Strategy of M/s Maruti Suzuki

Team members
P Veera Pratap Ch. Deepak S. Mohamed ali (BUB0912013) (BUB0912016) (BUB0912020)

R Prabhu

(BUB0912023)
Module :- Manufacturing strategy

Module Leader :- Mr. K.N. Ganapathy

Contents of presentation
Introduction Mission and Vision Competitive advantage External and Internal analysis SWOT Analysis TWOS Matrix Porters Five Force Model PESTLE Analysis BCG Matrix Business level strategy Functional strategy Conclusion
2

Company at a Glance
Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation of Japan. MSIL is a leading manufacturer of passenger vehicles in India.
Established in February 1981, though the actual production commenced
in 1983 with the Maruti 800 Maruti Udyog Limited was renamed as Maruti Suzuki India Limited in 17

Sept. 2007
Headquarters are located at New Delhi and has two manufacturing facility in Gurgaon and Manesar
3

Product varieties

Maruti 800 (A1)

Alto (A2)

Estilo

Viatra (MUV)

Omni (MPV)

Dzire (A3)

Swift

Wagon R

Etrigo

ECCO

SX4

Ritz

A Star

Gypsy

Kizashi (A4)
4

Major competitors

Business results YOY performance and MS

Net sales and PAT
2497.6 2288.6 1730.8 1635.1

1562 1189.1 853.6

1218.7

Market share distribution chart

3 5 6 11 3 211 3 3

46

2004 - 05

2006 - 07

2007 - 08

2008 - 09

2010 - 11

Net Sales in Nos.

Profit After Tax in Cr.

2009 - 10

2011 - 12

2005 - 06

16
Hyundai GM Ford M&M Renault Nissan Toyota Honda Others

Source : Official Maruti Suzuki website Indian Car Sales Report - February 2013

Maruti Suzuki
Tata Motors Volkswagen

Vision statement
The Leader in the Indian Automobile Industry, Creating Customer Delight and Shareholders Wealth, Eventually become a pride of India.

Core values
Customer obsession

Fast, Flexible and First mover

Innovation and creativity

Networking and creativity

Openness and Learnings

Mission statement
Modernization of the Indian Automobile Industry Developing cars faster and selling them for less

Production of fuel-efficient vehicles to conserve scarce resources

Production of large number of motor vehicles which was necessary for economic growth

Market Penetration, Market Development Similarly Product

Development and Diversification Partner relationship management, Value chain, Value delivery network .
8

Competitive advantage

External analysis External Factor Evaluation matrix (EFE Model)

#
1 2 3 4 5

Opportunities
Increasing demand for cars Efficient EFI Engines Large market to operate Global spare parts matrix Small size CNG Cylinders

Weight
0.15 0.10 0.10 0.05 0.12

Rating
4 3 3 2 3

Weighted score
0.60 0.30 0.30 0.10 0.36

Ratings 1 Poor 3 Above average

2 Below average 4 Superior

10

External analysis
#
1 2 3 4 5

Threats
Tough competitors Inflation rate Taxes Cheaper imported cars Increase in fuel prices Total weightage

Weight
0.14 0.08 0.08 0.10 0.08 1

Rating
2 3 3 4 2

Weighted score
0.28 0.24 0.24 0.40 0.16 2.98

The Total weighted score of 2.98 shows that company is responding above average to its external factors. They are trying to grab maximum opportunities available there and avoiding the threats to their best
11

Internal analysis internal Factor Evaluation matrix (IFE Model)

#
1 2 3 4 5

Strength
Highest market share Low price vehicles Large distribution charnels Easy availability of channels Highly innovative product line

Weight
0.20 0.10 0.12 0.08 0.12

Rating
4 4 4 4 4

Weighted score
0.80 0.40 0.48 0.32 0.48

Ratings 1 Poor 3 Above average

2 Below average 4 Superior

12

Internal analysis
#
1 2 3 4

Weakness
Scarcity of Raw internal Lack of coordination and linkage with Govt. bodies Less focus on looks and design Less technical training institutes Less distribution channels in sub urban areas Total weightage

Weight
0.08 0.05 0.10 0.05

Rating
2 2 1 1

Weighted score
0.16 0.10 0.10 0.05

0.10
1

0.10
2.99

The score 2.99 shows that company has solid internal position, its strengths are overcoming the weaknesses
13

Competitor analysis
Focus on indigenization and Lower Costs Increase dealer network Target to tap growing middle class By 2050 Top Spot in Car Volumes Local Manufacturing Plants World class features at affordable prices

14

TWOS Matrix
Strength Largest manufacturing capacity SO strategy Distribution network To capture Expertise in small untapped cars rural and youngistan market WO strategy To bring new and innovative models. WT strategy To change brand positioning Weakness Brand positioning Dependent upon imported diesel engine
15

Opportunities Untapped rural market Young bikers Growth in economy

ST strategy
Threats New entrants New emission norms To launch a car like CHERVO

Generic competitive strategies

Lower cost Broad target Narrow target

Cost leadership Cost Focus

Differentiation
Differentiation Focus Differentiation
16

Generic environmental analysis PESTLE Analysis

Political (Attractive) Economic (Attractive) Social (Moderate) Technology (Unattractive) Legal (Unattractive)
Government promoting foreign investments (FDIs) Stable political environment Good access of funds due to availability of cheap loans Persistent high growth for past few years
Rise of middle class leading to improve purchasing power Mass transportation due to increase environment consciousness

Capital intensive Huge investment required to achieve economy of scale Need to comply with ever evolving emission standards Need to comply various safety and technical standards 17

