end
backups/solutions across the vehicle’s life: Leasing, Maintenance, Convenience services and Remarketing.
Maruti Driving School (MDS): Maruti  has established this with the goal to capture the market where there is
inhibition in buying cars due to inability to drive the car. This brings that customer to Maruti showroom and Maruti
ends up creating a customer.
III. REPOSITIONING OF MARUTI PRODUCTS
Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. Other changes
have been made from time to time based on market responses or consumer feedbacks or the competitor moves. Here
are the certain changes observed in different models of Maruti.

Omni has been given a major facelift in terms of interiors and exteriors two months back. A new variant called Omni
Cargo, which has been positioned as a vehicle for transporting cargo and meant for small traders. It has received a
very good response from market. A variant with LPG is receiving a very good response from customers who look for
low cost of running.
Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs. They decreased the engine power
from 1600cc to 1300cc and modified it again considering consumers perception. This was a result of intensive survey
done all across the nation regarding the consumer perception of Versa.
Esteem has gone through three facelifts. A new look last year has helped boost up the waning sales of Esteem.
Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In 2003 they launched a lower
variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attract customers.
Wagon-R was perceived as dull boxy car when it was launched. This made it a big failure on launch. Then further
modifications in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it’s
of the most successful models in Maruti stable.
Zen has been modified four times till date. They had come up with a limited period variant called Zen Classic. That
was limited period offer to boost short term sales.
Maruti 800 has so far been facelifted two times. Once it came with MPFi technology and other time it came up with
changes in front grill, head light, rear lights and with round curves all around.
IV. CUSTOMER CENTRIC APPROACH
Maruti’s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards.
Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back
attitude image and has inculcated the customer-friendly approach in its organization culture. The customer centric
attitude is imbibed in its employees. Maruti dealers and employees are answerable to even a single customer
complain. There are instances of cancellation of dealerships based on customer feedback.

Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout so
that customer has to walk minimum in the showroom and there are norms for service times and delivery of vehicles.
The Dealer Sales Executive, who is the first interaction medium with the Maruti customer when the customer  walks
in Maruti showroom, is trained on greeting etiquettes. Maruti has proper customer complain handling cell under the
CRM department. The Maruti call center is another effort which brings Maruti closer to its customer. Their Market
Research department remains on its toes to study the changing consumer behaviour and market needs.Maruti enjoys
seventy percent repeat buyers which further bolsters their claim of being customer friendly. Maruti is investing a lot
of money and effort in building customer loyalty programmes.
V. COMMITTED TO MOTORIZING INDIA
Maruti is committed to motorizing India. Maruti is right now working towards making things simple for Indian
consumers to upgrade from two-wheelers to the car. Towards this end, Maruti partnerships with State Bank of India
and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars. Rs. 2599 scheme
was one of the outcomes of this effort.

Maruti expects the compact cars, which currently constitute around 80% of the market, to be the engine of growth in
the future. Robust economic growth, favorable regulatory framework, affordable finance and improvements in
infrastructure favor growth of the passenger vehicles segment. The low penetration levels at 7 per thousand and rising
income levels will augur well for the auto industry.

Maruti is busy fine-tuning another innovation. While researching they found that rural people had strange notions
about a car – that the EMI (equated monthly instalments) would range between Rs 4,000 and Rs 5,000. That, plus
another Rs 1,500-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the cost of using the car). To
counter that apprehension, the company is working on a novel idea. Control over the fuel bill is in the consumer’s
hands. But, maintenance need not be. Says Khattar: “What the company is doing now is saying how much you spend
on fuel is in your hands anyway. As far as the maintenance cost is concerned, if you want it that way, we will charge a
little extra in the EMI and offer free maintenance.”

VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED

It was a long and tough journey, but a rewarding one at the end. A reward worth Rs 2,424 crore, making it the biggest
privatization in India till date. The size of Maruti’s sell- off deal is proof of its success. On the investment of Rs 66
crore it made in 1982, when Maruti Udyog Limited (MUL) was formally set up, the sale represents a staggering return
of 35 times The best part of the deal is the Rs 1,000 crore control premium the Government has been able to extract
from Suzuki Motor Corporation for relinquishing its hold over India’s largest car company. Now looking at the
strategy point of it – for Suzuki, of course, complete control of MUL means a lot. Maruti is its most profitable and the
largest car company outside Japan. Suzuki will now be in the driver’s seat and will not have to mind the whims and
fancies of ministers and bureaucrats. “Decisions will now become quicker. The response to changing market
conditions and technological needs will be faster,” says Jagdish Khattar, managing director, MUL. After the
disinvestment Suzuki became the decision maker at MUL. They flowed fund in India for the major revamp in MUL.
Quoting from the report that appeared in The Economic Times, 4th April 2005, -

The Indian car giant Maruti Udyog Limited has finalized its two mega investment plans — a new car plant and an
engine and transmission manufacturing plant. Both the projects will be implemented by two different companies. At
its meeting the company’s board approved a total investment of Rs3,271.9 crore for these two ventures, which will be
located in Haryana.

The above signifies when GOI was a major stakeholder in the MUL strategies which lead to investment have had a
bureaucracy factor in it but after the disinvestment strategy followed is a TOP DOWN approach with a fast
implementation.
Suzuki’s proposed two-wheeler facility in India, would start making motorcycles and scooters by the end of 2005
through a joint venture, in which Maruti has 51 per cent stake. The two-wheeler unit will have a capacity of 250,000
units a year.

The disinvestment followed by IPO gives the insight in the fact that now all the strategic decisions are taken by Maruti
Suzuki Corporation. Disinvestment had helped by removing the red tape and bureaucracy factor from its strategic
decision making process.

VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET

In the old days, the company’s operations could be boiled down to a simple three-box flowchart. Components came
from the ‘vendors’ to the ‘factory’ where they were assembled and then sent out to the ‘dealers’. In this scheme, you
know where the company’s revenues come from. The new scheme is more complicated. It revolves around the total
lifetime value of a car.

Work on this began in 1999, when a MUL team, wondering about new revenue streams, traveled across the world.
Says R.S. Kalsi, general manager (new business), MUL: “While car companies were moving from products to services,
trying to capture more of the total lifetime value of a car, MUL was just making and selling cars.” If a buyer spends Rs
100 on a car during its entire life, one-third of that is spent on its purchase. Another third went into fuel. And the final
third went into maintenance. Earlier, Maruti was getting only the first one-third of the overall stream. As the Indian
market matured, customers began to change cars faster. Says Kalsi: “So the question was, if a car is going to see three
users in, say, a life span of 10 years, how can I make sure that it comes back to me each time it changes hands ? So
Maruti has changed gears to take a big share of this final one-third spent on maintenance. Maintenance market has a
huge market potential. Even after having fifty lakh vehicles on road Maruti is only catering to approximately 20000
vehicles through its service stations everyday.

For this they are conducting free service workshops to encourage consumers to come to their service stations. Maruti
has increased its authorized service stations to 1567 across 1036 cities. Every regional office is having a separate
services and maintenance department which look after the growth of this revenue stream.
VIII. PLAYING ON COST LEADERSHIP
Maruti is the price dictator in Indian automobile industry. It’s the low cost provider of car. The lowest car on road is
from Maruti stable i.e. Maruti 800. Maruti achieves this through continuous improvements in operational efficiency
and productivity.

The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in
costs in three years. The ability to keep lowering the prices sets Maruti apart from other players in the league. Maruti
spread the overheads over a larger base.

The impressive sales and profits were the result of major efforts within the company. Maruti also increased focus on
vendor management. Maruti consolidated its vendor base. This has provided its vendors with higher volumes and
higher efficiencies. Maruti does that by working with vendors, assuring them that for every drop in price, volumes will
go up. Maruti is now encouraging its vendors to develop R&D capability for specialized components. Based upon such
activities, product competitiveness in the market will further increase.
Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking System improved efficiency on the
shop floor and enhanced quality control. The e Nagare system, adopted from Suzuki Motor Corporation, smoothened
Maruti’s Just In Time operations.

C) MAJOR FUTURE STRATEGIES

I. PHASING OUT ZEN IN 2007
The launch of Swift and phasing out Zen is a strategic move. Alto was launched keeping in mind that it will take over
Maruti 800 market in future. Perhaps being the flagship product phasing out of Maruti 800 faced lots of resistance
from dealers all over. Another reason behind not phasing out Maruti 800 was the fear of brand shift of customers to
other competitor’s product. Swift was launched in May, 2005 in the price band starting from 4 lacs. Before launch of
Swift Maruti management had decided that they will phase out Zen since it had already came up with two
modifications. The major reason behind this decision was cannibalization of Wagon R and Swift due to overlapping of
price band. It is a rational decision to kill a product before it starts facing the decline stage in product cycle. Maruti is
offering Rs. 3000.00 more margins to dealer on the sale of Wagon-R as compared to Zen. This is to let dealer push
Wagon R instead of Zen.