Porters five force model

THREATS OF NEW ENTRANT BARGAINING POWER OF BUYERS BARGANING POWER OF SUPPLIERS THREATS SUBSTITUTE PRODUCT RIVALRY AMONG COMPETITORS

Forces Results

Governme Product Presence of Intense nt policies differentia substitute players Patents & tion is high input is Better proprietary Buyers get high technology Knowledge incentives Switching Asset in the costs of specificity form of suppliers is Economics cost, high of scale discounts after sales services

Industry concentrat ion High fixed cost Diversity Low switching cost

18

BCG Matrix
Swift Dezire
Business growth rate

SX 4 Grand Vitara Rtiz Etigo

BCG Matrix

Zen
Estilo

Alto Wagor R

ECCO Omni Gypsy Maruti 800

Relative market share
19

A Star

Business level strategy

How a Business level strategy is built

Capabilities

Core competencies

Business level strategy

Whom to serve

What needs to serve

How to serve the needs

Business level strategy

20

Capabilities of MSIL
Manufacturing and production technology
Understanding customers needs Developing new designs and models of cars which are fuel-efficient Quality focus Prompt service and customer satisfaction
21

Core competencies

Manufacturing excellence
1. Pioneer latest technology 2. Lean Mfg. 3.Excalent PMS 4. Quality control

Strong distribution network

1. Most extensive network in India 2. Greater customer Pioneer in latest

Forward and Back ward integration

1. Alliance with suppliers
2. Alliance with dealers

Other CRM activities

1. True vale 2. Any time Maruti 3.ASC 4. Insurance

22

Business level strategy

Cost Competitive scope Narrow target Broad target

Competitive advantage Uniqueness

Differentiation Audi Volkswagon
Hybrid strategy

Cost leadership Maruti Tata

Focus leadership

Focus differentiation

Hyundai
Ford, GM, Mahindra

Honda, Toyota, BMW

23

Other functional strategy 4 Ps strategy

Product

Promotion

Marketing mix

Price

Place
24

Product & Price strategy

Segment Models Price range in Lakhs.*

A1
A2

Alto 800
Estilo, Swift, Wagon R, A-start, Ritz

2.9 to 3.4 3.9 to 6.6

6.7 to 10.4 17 to 18 6.3 to 23 2.4 to 4.6

A3
A4

Dizre, SX4
Kizashi

MUV
MPV

Etrigo, Grand vitara, Gypsy King

Omni, EECO

*Ex-Showroom price at Bangalore

MSIL has various segment and variety of models that suits all type of customers. The products are divided in to different segment based on Price , features and usage pattern of customers
25

Place strategy
Maruti the place of the car is in the whole world. MSIL decides its distribution channels for selling car, like use some time one level or some time two level

marketing channels. They show the permanent location for selling the cars. They
provide the many useful inventory. MSIL defines the transport facility of the company for company to market and market to consumers 600 New car sales outlets covering 393 cities. 265 Maruti True Value outlets spread across 189 cities.

2628 Maruti Authorized Service Stations, covering 1220 towns.

Tie up with Adani group for exporting 200,000 units through Mnudra port Gujarat Place strategy
26

Promotion strategy
MARUTI Main promotion of car is done by the Advertising. The advertising is mainly done in the form of different T.V. channels, different newspaper,

holdings etc. Now days the main promotion is done by the brand
ambassadors such as film stars, celebrities, sportsmen, etc

27

Customer Relationship Management (CRM )

Maruti created a land-mark in CRM by launching a website first time in India for the customers in the year 1998 Maruti is investing a lot of money and effort in building customer loyalty programmes The advantages of Maruti Auto Cards are

4% value back and much more

Exclusive discounts on car exchange Exciting rewards on car referrals

Complimentary gift vouchers, etc.

28

Customer Relationship Management (CRM )

True value outlets for Pre Owned cars

Availability of easy finance with lower interest rates

Maruti On-road Service facility

09/02/2013/

29

Advantages of CRM
Quality Service Across 1220 towns In the J.D. Power CSI Study Maruti Suzuki scored the highest across all 7 parameters:

1.least problems experienced with vehicle serviced, 2.highest service quality, 3. best in-service experience 4.best service delivery, 5.best service advisor experience, 6. most user-friendly service and 7.best service initiation experience

No. 1 in JDP CSI, Consecutive 13 years

09/02/2013/

30

Other future plans

Design small cars suitable for the Indian conditions as a
strategy to beat the stiff competition with the entry of global auto makers. Mr. Bhargava, MSIL Launching compact cars with more features in ultra lowcost segment to meet the needs of the customers locally MSIL has decided to develop twin facilities in Gujarat.

31

Conclusion
MSIL, through its cost leadership approach market leader for 3 decades , 46% market share Constant innovation to its processes, hence helping it achieve efficiency Cost advantage by maintaining long term contracts with its suppliers -

reliable supply of materials

Moving towards Integrated cost leadership/differentiation strategy to cater to changing demands of customers and changing environment

Sustainability of this strategy in the long run

09/02/2013/

32

Reference
Author unknown, Business level strategy http://www.slideshare.net/hedaurahul/business-policy-and-strategicmanagement-of-maruti-suzuki - Retrieved on 18.04.2013 Author unknown, MSIL Strategy http://www.slideshare.net/sanjaysan1/maruti-suzuki-strategic-management12583528 , Retrieved on 19.04.2013 Author unknown, MSIL Business level strategy http://www.slideshare.net/keshavcrashk/maruti-suzuki-business-levelstrategy, Retrieved on 20.04.2013

24

34