II. MARUTI PLANS FOR A BIG DIESEL FORAY

The new car manufacturing company, called Maruti Suzuki Automobiles India Limited, will be a joint venture
between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively.  The
Rs1,524.2 crore plant will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units
per annum. The new car manufacturing plant will begin commercial production by the end of 2006.

Maruti would set up a diesel engine plant at Gurgaon in line with its plan to become a major player in diesel vehicles
in a couple of years. This has been done in the wake of major competition from Tata Indica and meets the growing
demand of diesel cars in India. While the annual growth in the diesel segment was 13 per cent in the last three years,
it was 19-20 per cent in the first quarter (April-June) of the current fiscal. Maruti has currently an insignificant
presence in diesel vehicle. It will manufacture new generation CRDI (common rail direct injection) engines in
collaboration with Fiat-GM Opel and engines will be of 1200 cc. The plant with a capacity to produce one lakh diesel
engines would be operational in 2006. At present, Peugeot of France, supplies diesel engines for Maruti’s Zen and
mid-sized Esteem models. This will further reduce the imported component in Maruti vehicles, making them more
competitive in the Indian market. 

III. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT

The engine and the transmission plant will be owned by Suzuki Powertrain India Limited in which Suzuki Motor
Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity
would be three lakh diesel engines. However, the initial production would be 1 lakh diesel engines, 20,000 petrol
engines and 1.4 lakh transmission assemblies. Investment in this facility will be Rs.1,747.7 crore. The commercial
production will start by the end of 2006.

IV. INDIA AS EXPORT HUB FOR MARUTI

Three years back as an experiment, based on the increasing design capabilities of suppliers in countries like India,
McKinsey did an exercise to figure out just how much money could be saved if automobiles were to be made in
overseas locations like India, Mexico and South Africa – an automobile BPO, so to speak. The result was staggering:
the industry stands to gain $ 150 billion annually in cost savings, and an additional $ 170 billion annually in new
revenues once demand shoots up following the drop in prices, and the combination of which means a 25 per cent
increase in existing revenue levels.
According to the study, over 90 per cent of automobiles today are sold in the countries they are made in, so there’s a
lot of money to be made by shifting the production overseas. Till recently, just 100,000 cars produced in low-cost
countries were exported to high-cost ones – presumably this figure is going up now that Altos from Maruti, Santros
from Hyundai, Indicas from Tata Motors, and Ikons from Ford, among others, are being regularly exported out of
India.

Yet, as McKinsey points out, since it just costs $ 500 and just three weeks (and both figures are falling) to ship out a
car to anywhere in the world, why produce cars in high-wage islands? If a car was produced in India instead of in
Japan, the study says, it will cost 22-23 per cent less, after factoring in higher import duties for components/steel,
lower levels of automation, and transport costs.

In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its first export in 1986. Europe is the
largest destination of Maruti’s exports and coincidentally after the first commercial shipment of 480 units to Hungary
in 1987, the 300,00 mark was crossed by the shipment of 571 units to the same country. The top ten destination of the
cumulative exports have been Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland
in that order.

The Alto, which meets the Euro-3 norms, has been very popular in Europe where a landmark 200,000 vehicle were
exported till March 2003. Even in the highly developed and competitive markets of Netherlands, UK, Germany,
France and Italy Maruti vehicles have made a mark. Though the main market for the Maruti vehicles is Europe, where
it is selling over 70% of its exported quantity, it is exporting in over 70 countries.

Maruti has entered some unconventional markets like Angola, Benin, Djibouti, Ethiopia, Morocco, Uganda, Chile,
Costa Rica and El Salvador. The Middle-East region has also opened up and is showing good potential for growth.
Some markets in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE.

The markets outside of Europe that have large quantities, in the current year, are Algeria, Saudi Arabia, Srilanka and
Bangladesh. Maruti exported more than 51,000 vehicles in 2003-04 which was 59% higher than last year. In the
financial year 2003-04 Maruti exports contributed to more than 10% of total Maruti sales.

V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION

Japanese auto major Suzuki is all set to convert Maruti Udyog Ltd’s research and development (R&D) facility as its
Asia hub by 2007 for the design and development of new compact cars, according to a top official of the firm. The
country’s leading car manufacturer will make substantial investments to upgrade its research and development centre
at Gurgaon in Haryana for executing design and development projects for Suzuki. This includes localisation,
modernisation and greater use of composite technologies in upcoming models.

The company will be hiring more software engineers and technocrats to handle Suzuki’s R&D projects. Investment
would be more in terms of manpower than in infrastructure, which is already in place. Apart from working on
innovative features, the R&D teams will focus on latest technologies using CAD-CAM tools to roll out new models that
will meet the needs of MUL’s diverse customers in the future.

The reasons as to why it can be good for R&D is that

Ø  Firstly the cost involved in R&D and infrastructure is low in India as compared to other countries. Also the
technical skills are abundantly available; again at a cheaper cost.

Ø  Secondly, India is growing as an export hub along with the Indian market growing aggressively into becoming an
attractive one for investors.

Ø  Thirdly, Suzuki’s investment in India, is also important as it has completely divested now as a result MUL will now
become a 100% subsidiary of Suzuki in the coming year.

KEY SUCCESS FACTORS

(1)The Quality Advantage
Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India (J.D.
Power IQS Study 2004). The Alto was chosen No.1 in the premium compact car segment and the Esteem in the entry
level mid – size car segment across 9 parameters.

(2)A Buying Experience Like No Other

Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities, with a workforce of over 6000
trained sales personnel to guide MUL customers in finding the right car.

(3)Quality Service Across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7 parameters: least problems
experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service
advisor experience, most user-friendly service and best service initiation experience.

92% of Maruti Suzuki owners feel that work gets done right the first time during service. The J.D. Power CSI study
2004 also reveals that 97% of Maruti Suzuki owners would probably recommend the same make of vehicle, while 90%
owners would probably repurchase the same make of vehicle.

(4)One Stop Shop

At Maruti Suzuki, customers will find all car related needs met under one roof. Whether it is easy finance, insurance,
fleet management services, exchange- Maruti Suzuki is set to provide a single-window solution for all car related
needs.

(5) The Low Cost Maintenance Advantage

The acquisition cost is unfortunately not the only cost customers face when buying a car. Although a car may be
affordable to buy, it may not necessarily be affordable to maintain, as some of its regularly used spare parts may be
priced quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy segment that the affordability of spares
is most competitive, and it is here where Maruti Suzuki shines.

(6)Lowest Cost of Ownership

The highest satisfaction ratings with regard to cost of ownership among all models are all Maruti Suzuki vehicles: Zen,
Wagon R, Esteem, Maruti 800, Alto and Omni.

(7) Technological Advantage

It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. This new technology
harnesses the power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create optimum engine delivery.
This means every Maruti Suzuki owner gets the ideal combination of power and performance from his car.

FUTURE CHALLENGES
Ø  Maruti has always been identified as a traditional carmaker producing value-for-money cars and right now the
biggest hurdle Maruti is facing is to shed this image. Maruti wants to change it for a more aggressive image. Maruti
Baleno has failed due to one of the major reasons being that customers could not identify Maruti with a car as
sophisticated as Maruti Baleno. Maruti is looking forward to bring about a perception change about the company
and its cars. Maruti started the exercise with the new-look Zen, and Suzuki’s decision to pick India as one of the first
markets for this radically different-looking car gave this endeavor a new thrust. Maruti has also changed its logo at
the front grill. It has replaced the traditional Maruti logo on grill ‘stylish ‘M’ with S’. The major thrust in the facelift
endeavour is with the launch of 1.3 litre Swift. It’s a style statement from Maruti to Indian market.
Ø  The next threat Maruti faces is the growing competition in compact cars. Companies like Toyota, Ford,
Honda and Fiat are planning to come out with small segment cars in near future.Ford is launching Focus and Fiesta,
GM is launching Aveo in 2006, Chevrolet is launching Spark in 2006, Hyundai is launching its new compact car in
2006, Honda is launching Jazz in 2006, GM is has reduced prices of its Corsa, Fiat is coming up with Panda and new
Fiat Palio, Skoda is launching Fabia. All this will pose a major threat to Maruti leadership in compact cars.
Ø  New emission norms like Bharat Stage 3 which has come into effect from April 2005 has increased car prices by
Rs.20000 and Bharat Stage 4 which is coming into force in 2007 will contribute in increasing car prices further. This
could be of concern to Maruti which is low cost provider of passenger cars.
Ø  Rise in petrol prices and growing popularity of other substitute fuels like CNG will be another threat to
Maruti. There is also a threat to Suzuki from R&D investment by Toyota and Honda in Hybrid cars. Hybrid cars could
run on both petrol and gaseous fuels.
Ø  There is a threat to Maruti models ageing. Maruti models like Maruti 800 which is in market for the last twenty
years and others like Zen and Esteem which have also entered the decline phase are the other threats. Maruti is
planning phasing out Zen in 2007 and there were rumors of phasing out Maruti 800 also. This all makes Suzuki to
replace these brands with new launches . As Swift and Wagon R are replacing the Zen market. Maruti will have to
keep on making modifications in its present models or its models will face extinction.